The Group operates both defined benefit and defined contribution pension schemes. These pension schemes are funded and contributions are made to separate trustee-administered funds. The assets of the pension schemes are held separately from the Group.

The pension charge for the defined contribution pension schemes for the year is £17.2m (2005: £9.4m). In 2006, employer contributions to defined contribution pension schemes included £6.2m made through a salary sacrifice arrangement.

In 2005 there were 2 main defined benefit pension schemes where the Group was the sole employing sponsor: The Capita Pension and Life Assurance Scheme (Capita scheme) and The Eastgate Assistance Retirement Benefit Scheme (Eastgate scheme). On 1 April 2006 the assets and liabilities of the Eastgate scheme were transferred into the Capita scheme. Accordingly, the comparative figures for 2005 relate to the Capita scheme combined with the Eastgate scheme. Grouped together under 'Other schemes' are smaller arrangements: 1 scheme where the Group is the sole employing sponsor; allocated sections of 2 multi-employer schemes in which the Group is a participating employer; and several schemes to which the Group zmakes contributions under Admitted Body status to our customers' defined benefit pension schemes in respect of certain TUPE employees.

For the Admitted Body schemes, which are all part of the Local Government Pension Scheme, the Group will only participate in the schemes for a finite period up to the end of the contracts. The Group is required to pay regular contributions as decided by the respective Scheme Actuary and as detailed in each schemes' Schedule of Contributions. In addition, for some schemes, the Group will be required to pay any deficit (as determined by the respective Scheme Actuary) that is remaining for the notional section of the scheme at the end of the contract.

The assets and liabilities of the defined benefit pension schemes (excluding additional voluntary contributions) as at 31 December are:

The pension schemes have not invested in any of the Group's own financial instruments nor in properties or other assets used by the Group.

The amounts recognised in the consolidated income statement and in the consolidated statement of recognised income and expense for the year are analysed as follows:

Pension contributions are determined based on the advice of qualified independent actuaries. In 2006, employer contributions to defined benefit pension schemes included £3.0m made through a salary sacrifice arrangement.

Formal valuations of the Capita scheme and the FPS scheme were carried out as at 6 April 2005 and 31 March 2005 respectively. For the other schemes, the latest formal valuations were carried out as at either 31 March 2004 or 1 April 2004. These valuations are updated by qualified independent actuaries at each balance sheet date. Scheme assets are stated at their market valuations at each respective balance sheet date and overall expected rates of return are established by considering published brokers' forecasts for each category of scheme assets.

¹ This does not apply to the Admitted Body schemes.
² There are other levels of pension increase which apply to particular periods of membership.
³ In 2005, the post retirement mortality assumption for the Eastgate scheme for both current and future pensioners was '90% of PA92 (C=2020)'.
⁴ This does not apply to the Admitted Body Schemes where no allowance for the extended limits is taken.
⁵ For 2005 the assumption was that the maximum permissible tax-free cash sum applicable would be taken.

Changes in the present value of the defined benefit pension obligations are analysed as follows:

The defined benefit obligation comprises £470.6m (2005: £438.4m) arising from schemes that are wholly or partly funded.

Changes in the fair value of scheme assets are analysed as follows:

The total employer contributions to the defined benefit pension schemes in 2007 are estimated to be £16.5m in respect of the Capita scheme and £3.7m in respect of the 'Other' schemes.

The service costs have been determined using the projected unitmethod. As some of the sections are closed to new entrants, the service cost (expressed as a % of pensionable salaries) would be expected to increase as the average age of themembership increases.

¹ The assets and liabilities of the FPS Defined Benefit Scheme are included as a business combination. The figures have been determined as of 1 September 2005 (the date on which the Group acquired FPS).

History of experience gains and losses:

The cumulative amount of actuarial losses recognised since 1 January 2004 in the consolidated statement of recognised income and expense is £10.4m (2005: £23.4m). The Directors are unable to determine how much of the pension scheme deficit recognised on transition to IFRS of £77.8m (of which an IFRS transitional adjustment of £67.7m was taken directly to equity) is attributable to actuarial gains and losses since inception of those pension schemes. Consequently, the Directors are unable to determine the amount of actuarial gains and losses that would have been recognised in the consolidated statement of recognised income and expense before 1 January 2004.