The Group sponsors defined benefit arrangements in certain countries, the most material being a defined benefit pension plan in the Netherlands. This is a funded career average pay arrangement, where pensionable salary is subject to a cap. The arrangement is financed through an insurance contract.

The other defined benefit pension arrangements operated by the Company are unfunded: Jubilee awards of £182,000 (2016: £187,000) for employees in the Netherlands are recognised within other payables in the Consolidated Statement of Financial Position as at 30 June 2017.

The pension cost relating to the defined benefit pension arrangement in the Netherlands is assessed in accordance with the advice of an independent qualified actuary using the projected unit method.

The major actuarial assumptions used by the actuary were:

20172016
Discount rate2.10%1.50%
Inflation assumption1.80%1.80%
Salary growth2.30%2.30%
Rate of increase in accrued pensions of active members0.80%1.00%
Rate of increase in pensions in payment0.00%0.00%
Rate of increase in pensions in deferment0.00%0.00%

In valuing the liabilities of the pension scheme at 30 June 2017 and 30 June 2016, mortality assumptions have been made as indicated below.

The mortality assumption follows the Prognosetafel AG2016 (2016: Prognosetafel AG2014) mortality tables with an experience adjustment in line with the ES-P2 tables as published by the Dutch Alliance of Insurers.

Assumed life expectations on retirement ageMaleFemale
Retiring today (age 67)19.621.8
Retiring in 20 years (age 47)21.924.2

The assumptions used by the Group are the best estimates chosen by the Directors from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice.

2017
£000
2016
£000
Present value of funded defined benefit obligations(17,907)(17,360)
Fair value of scheme assets14,89813,639
Net pension scheme deficit(3,009)(3,721)

Movements in Present Value of Defined Benefit Obligations

2017
£000
2016
£000
Defined benefit obligation at beginning of the period17,3607,210
Service cost1,644867
Interest cost269211
Employee contributions206171
Benefits paid(20)(6)
Remeasurements:
— (Gain)/loss from change in financial assumptions(3,429)4,814
— Loss from change in demographic assumptions122
— Experience losses6582,034
Foreign exchange difference on translation1,0972,059
Defined benefit obligations at end of the period17,90717,360

Movements in Fair Value of Scheme Assets

2017
£000
2016
£000
Fair value of scheme assets at beginning of the period13,6395,899
Interest income230194
Additional charges(136)(124)
Employer contributions670581
Employee contributions206171
Benefits paid(20)(6)
Remeasurements:
— Premium adjustment48362
— Return on plan assets(1,058)5,235
Foreign exchange difference on translation8841,627
Fair value of scheme assets at end of the period14,89813,639

Analysis of the Amount Charged to the Income Statement

2017
£000
2016
£000
Service cost1,644867
Net interest cost3917
Additional charges136124
Net pension expense1,8191,008

Cumulative Analysis of the Amount Charged to the Other Statement of Consolidated Income

2017
£000
2016
£000
Amounts charged in previous periods2,5701,019
Actuarial (gain)/loss on defined benefit pension scheme(2,074)1,551
Net pension expense4962,570

Scheme Assets

The Group's defined benefit pension scheme in the Netherlands is financed through an insurance contract. Under this contract, a market price for the assets in respect of this insurance contract is not available. In accordance with IAS 19 for such insurance policies, an asset value has been calculated by discounting expected future cash flows. The discount rate used for this calculation reflects the risk associated with the scheme assets and the maturity or expected disposal date of those assets.

The fair value of the scheme's assets is as follows:

2017
£000
2016
£000
Total fair value of assets14,89813,639
Actual return on scheme assets230194
Discount rate used to value assets2.10%1.50%

The long term rate of return on pension plan assets is determined by aggregating the expected return for each asset class over the strategic asset allocation as at the year end. This rate of return is then adjusted for any expected profit sharing based on market related returns on notional loans.

The scheme's assets do not include any of the Group's own financial instruments or any property occupied by or other assets used by the Group.

The employer has a contract with the insurance company Nationale-Nederlanden to cover the committed pension benefits.

The employer contributions expected to be paid into the scheme for the next financial period amount to £680,069 (2016: £630,000).

History of Amounts in the Current Period

2017
£000
2016
£000
2015
£000
2014
£000
2013
£000
Present value of funded defined benefit obligations(17,907)(17,360)(7,210)(5,927)(4,722)
Fair value of scheme assets14,89813,6395,8994,8573,726
Deficit in the scheme(3,009)(3,721)(1,311)(1,070)(996)

The sensitivity of the defined benefit obligation to change in the weighted principal assumptions is:

Impact on defined benefit obligation
Change in assumptionIncrease in assumptionDecrease in assumption
Discount rate0.25%Decrease by 6.8%Increase by 7.4%
Salary growth rate0.25%Increase by 0.7%Decrease by 0.7%
Inflation rate0.25%Increase by 0.2%Decrease by 0.3%
Increase by 1 year
in assumption
Decrease by 1 year
in assumption
Life expectancyIncrease by 2.7%Decrease by 2.7%

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method has been applied as when calculating the pension liability recognised within the statement of financial position.