v3.26.1
Pensions and other post-retirement benefits (Tables)
 12 Months Ended
Mar. 31, 2026
Employee Benefits [Abstract]  
Disclosure of actuarial assumptions The Company has applied the following financial assumptions in assessing DB liabilities:
UK pensions
US pensions
US other post-retirement
benefits
2026
2025
2024
2026
2025
2024
2026
2025
2024
%
%
%
%
%
%
%
%
%
Discount rate – past
service
6.00
5.73
4.87
5.60
5.50
5.15
5.60
5.50
5.15
Discount rate – future
service
6.35
5.95
4.92
5.60
5.50
5.15
5.60
5.50
5.15
Rate of increase in RPI
– past service
3.17
2.99
3.05
n/a
n/a
n/a
n/a
n/a
n/a
Rate of increase in RPI
– future service
3.06
2.85
2.92
n/a
n/a
n/a
n/a
n/a
n/a
Salary increases
3.32
3.08
3.10
4.50
4.50
4.50
4.50
4.50
4.50
Initial healthcare cost
trend rate
n/a
n/a
n/a
n/a
n/a
n/a
7.10
7.80
7.10
Ultimate healthcare
cost trend rate
n/a
n/a
n/a
n/a
n/a
n/a
4.50
4.50
4.50
The table below sets out the projected life expectancies adopted for the UK and US pension arrangements:
UK pensions
US pensions
2026
2025
2024
2026
2025
2024
years
years
years
years
years
years
Assumed life expectation for a
retiree aged 65
Males
21.9
21.5
21.5
21.9
21.8
21.6
Females
24.2
23.9
23.5
23.9
23.8
23.9
In 20 years:
Males
22.9
22.4
22.6
23.5
23.4
23.3
Females
25.6
25.3
24.9
25.5
25.4
25.5
The table
below summarises the split of DB obligations by status for each category of plan:
UK pensions
US pensions
US other
post-retirement benefits
2026
2025
2026
2025
2026
2025
%
%
%
%
%
%
Active members
10
11
42
40
30
28
Deferred members
7
7
10
10
—
—
Pensioner members
83
82
48
50
70
72
Disclosure of amounts recognised in the statement of financial position Amounts recognised in the consolidated statement of financial position
The geographical split of pensions and other post-retirement benefits is as shown below:
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Present value of funded obligations
(9,319)
(9,424)
(4,009)
(4,508)
(1,770)
(2,222)
(15,098)
(16,154)
Fair value of plan assets
10,441
10,603
4,608
5,180
2,731
2,658
17,780
18,441
1,122
1,179
599
672
961
436
2,682
2,287
Present value of unfunded obligations
(51)
(51)
(186)
(196)
(10)
—
(247)
(247)
Other post-employment liabilities
—
—
—
—
(44)
(47)
(44)
(47)
1,071
1,128
413
476
907
389
2,391
1,993
Restrictions on asset recognised
—
—
—
—
(244)
(77)
(244)
(77)
Net defined benefit asset
1,071
1,128
413
476
663
312
2,147
1,916
Represented by:
Liabilities
(51)
(51)
(186)
(196)
(123)
(326)
(360)
(573)
Assets
1,122
1,179
599
672
786
638
2,507
2,489
1,071
1,128
413
476
663
312
2,147
1,916
Disclosure of amounts recognised in the income statement and statement of other comprehensive income Amounts recognised in the income statement and statement of other comprehensive income
The expense or income arising from all Group retirement benefit arrangements recognised in the Group income statements is shown below:
2026
2025
2024
£m
£m
£m
Included within operating costs
Administration costs
27
22
22
Included within payroll costs
Defined benefit plan costs:
Current service cost1
123
138
143
Past service cost – augmentations and redundancies
2
1
9
Gains on settlement
(25)
—
(30)
100
139
122
Included within finance income and costs
Net interest income adjusted for change to irrecoverable surplus
(114)
(98)
(100)
Total expense included in income statement
13
63
44
Exchange losses
(14)
(20)
(6)
Remeasurement gains/(losses) of pension assets and post-retirement benefit obligations
287
(29)
(218)
Adjustments for restrictions on the defined benefit asset
(155)
(77)
—
Total gain/(loss) included in the statement of other comprehensive income
118
(126)
(224)
1.Of the current service cost, £33 million (2025: £34 million; 2024: £35 million) has been capitalised to property, plant and equipment.
25. Pensions and other post-retirement benefits cont.
Amounts recognised in the income statement and statement of other comprehensive income cont.
The geographical split of pensions and other post-retirement benefits is shown below:
UK pensions
US pensions
US other post-retirement benefits
2026
2025
2024
2026
2025
2024
2026
2025
2024
£m
£m
£m
£m
£m
£m
£m
£m
£m
Included within operating costs
Administration costs
19
14
13
6
6
7
2
2
2
Included within payroll costs
Defined benefit plan costs:
Current service cost
34
45
45
62
68
72
27
25
26
Past service cost – augmentations and redundancies
2
1
9
—
—
—
—
—
—
Gains on settlement
—
—
—
(25)
—
(30)
—
—
—
36
46
54
37
68
42
27
25
26
Included within finance income and costs
Net interest income adjusted for change to irrecoverable surplus
(58)
(68)
(84)
(22)
(19)
(13)
(34)
(11)
(3)
Total (income)/expense included in income statement
(3)
(8)
(17)
21
55
36
(5)
16
25
Exchange losses
—
—
—
(7)
(10)
(5)
(7)
(10)
(1)
Remeasurement (losses)/gains of pension assets and post-retirement benefit obligations
(156)
(257)
(474)
(54)
106
99
497
122
157
Adjustments for restrictions on the defined benefit asset
—
—
—
—
—
—
(155)
(77)
—
Total (loss)/gain included in the statement of other comprehensive income
(156)
(257)
(474)
(61)
96
94
335
35
156
Schedule of reconciliation of the net defined benefit asset (liability) Reconciliation of the net defined benefit asset
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Opening net defined benefit asset
1,128
1,261
476
408
389
145
1,993
1,814
Income/(cost) recognised in the income statement before adjustment for irrecoverable surplus
3
8
(21)
(55)
16
(16)
(2)
(63)
Remeasurement and foreign exchange effects recognised in the statement of other comprehensive income
(156)
(257)
(61)
96
491
112
274
(49)
Employer contributions
93
112
19
27
8
143¹
120
282
Other movements
3
4
—
—
3
5
6
9
1,071
1,128
413
476
907
389
2,391
1,993
Restrictions on the defined benefit asset
—
—
—
—
(244)
(77)
(244)
(77)
Closing net defined benefit asset
1,071
1,128
413
476
663
312
2,147
1,916
1.In addition to the regular employer contributions that are described above, the Company made a one-off contribution of £133 million to the OPEB schemes in the prior year.
25. Pensions and other post-retirement benefits cont.
Changes in the present value of defined benefit obligations (including unfunded obligations)
The table below shows the movement in defined benefit obligations across our DB plans over the year.
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Opening defined benefit obligations
(9,475)
(10,521)
(4,704)
(4,912)
(2,222)
(2,434)
(16,401)
(17,867)
Current service cost
(34)
(45)
(62)
(68)
(27)
(25)
(123)
(138)
Interest cost
(452)
(533)
(241)
(246)
(92)
(120)
(785)
(899)
Actuarial (losses)/gains – experience
(40)
(41)
(88)
(4)
(5)
116
(133)
71
Actuarial gains/(losses) – demographic assumptions
(98)
(74)
—
(22)
419
19
321
(77)
Actuarial gains/(losses) – financial assumptions
11
989
31
156
(15)
36
27
1,181
Past service cost – augmentations and redundancies
(2)
(1)
—
—
—
—
(2)
(1)
Liabilities extinguished on settlements
—
—
468
—
—
—
468
—
Medicare subsidy received
—
—
—
—
(37)
(31)
(37)
(31)
Employee contributions
(5)
(5)
—
—
—
—
(5)
(5)
Benefits paid
725
756
280
282
142
165
1,147
1,203
Exchange adjustments
—
—
121
110
57
52
178
162
Closing defined benefit obligations
(9,370)
(9,475)
(4,195)
(4,704)
(1,780)
(2,222)
(15,345)
(16,401)
Changes in the value of plan assets
The table below shows the movement in pension assets across our DB plans over the year.
UK pensions
US pensions
US other
post-retirement benefits
Total
2026
2025
2026
2025
2026
2025
2026
2025
£m
£m
£m
£m
£m
£m
£m
£m
Opening fair value of plan assets
10,603
11,782
5,180
5,320
2,658
2,631
18,441
19,733
Interest income
510
601
263
265
137
131
910
997
Return on plan assets (less than)/in excess of interest1
(29)
(1,131)
3
(24)
98
(49)
72
(1,204)
Administration costs
(19)
(14)
(6)
(6)
(2)
(2)
(27)
(22)
Assets distributed on settlements
—
—
(443)
—
—
—
(443)
—
Employer contributions
93
112
19
27
8
143
120
282
Employee contributions
5
5
—
—
—
—
5
5
Benefits paid
(722)
(752)
(280)
(282)
(105)
(134)
(1,107)
(1,168)
Exchange adjustments
—
—
(128)
(120)
(63)
(62)
(191)
(182)
Closing fair value of plan assets
10,441
10,603
4,608
5,180
2,731
2,658
17,780
18,441
Actual return on plan assets
481
(530)
266
241
235
82
982
(207)
Expected contributions to plans in the following year
55
89
28
19
10
—
93
108
1.For the year ended 31 March 2026 this included actuarial losses of £60 million resulting from the purchase of a bulk annuity policy with Rothesay.
Disclosure of asset allocations The allocation of assets by asset class is set out below. Within these asset allocations there is significant diversification across regions, asset managers, currencies and bond categories.
UK pensions
2026
2025
2024
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Quoted
Unquoted
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Equities
842
103
945
716
123
839
576
153
729
Corporate bonds
1,018
—
1,018
1,338
(1)
1,337
1,910
—
1,910
Government securities and liability-driven investments
—
3,378
3,378
—
3,938
3,938
—
5,259
5,259
Property1
—
403
403
—
451
451
—
679
679
Diversified alternatives
412
231
643
381
428
809
669
572
1,241
Bulk annuity policies
—
4,059
4,059
—
3,239
3,239
—
2,060
2,060
Longevity swap
—
—
—
—
—
—
—
(94)
(94)
Cash and cash equivalents
—
—
—
1
—
1
3
—
3
Other (including net current assets and liabilities)
—
(5)
(5)
—
(11)
(11)
—
(5)
(5)
2,272
8,169
10,4412
2,436
8,167
10,6032
3,158
8,624
11,7822
1.The allocation in property includes £284 million (2025: £294 million, 2024: £288 million) of investments in forestry funds.
2.The fair value of plan assets set out above includes employer-related investment exposure of £nil (2025: £nil, 2024: £44 million). The investment strategies for some of the DB plans use repurchase agreements to increase market exposure of their liability-driven investments, with the fair
value of these instruments totalling approximately £2.5 billion at 31 March 2026 (2025: £2.9 billion, 2024: £2.7 billion).
US pensions
2026
2025
2024
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Quoted
Unquoted
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Equities
—
848
848
—
887
887
99
1,224
1,323
Corporate bonds
1,682
339
2,021
1,955
401
2,356
1,987
403
2,390
Government securities
621
460
1,081
737
467
1,204
360
444
804
Property
—
163
163
—
196
196
—
237
237
Diversified alternatives
—
357
357
—
384
384
54
502
556
Cash and cash equivalents
130
—
130
152
—
152
9
—
9
Other (including net current assets and liabilities)
4
4
8
(2)
3
1
1
—
1
2,437
2,171
4,608
2,842
2,338
5,180
2,510
2,810
5,320
US other post-retirement benefits
2026
2025
2024
Quoted
Unquoted
Total
Quoted
Unquoted
Total
Quoted
Unquoted
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
Equities
36
553
589
31
522
553
37
524
561
Corporate bonds
1,217
161
1,378
1,350
47
1,397
1,351
46
1,397
Government securities
455
1
456
441
1
442
410
1
411
Diversified alternatives
121
—
121
103
—
103
92
9
101
Other (including insurance contracts)
2
185
187
—
163
163
—
161
161
1,831
900
2,731
1,925
733
2,658
1,890
741
2,631
The approximate investment allocations for our plans at 31 March 2026 are as follows:
UK pensions
US pensions
US other post-
retirement benefits
%
%
%
Return-seeking assets
19
30
26
Liability-matching assets
81
70
74
Disclosure of most significant risks associated with DB plans The most significant risks associated with the DB plans are as follows:
Main risks
Description and mitigation
Investment risk
The plans invest in a variety of asset classes, with actual returns likely to differ from the
underlying discount rate adopted, impacting on the funding position of the plan through
the net balance sheet asset or liability. Each plan seeks to balance the level of
investment return required with the risk that it can afford to take, to design the most
appropriate investment portfolio.
Changes in
bond yields
Liabilities will fluctuate as yields change. Volatility of the net balance sheet asset or
liability is controlled through liability-matching strategies. The investment strategies
allow for the use of synthetic as well as physical assets to be used for hedging.
Inflation risk
Changes in inflation will affect current and future pensions but are partially mitigated
through investing in inflation-matching assets and hedging instruments as well as bulk
annuity policies. The investment strategies allow for the use of synthetic as well as
physical assets to be used for hedging.
Member
longevity
Improvements in life expectancy will lead to pension payments being paid for longer
than expected and benefits ultimately being more expensive. This risk has been partly
mitigated by the investment in bulk annuity policies for NGEG of ESPS and NGUKPS.
Counterparty
risk
This is managed by having a diverse range of counterparties and through having a
strong collateralisation process. Measurement and management of counterparty risk
is delegated to the relevant investment managers. For our bulk annuity policies, various
termination provisions were included in the contracts, managing our exposure to
counterparty risk. The insurers’ operational performance and financial strength are
monitored on a regular basis.
Default risk
Debt investments are predominantly made in regulated markets in assets considered
to be of investment grade. Where investments are made either in non-investment grade
assets or outside of regulated markets, investment levels are kept to prudent levels and
subject to agreed ranges, to control the risk.
Liquidity risk
The pension plans hold sufficient cash to meet benefit requirements, with other
investments being held in liquid or realisable assets to meet unexpected cash flow
requirements. These could include collateral calls relating to the plans’ liability-matching
assets which could result from extreme market movements. Should the plans not have
sufficient liquidity to meet cash flow requirements, they could be forced to take sub-
optimal investment decisions such as selling assets at a reduced price. The plans
generally do not borrow money, or act as guarantor, to provide liquidity to other parties.
Currency risk
Fluctuations in the value of foreign denominated assets due to exposure to currency
exchange rates are managed through currency hedging overlay and currency hedging
carried out by some of the investment managers.