Notes (forming part of the condensed consolidated interim financial statements)
|
22
|
Employee benefits (continued)
|
For the valuations at 31 December 2019 and 31 March 2019, the mortality assumptions used are the SAPS base table, in particular S2PxA tables and the
Light table for members of the Jaguar Executive Pension Plan.
For the Jaguar Pension Plan, scaling factors of 112 per cent to 118 per cent have
been used for male members and scaling factors of 101 per cent to 112 per cent have been used for female members.
For the Land Rover Pension
Scheme, scaling factors of 107 per cent to 112 per cent have been used for male members and scaling factors of 101 per cent to 109 per cent have been used for female members.
For the Jaguar Executive Pension Plan, an average scaling factor of 94 per cent has been used for male members and a scaling factor of 84 per cent
has been used for female members.
There is an allowance for future improvements in line with the CMI (2018) projections and an allowance for
long-term improvements of 1.25 per cent per annum.
For the valuations at 31 December 2018, the mortality assumptions used are the SAPS base
table, in particular S2PxA tables and the Light table for members of the Jaguar Executive Pension Plan. Scaling factors of 113 per cent to 119 per cent for males and 102 per cent to 114 per cent for females have been used for the
Jaguar Pension Plan, 108 per cent to 113 per cent for males and 102 per cent to 111 per cent for females for the Land Rover Pension Scheme, and 95 per cent for males and 85 per cent for females for the Jaguar Executive
Pension Plan. There is an allowance for future improvements in line with the CMI (2017) projections with an allowance for long-term improvements of 1.25 per cent per annum.
A past service cost of £4 million has been recognised in the nine month period ended 31 December 2019 as part of the Group restructuring
program that commenced in the year ended 31 March 2019.
A past service cost of £17 million was recognised in the nine month period ended
31 December 2018. This reflects a plan amendment for certain members as part of the Group restructuring programme and a past service cost following a High Court ruling in October 2018. As a result of the ruling, pension schemes are required to
equalise male and female members’ benefits for the inequalities within guaranteed minimum pension earned between 17 May 1990 and 5 April 1997. The Group historically made no assumptions for guaranteed minimum pension and therefore has
considered the change to be a plan amendment.
|
23
|
Commitments and contingencies
|
In the normal course of business, the Group faces claims and assertions by various parties. The Group assesses such claims and assertions and monitors the
legal environment on an ongoing basis, with the assistance of external legal counsel wherever necessary. The Group records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its
financial statements, if material. For potential losses that are considered possible, but not probable, the Group provides disclosure in the consolidated financial statements but does not record a liability unless the loss becomes probable. Such
potential losses may be of an uncertain timing and/or amount.
The following is a description of claims and contingencies where a potential loss is
possible, but not probable. Management believes that none of the contingencies described below, either individually or in aggregate, would have a material adverse effect on the Group’s financial condition, results of operations or cash flows.
Litigation and product related matters
The Group is
involved in legal proceedings, both as plaintiff and as defendant. There are claims and potential claims of £20 million (31 March 2019: £17 million, 31 December 2018: £16 million) against the Group which
management has not recognised, as settlement is not considered probable. These claims and potential claims pertain to motor accident claims, consumer complaints, employment and dealership arrangements, replacement of parts of vehicles and/or
compensation for deficiency in the services by the Group or its dealers.
The Group has provided for the estimated cost of repair following the passenger
safety airbag issue in the United States, China, Canada, Korea, Australia and Japan. The Group recognises that there is a potential risk of further recalls in the future; however, the Group is unable at this point in time to reliably estimate the
amount and timing of any potential future costs associated with this warranty issue.
Other taxes and duties
Contingencies and commitments include tax contingent liabilities of £46 million (31 March 2019: £41 million, 31 December 2018:
£42 million). These mainly relate to tax audits and tax litigation claims.
27