Notes to the accounts
30 Pension commitments
The Group established its own pension scheme with effect from 1 April 1998, and all the members, pensioners and former members with preserved benefits of the Group's sub-fund of the Water Companies' Association Pension Scheme were transferred to the new scheme on equivalent terms. The Group's share of the Water Companies' Association Pension Scheme's assets were transferred to the new scheme. This reorganisation of the Group's pension arrangements has not had significant financial effect.

The Scheme provides members with benefits related to pay and service at rates that are defined under its rules. To finance those benefits, assets, held separately from those of the Group, were accumulated in the Scheme.

The Group is liable to pay contributions to the Scheme at rates recommended by the Scheme's Actuary based on regular reviews of the financial position of the Scheme. The first valuation of the Scheme was carried out as at 31 March 1999. It was agreed no contribution should be made to the Scheme because of the large surplus of assets over accrued liabilities.

The cost for the year was £nil (1999: £nil) after allowing for the reduction of £1,390,000 (1999: £1,025,000) in cost resulting from the amortisation over members' estimated remaining service lives of the surplus of the Scheme's assets over its accrued liabilities.

The most significant assumptions used for determining pension costs in the latest actuarial valuation at 31 March 1999 were:
Valuation method
Projected unit
Rate of return on investments
6% per annum before retirement
4.75% per annum after retirement
Rate of increase in pay 4.25% per annum plus an age-related scale of merit increases
Rate of increase in pensions in payment
2.75% per annum
The assets were taken at their market value at the valuation date.

This actuarial valuation shows that the market value of the assets was £74.2 million which represented 137% of the value of benefits that had accrued to the Group's pensioners, deferred pensioners and members, based on past service and allowing for assumed future pay and pension increases. There was a surplus of assets over accrued liabilities at 31 March 1999 of £19.9 million.

The Group also participates in other pension arrangements for a number of employees. Contributions to those schemes were £235,000 (1999: £295,000).