• The GUS Defined Benefit Scheme
• The Argos Defined Benefit Scheme
• The GUS Defined Contribution Scheme

Accrued pension costs in respect of the defined benefit schemes and other pension liabilities amounted to £63.4m (1998 £54.6m) and are included in Provisions for deferred and other liabilities and charges at 31 March 1999 (note 25). Accrued pension costs include £21.8m (1998 £21.2m) in respect of unfunded liabilities.

(a) The GUS Defined Benefit Scheme
The Scheme has rules which specify the benefits to be paid and is financed accordingly with assets being held in independently administered funds.

A formal valuation of the Scheme as at 31 March 1998 was carried out by independent, professionally qualified actuaries, William M. Mercer Limited, using the projected unit method. As a result of the July 1997 budget, pension schemes are no longer able to obtain repayment of tax credits attached to their dividend income. It was considered appropriate, therefore, to review, with the Scheme's actuaries, the methods and assumptions underlying the actuarial valuation of the Scheme, following which it was decided that a valuation basis linked to market values should be used to value investments. Previously, the actuaries valued investments as the discounted cash flow value of expected future income. The principal actuarial assumptions used at 31 March 1998 were as follows:

Valuation rate of interest
    Pre-retirement         7.55% per annum
    Post-retirement         6.06% per annum
Rate of future earnings growth     5.15% per annum
Pension increases     3.00% per annum

At the valuation date, the market value of the Scheme's assets was £256m. This represented 105% of the value of benefits that had accrued to members.

(b) The Argos Defined Benefit Scheme
A formal valuation of the Scheme as at 5 April 1998 was carried out by independent, professionally qualified actuaries, Watson Wyatt Partners, using the projected unit method. The principal actuarial assumptions used at 5 April 1998 were as follows:

    Investment return     7.75% per annum
    Rate of future earnings growth     5.25% per annum
    Pension increases     3.25% per annum

At the valuation date, the market value of the Scheme's assets was £180m. The actuarial value of the assets represented 106% of the benefits that had accrued to members. The actuarial assumptions used in valuing this scheme differ marginally from those used in valuing the GUS Defined Benefit Scheme. Using the GUS assumptions no significant surplus existed for the purpose of fair value accounting.

(c) The GUS Defined Contribution Scheme
The Scheme was introduced during the year ended 31 March 1999 with the aim of providing pension benefits for those Group employees in the United Kingdom who, hitherto, had been ineligible for pension scheme membership. The assets of the Scheme are held separately from those of the Company in an independently administered fund. The pension cost represents contributions payable by the Company to the fund and amounted to £2.3m. Contributions totalling £0.3m were payable to the fund at 31 March 1999 and are included in creditors.

(d) Other Post Retirement Benefits
In the United Kingdom, the Group provides post retirement healthcare insurance funded by annual premiums to a third party insurer.

The last actuarial valuation of the accrued liability in respect of post retirement healthcare benefits was carried out as at 1 April 1998 by independent, professionally qualified actuaries, William M. Mercer Limited, using the projected unit method. The assumption which has the most significant impact on the actuarial valuation is that medical cost inflation will be 10% per annum for five years reducing to 7% per annum for the longer term.

The provision at 31 March 1999 of £14.0m (1998 £14.4m) is included in Provisions for deferred and other liabilities and charges (note 25). Premiums paid in the year were £0.4m (1998 £0.3m) and the total cost for the Group was £0.4m (1998 £0.3m).