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Pensions and other post retirement benefits (Tables)
 12 Months Ended
Mar. 31, 2020
Employee Benefits [Abstract]  
Schedule of results of most recent actuarial valuations
The results of the most recent actuarial valuations are shown below. See page 167 for the assumptions used for IAS 19 (revised) purposes. The actuarial valuations for NGUKPS as at 31 March 2019 have recently been completed, while we expect the valuation for NGEG of ESPS to be finalised by 30 June 2020.
 
Section A of NGUKPS
Section B of NGUKPS
NGEG of ESPS
Latest full actuarial valuation
31 March 2019
31 March 2019
31 March 2016
Actuary
Willis Towers Watson
Willis Towers Watson
Aon Hewitt
Market value of plan assets at latest valuation
£6,551 million
£5,765 million
£2,553 million
Actuarial value of benefits due to members
£6,502 million
£5,831 million
£3,053 million
Market value as percentage of benefits
101%
99%
84%
Funding surplus/(deficit)
£49 million
(£66 million)
(£500 million)
Funding surplus/(deficit) net of tax
£41 million
(£55 million)
(£415 million)
Schedule of security agreements
 
Section A of NGUKPS
Section B of NGUKPS
NGEG of ESPS
Value of security arrangements at 31 March 20201
£315 million
£180 million
£239 million
Principal supporting employers
National Grid plc and National Grid UK Limited
National Grid Gas plc (NGG)
National Grid Electricity Transmission plc (NGET)
Additional amounts payable2 at 31 March 2020
£72 million
A maximum of £280 million
A maximum of £500 million
1.
Following the completion of the March 2019 valuations for Sections A and B of NGUKPS, these amounts have changed to £186 million for Section A and to £nil for Section B.
2.
These amounts are payable if certain trigger events occur which have been individually agreed between the plans and their relevant supporting employers.
Disclosure of actuarial assumptions
The Company has applied the following financial assumptions in assessing DB liabilities:
 
UK pensions
 
2020
2019
2018
 
%
%
%
Discount rate – past service
2.35
2.40
2.60
Discount rate – future service
2.35
2.45
2.65
Salary increases
2.90
3.50
3.40
Rate of increase in RPI – past service
2.65
3.25
3.15
Rate of increase in RPI – future service
2.45
3.20
3.10
 
US pensions
 
US other post-retirement benefits
 
2020
2019
2018
 
2020
2019
2018
 
%
%
%
%
%
%
Discount rate
3.30
3.95
4.00
 
3.30
3.95
4.00
Salary increases
3.50
3.50
3.50
 
3.50
3.50
3.50
Initial healthcare cost trend rate
n/a
n/a
n/a
 
7.00
7.25
7.50
Ultimate healthcare cost trend rate
n/a
n/a
n/a
 
4.50
4.50
4.50
 
 
2020
 
2019
 
2018
 
 
UK
years
US
years
 
UK
years
US
years
 
UK
years
US
years
 
 
Assumed life expectations for a retiree age 65
 
 
 
 
 
 
 
 
 
Males
22.1
20.9
 
22.0
22.1
 
22.3
22.0
 
Females
23.8
23.4
 
23.6
24.2
 
23.9
24.2
 
In 20 years:
 
 
 
 
 
 
 
 
 
Males
23.3
22.5
 
23.3
23.7
 
23.7
23.6
 
Females
25.3
25.1
 
25.2
25.9
 
25.5
25.8
Amounts recognised in the statement of financial position
Amounts recognised in the consolidated statement of financial position
 
2020

2019

2018

 
£m

£m

£m

Present value of funded obligations
(24,281
)
(24,609
)
(23,747
)
Fair value of plan assets
23,748

24,793

23,858

 
(533
)
184

111

Present value of unfunded obligations
(345
)
(330
)
(307
)
Other post-employment liabilities
(75
)
(72
)
(67
)
Net defined benefit liability
(953
)
(218
)
(263
)
Represented by:
 
 
 
Liabilities
(2,802
)
(1,785
)
(1,672
)
Assets
1,849

1,567

1,409

 
(953
)
(218
)
(263
)
The geographical split of pensions and other post-retirement benefits is as shown below:
 
UK Pensions
 
US Pensions
 
US other post-retirement benefits
 
2020

2019

2018

 
2020

2019

2018

 
2020

2019

2018

 
£m

£m

£m

£m

£m

£m

£m

£m

£m

Present value of funded obligations
(12,775
)
(14,200
)
(14,152
)
 
(7,809
)
(6,901
)
(6,349
)
 
(3,697
)
(3,508
)
(3,246
)
Fair value of plan assets
14,364

15,507

15,330

 
6,972

6,646

6,030

 
2,412

2,640

2,498

 
1,589

1,307

1,178

 
(837
)
(255
)
(319
)
 
(1,285
)
(868
)
(748
)
Present value of unfunded obligations
(69
)
(76
)
(74
)
 
(276
)
(254
)
(233
)
 
—

—

—

Other post-employment liabilities
—

—

—

 
—

—

—

 
(75
)
(72
)
(67
)
Net defined benefit asset/(liability)
1,520

1,231

1,104

 
(1,113
)
(509
)
(552
)
 
(1,360
)
(940
)
(815
)
Represented by:
 
 
 
 
 
 
 
 
 
 
 
Liabilities
(69
)
(76
)
(74
)
 
(1,373
)
(769
)
(783
)
 
(1,360
)
(940
)
(815
)
Assets
1,589

1,307

1,178

 
260

260

231

 
—

—

—

 
1,520

1,231

1,104

 
(1,113
)
(509
)
(552
)
 
(1,360
)
(940
)
(815
)
Amounts recognised in the income statement and statement of other comprehensive income
Amounts recognised in the income statement and statement of other comprehensive income
 
2020

2019

2018

 
£m

£m

£m

Included within operating costs
 
 
 
Administration costs
16

14

16

Included within payroll costs
 
 
 
Defined benefit plan costs:
 
 
 
Current service cost
178

193

193

Past service cost – augmentations
—

5

1

Past service credit – redundancies
—

(7
)
(1
)
Special termination benefit cost – redundancies
2

55

9

Past service cost – plan amendments¹
—

34

—

 
180

280

202

Included within finance income and costs
 
 
 
Net interest cost
23

22

65

Total included in income statement
219

316

283

Remeasurement (losses)/gains of pension assets and post-retirement benefit obligations²
(724
)
68

1,313

Exchange adjustments
(97
)
(101
)
175

Total included in the statement of other comprehensive income
(821
)
(33
)
1,488

1.
For the year ended 31 March 2019, the estimated cost of equalising for the impact of GMP under the most cost-effective permissible methodology (Section A of NGUKPS – £17 million; Section B of NGUKPS – £12 million; NGEG of ESPS – £5 million).
2.
For the year ended 31 March 2020, this includes an actuarial loss from the purchase of buy-in policies of £0.7 billion.
The geographical split of pensions and other post-retirement benefits is as shown below:
 
UK Pensions
 
US Pensions
 
US other post-retirement benefits
 
2020

2019

2018

 
2020

2019

2018

 
2020

2019

2018

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Included within operating costs
 
 
 
 
 
 
 
 
 
 
 
Administration costs
9

6

6

 
6

7

9

 
1

1

1

Included within payroll costs
 
 
 
 
 
 
 
 
 
 
 
Defined benefit plan costs:
 
 
 
 
 
 
 
 
 
 
 
Current service cost
33

41

49

 
100

104

98

 
45

48

46

Past service cost – augmentations
—

5

1

 
—

—

—

 
—

—

—

Past service credit – redundancies
—

(7
)
(1
)
 
—

—

—

 
—

—

—

Special termination benefit cost – redundancies
2

55

9

 
—

—

—

 
—

—

—

Past service cost – plan amendments
—

34

—

 
—

—

—

 
—

—

—

 
35

128

58

 
100

104

98

 
45

48

46

Included within finance income and costs
 
 
 
 
 
 
 
 
 
 
 
Net interest (income)/cost
(31
)
(31
)
3

 
21

21

27

 
33

32

35

Total included in income statement
13

103

67

 
127

132

134

 
79

81

82

Remeasurement gains/(losses) of pension assets and post-retirement benefit obligations¹
143

57

1,177

 
(588
)
(14
)
27

 
(279
)
25

109

Exchange adjustments
—

—

—

 
(42
)
(42
)
75

 
(55
)
(59
)
100

Total included in the statement of other comprehensive income
143

57

1,177

 
(630
)
(56
)
102

 
(334
)
(34
)
209


1.
For the year ended 31 March 2020, UK pensions is stated after an actuarial loss from the purchase of buy-in policies of £0.7 billion.
Disclosure of reconciliation of the net defined benefit liability
Reconciliation of the net defined benefit liability
 
2020

2019

2018

 
£m

£m

£m

Opening net defined benefit liability
(218
)
(263
)
(1,933
)
Cost recognised in the income statement
(219
)
(316
)
(283
)
Remeasurement and foreign exchange effects recognised in the statement of other comprehensive income
(821
)
(33
)
1,488

Employer contributions
327

419

475

Other movements
(22
)
(25
)
(10
)
Closing net defined benefit liability
(953
)
(218
)
(263
)
The geographical split of pensions and other post-retirement benefits is as shown below:
 
UK pensions
 
US pensions
 
US other post-retirement benefits
 
2020

2019

2018

 
2020

2019

2018

 
2020

2019

2018

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Opening net defined benefit asset/(liability)
1,231

1,104

(156
)
 
(509
)
(552
)
(728
)
 
(940
)
(815
)
(1,049
)
Cost recognised in the income statement
(13
)
(103
)
(67
)
 
(127
)
(132
)
(134
)
 
(79
)
(81
)
(82
)
Remeasurement and foreign exchange effects recognised in the statement of other comprehensive income
143

57

1,177

 
(630
)
(56
)
102

 
(334
)
(34
)
209

Employer contributions
156

174

150

 
153

231

208

 
18

14

117

Other movements
3

(1
)
—

 
—

—

—

 
(25
)
(24
)
(10
)
Closing net defined benefit
asset/(liability)
1,520

1,231

1,104

 
(1,113
)
(509
)
(552
)
 
(1,360
)
(940
)
(815
)

Changes in the present value of defined benefit obligations (including unfunded obligations)
 
2020

2019

2018

 
£m

£m

£m

Opening defined benefit obligations
(24,939
)
(24,054
)
(26,230
)
Current service cost
(178
)
(193
)
(193
)
Interest cost
(751
)
(771
)
(775
)
Actuarial gains/(losses) – experience
148

(69
)
(100
)
Actuarial gains – demographic assumptions
452

266

671

Actuarial (losses)/gains – financial assumptions
(84
)
(619
)
174

Past service credit – redundancies
—

7

1

Special termination benefit cost – redundancies
(2
)
(55
)
(9
)
Past service cost – augmentations
—

(5
)
(1
)
Past service cost – plan amendments
—

(34
)
—

Medicare subsidy received
(22
)
(19
)
(21
)
Employee contributions
(1
)
(1
)
(1
)
Benefits paid
1,282

1,376

1,285

Exchange adjustments
(531
)
(768
)
1,145

Closing defined benefit obligations
(24,626
)
(24,939
)
(24,054
)
The geographical split of pensions and other post-retirement benefits is as shown below:
 
UK pensions
 
US pensions
 
US other post-retirement benefits
 
2020

2019

2018

 
2020

2019

2018

 
2020

2019

2018

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Opening defined benefit obligations
(14,276
)
(14,226
)
(15,645
)
 
(7,155
)
(6,582
)
(7,050
)
 
(3,508
)
(3,246
)
(3,535
)
Current service cost
(33
)
(41
)
(49
)
 
(100
)
(104
)
(98
)
 
(45
)
(48
)
(46
)
Interest cost
(335
)
(358
)
(366
)
 
(280
)
(277
)
(273
)
 
(136
)
(136
)
(136
)
Actuarial gains/(losses) – experience
113

(56
)
(95
)
 
(45
)
(52
)
(38
)
 
80

39

33

Actuarial gains – demographic assumptions
140

224

565

 
78

—

30

 
234

42

76

Actuarial gains/(losses) – financial assumptions
798

(568
)
604

 
(595
)
(24
)
(279
)
 
(287
)
(27
)
(151
)
Past service credit – redundancies
—

7

1

 
—

—

—

 
—

—

—

Special termination benefit cost – redundancies
(2
)
(55
)
(9
)
 
—

—

—

 
—

—

—

Past service cost – augmentations
—

(5
)
(1
)
 
—

—

—

 
—

—

—

Past service cost – plan amendments
—

(34
)
—

 
—

—

—

 
—

—

—

Medicare subsidy received
—

—

—

 
—

—

—

 
(22
)
(19
)
(21
)
Employee contributions
(1
)
(1
)
(1
)
 
—

—

—

 
—

—

—

Benefits paid
752

837

770

 
374

398

362

 
156

141

153

Exchange adjustments
—

—

—

 
(362
)
(514
)
764

 
(169
)
(254
)
381

Closing defined benefit obligations
(12,844
)
(14,276
)
(14,226
)
 
(8,085
)
(7,155
)
(6,582
)
 
(3,697
)
(3,508
)
(3,246
)
25. Pensions and other post-retirement benefits continued
Changes in the value of plan assets
 
2020

2019

2018

 
£m

£m

£m

Opening fair value of plan assets
24,793

23,858

24,375

Interest income
728

749

710

Return on plan assets (less than)/in excess of interest¹
(1,240
)
490

568

Administration costs
(16
)
(14
)
(16
)
Employer contributions
327

419

475

Employee contributions
1

1

1

Benefits paid
(1,279
)
(1,377
)
(1,285
)
Exchange adjustments
434

667

(970
)
Closing fair value of plan assets
23,748

24,793

23,858

Actual return on plan assets
(512
)
1,239

1,278

Expected contributions to plans in the following year
269

307

363

1.
For the year ended 31 March 2020, this includes an actuarial loss from the purchase of buy-in policies of £0.7 billion.
The geographical split of pensions and other post-retirement benefits is as shown below:
 
UK pensions
 
US pensions
 
US other post-retirement benefits
 
2020

2019

2018

 
2020

2019

2018

 
2020

2019

2018

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Opening fair value of plan assets
15,507

15,330

15,489

 
6,646

6,030

6,322

 
2,640

2,498

2,564

Interest income
366

389

363

 
259

256

246

 
103

104

101

Return on plan assets (less than)/
in excess of interest¹
(908
)
457

103

 
(26
)
62

314

 
(306
)
(29
)
151

Administration costs
(9
)
(6
)
(6
)
 
(6
)
(7
)
(9
)
 
(1
)
(1
)
(1
)
Employer contributions
156

174

150

 
153

231

208

 
18

14

117

Employee contributions
1

1

1

 
—

—

—

 
—

—

—

Benefits paid
(749
)
(838
)
(770
)
 
(374
)
(398
)
(362
)
 
(156
)
(141
)
(153
)
Exchange adjustments
—

—

—

 
320

472

(689
)
 
114

195

(281
)
Closing fair value of plan assets
14,364

15,507

15,330

 
6,972

6,646

6,030

 
2,412

2,640

2,498

Actual return on plan assets
(542
)
846

466

 
233

318

560

 
(203
)
75

252

Expected contributions to plans in the following year
137

148

140

 
125

150

221

 
7

9

2


1.
For the year ended 31 March 2020, UK pensions includes an actuarial loss from the purchase of buy-in policies of £0.7 billion.
Disclosure of asset allocations
Asset allocations
Within the asset allocations below, there is significant diversification across regions, asset managers, currencies and bond categories.
UK pensions
 
2020
 
2019
 
2018
 
Quoted

Unquoted

Total

 
Quoted

Unquoted

Total

 
Quoted

Unquoted

Total

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Equities
732

732

1,464

 
1,181

784

1,965

 
1,420

813

2,233

Corporate bonds
3,837

—

3,837

 
3,625

—

3,625

 
3,949

—

3,949

Government securities
2,051

—

2,051

 
6,114

—

6,114

 
5,629

—

5,629

Property
103

585

688

 
108

749

857

 
129

834

963

Diversified alternatives
—

893

893

 
—

771

771

 
99

690

789

Liability-matching assets
1,704
¹
3,278
²
4,982

 
1,751

—

1,751

 
1,174

—

1,174

Longevity swap
—

(51
)
(51
)
 
—

(35
)
(35
)
 
—

—

—

Cash and cash equivalents
29

222

251

 
40

259

299

 
211

215

426

Other (including net current assets and liabilities)
—

249

249

 
—

160

160

 
—

167

167

 
8,456

5,908

14,364

 
12,819

2,688

15,507

 
12,611

2,719

15,330

1.
Consists of pooled funds which invests mainly in fixed interest securities.
2.
Comprises the buy-in policies held by NGUKPS.
US pensions
 
2020
 
2019
 
2018
 
Quoted

Unquoted

Total

 
Quoted

Unquoted

Total

 
Quoted

Unquoted

Total

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Equities
467

2,043

2,510

 
533

2,178

2,711

 
577

1,954

2,531

Corporate bonds
1,640

518

2,158

 
1,329

425

1,754

 
1,085

413

1,498

Government securities
535

732

1,267

 
422

640

1,062

 
414

565

979

Property
—

307

307

 
—

316

316

 
—

279

279

Diversified alternatives
162

464

626

 
183

487

670

 
198

421

619

Infrastructure
—

121

121

 
—

99

99

 
—

77

77

Cash and cash equivalents
24

—

24

 
21

—

21

 
14

—

14

Other (including net current assets and liabilities)
(44
)
3

(41
)
 
(8
)
21

13

 
6

27

33

 
2,784

4,188

6,972

 
2,480

4,166

6,646

 
2,294

3,736

6,030

US other post-retirement benefits
 
2020
 
2019
 
2018
 
Quoted

Unquoted

Total

 
Quoted

Unquoted

Total

 
Quoted

Unquoted

Total

 
£m

£m

£m

 
£m

£m

£m

 
£m

£m

£m

Equities
353

1,037

1,390

 
404

1,184

1,588

 
412

1,110

1,522

Corporate bonds
15

—

15

 
19

—

19

 
24

—

24

Government securities
551

1

552

 
540

3

543

 
508

2

510

Diversified alternatives
162

161

323

 
175

166

341

 
161

144

305

Other¹
—

132

132

 
—

149

149

 
—

137

137

 
1,081

1,331

2,412

 
1,138

1,502

2,640

 
1,105

1,393

2,498


1.
Other primarily comprises insurance contracts.
Asset allocation strategy
Each plan’s investment strategy is formulated in order to target specific asset allocations and returns, and to manage risk. The asset allocation of the plans is as follows:
 
2020
 
2019
 
UK pensions
US pensions

US other post-retirement benefits
 
UK pensions
US pensions
US other post-retirement benefits
 
%
%

%
 
%
%
%
Equities
10.2
36.0

57.6
 
12.7
40.8
60.2
Corporate bonds
26.7
31.0

0.6
 
23.4
26.4
0.7
Government securities
14.3
18.2

22.9
 
39.4
16.0
20.6
Property
4.8
4.4

—
 
5.5
4.7
—
Diversified alternatives
6.2
9.0

13.4
 
5.0
10.1
12.9
Liability matching assets
34.3
—

—
 
11.1
—
—
Infrastructure
—
1.7

—
 
—
1.5
—
Cash and cash equivalents
1.8
0.3

—
 
1.9
0.3
—
Other
1.7
(0.6
)
5.5
 
1.0
0.2
5.6

100.0
100.0

100.0
 
100.0
100.0
100.0