NOTES TO THE FINANCIAL STATEMENTS CONTINUED S S 25 PROVISIONS TR 26 PENSION OBLIGATIONS CONTINUED TR 2023 2022 A Defined Benefit scheme continued A £m £m TE On 18 December 2020, the Group agreed to increase the recovery plan contributions from £7.1m per annum to £15.0m per annum effective from TE Warranty Total Restructuring Warranty Total G G I I C 1 January 2021 through to 30 June 2027. Estimated contributions for the year ending 31 December 2024 are £15.0m, although this is subject to C At the beginning of the year 41.1 41.1 0.4 38.5 38.9 Rconsideration as part of the 6 April 2023 valuation, due by July 2024. R Charge for the year 29.7 29.7 – 30.9 30.9 E E P P O The 6 April 2020 valuation was updated by an independent qualified actuary to 31 December 2022 for the 2022 year-end disclosures in accordance with O Utilisation (27.4) (27.4) (0.4) (26.5) (26.9) R R Effect of movements in exchange rates 0.7 0.7 – (1.5) (1.5) TIAS 19R. The initial results of the 6 April 2023 valuation were updated by an independent qualified actuary to 31 December 2023 for the 2023 year-end T disclosures in accordance with IAS 19R. The ongoing valuation as at 6 April 2023 is due to be completed by July 2024 in line with the scheme-specific Release to the Income Statement (0.2) (0.2) – (0.3) (0.3) funding requirements of the Pensions Act 2004. As part of that valuation the Trustee and the Group will review the adequacy of the contributions being At the end of the year 43.9 43.9 – 41.1 41.1 G G O paid into the scheme. O VE VE R Following the High Court ruling in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others in June 2023, it was held that section 37 R NAN NAN Analysed as: of the Pension Schemes Act 1993 operates to make void any amendment to the rules of a contracted out pension scheme without written actuarial Current 20.2 20.2 – 18.6 18.6 confirmation under Regulation 42(2) of the Occupational Pension Schemes (Contracting Out) Regulations 1996, in so far that the amendment relates C C Non-current 23.7 23.7 – 22.5 22.5 Eto members’ section 9(2B) rights. An appeal is due to be heard on 26 June 2024 which, it is hoped, will provide further clarity on the issue. E 43.9 43.9 – 41.1 41.1 The Trustees of the Scheme and the Plan (collectively the “Pension Schemes”) have confirmed that; F F I I In the year ended 31 December 2020, the Group launched a consultation process to reduce employee numbers reflecting lower than originally planned NAN– The Pension Schemes were contracted out of the additional state pension between 1997 and 2016; and NAN production volumes resulting in an exceptional charge to the Consolidated Income Statement in 2020. The restructuring was substantially completed – It was possible that amendments were made to the Pension Schemes that may have impacted on the members’ section 9(2B) rights. C C during 2021, with the final amounts being utilised during the year ended 31 December 2022. IALThe Trustees of the Pension Schemes and the Directors work closely together and take appropriate legal and professional advice when making IAL The warranty provision is calculated based on the level of historical claims and is expected to be substantially utilised within the next three years. Samendments to the Pension Schemes. However, at 31 December 2023, it is not currently possible to determine whether any amendments to section 9(2B) S T T A rights were made to the Pension Schemes that were not in accordance with section 37 of the Pension Schemes Act 1993 requirements. Further, it is not A 26 PENSION OBLIGATIONS T T E currently possible to reliably estimate the possible impact to the defined benefit obligations of the Pension Schemes if these amendments were not in E Defined contribution scheme M M E accordance with section 37 of the Pension Schemes Act 1993 requirements. E The Group opened a Defined Contribution scheme in June 2011. The total expense relating to this scheme in the year ended 31 December 2023 was N N T T £20.9m (2022: £17.6m). Outstanding contributions at the 31 December 2023 were £1.9m (2022: £1.5m). Contributions are made by the Group to other SAssumptions S pension arrangements for certain employees of the Group. The principal assumptions used by the actuary were: F 31 December 31 December F Defined Benefit scheme U 2023 2022 U R R The Group operates a Defined Benefit Pension Scheme. During 2017, it was agreed and communicated to its members that the scheme’s benefits would be T T H Discount rate 4.7% 4.85% H amended from a final pensionable salary basis to a career average revalued earnings (CARE) basis with effect from 1 January 2018. The scheme was closed E E R Rate of increase in salaries N/A N/A R to new entrants on 31 May 2011. The benefits of the existing members were not affected by the closure of the scheme. The assets of the scheme are held INFRate of revaluation in deferment 2.4% 2.45% INF separately from those of the Group. On 31 January 2022, the scheme was closed to future accrual resulting in a curtailment loss of £2.8m (note 5). OR Rate of increase in pensions in payment attracting Limited Price Indexation 2.85% 2.95% OR In constructing the investment strategy for the scheme, the Trustees take due account of the liability profile of the scheme along with the level of disclosed MExpected return on scheme assets 4.7% 4.85% M surplus or deficit. The investment strategy is reviewed on a regular basis and, at a minimum, on a triennial basis to coincide with actuarial valuations. The A A T T I RPI Inflation assumption 2.9% 3.00% I primary objectives are to provide security for all beneficiaries and to achieve long-term growth sufficient to finance any pension increases and ensure the ONCPI Inflation assumption 2.4% 2.45% ON residual cost is held at a reasonable level. The pension scheme operates under the regulatory framework of the Pensions Act 2004. The Trustee has the primary responsibility for governance of the The Group’s inflation assumption reflects its long-term expectations and has not been amended for short-term variability. The mortality assumptions allow scheme. Benefit payments are from Trustee-administered funds and scheme assets are held in a Trust which is governed by UK regulation. The Trustee for expected increases in longevity. The ‘current’ disclosures below relate to assumptions based on the longevity (in years) following retirement at each comprises representatives of the Group and members of the scheme and an independent, professional Trustee was appointed during 2019. reporting date, with “future” relating to an employee retiring in 2043 (2023 assumptions) or 2042 (2022 assumptions). The pension scheme exposes the Group to the following risks: Projected life expectancy at age 65 – Asset volatility – the scheme’s Statement of Investment Principles targets around 22% return-enhancing assets and 78% risk-reducing assets. The Trustee Future Current Future Current monitors the appropriateness of the scheme’s investment strategy, in consultation with the Group, on an ongoing basis. Currently Currently Currently Currently aged 45 aged 65 aged 45 aged 65 – Inflation risk – the majority of benefits are linked to inflation and so increases in inflation will lead to higher liabilities (although in most cases there are 2023 2023 2022 2022 caps in place which protect against extreme inflation). Male 22.3 21.1 22.5 21.3 – Longevity – increases in life expectancy will increase the period over which benefits are expected to be payable, which increases the value placed on the Female 25.1 23.7 25.3 23.9 scheme’s liabilities. – Changes in bond yields – A decrease in corporate bond yields will increase the value placed on the Scheme liabilities, although this will be partially offset by an increase in the value of the Scheme’s bond holdings. Years The projected unit method has been used to determine the liabilities. Average duration of the liabilities in years as at 31 December 2023 19 Average duration of the liabilities in years as at 31 December 2022 19 The pension cost is assessed in accordance with the advice of an independent qualified actuary. The latest completed actuarial valuation of the scheme had an effective date of 6 April 2020. The assumptions that make the most significant effect on the valuation are those relating to the rate of return on investments, the rate of increase in salaries and pensions and expected longevity. It was assumed that the investment return would be based on the Bank of England gilt curve plus 0.5% per annum and that salary increases would be equivalent to CPI inflation plus 1.0% per annum. At the 6 April 2020 actuarial valuation, the actuarial value of the scheme assets was £314.6m, sufficient to cover 76% of the benefits which had accrued to members. ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023 187