The Group has defined benefit pension schemes in the UK, Ireland and Germany. All these schemes are now closed to new entrants. Elsewhere (including the replacement schemes in the UK and Ireland), the schemes are defined contribution.

During the latter part of the prior year and first half of this year, the Group consulted with UK based employees over changes designed to improve the sustainability of the UK defined benefit pension scheme. These included changes in the Group’s future approach to early retirement, a restriction on the amount of base pay that can be considered pensionable for defined benefit purposes, and a life expectancy risk sharing mechanism to share the uncertain future costs of improving life expectancy between the Group and the active members. These changes resulted in an accounting benefit of £17.5m.

In the second half of the year, the headcount in the UK was reduced as a result of cost reduction actions taken in the business. This has led to an accounting cost of £0.8m relating to the pension impact of the changes.

As a result of these two actions and their effects on the UK defined benefit pension scheme, a net non‑cash credit of £16.7m has been recognised in the Income Statement and excluded from headline profit.

The most recent valuation of the UK defined benefit scheme was carried out as at 31 March 2009. This disclosed a deficit of £6.3m before tax relief. The scheme was 97% funded on an accounting basis. The Group was not required to make any deficit recovery contributions to the pension scheme during the financial year, and does not anticipate any requirement to do so in the year ending 31 March 2010.

This deficit is £15.5m lower than at the previous year end due to lower expectations of long term inflation, higher discount rates, partially offset by the reduction in the value of the assets, together with benefit changes which improve the sustainability of the scheme.

Under IAS 19, the combined gross deficit of the Group’s defined benefit schemes was £16.9m at 31 March 2009.