182 Vodafone Group Plc Annual Report 2025
Strategic report
Governance
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25. Post employment benefits (continued) Funding plans are individually agreed for each of the Group’s other defined benefit plans with the respective trustees or governing board, taking into account local regulatory requirements. It is expected that ordinary contributions of €2 0 million will be paid into the Group’s defined benefit plans during the year ending 31 March 2026. The Group has also provided certain guarantees in respect of the Vodafone UK plan; further details are provided in note 29 ‘Contingent liabilities and legal proceedings’ to the consolidated financial statements. The investment strategy for the UK plans is controlled by the trustees in consultation with the Group and the plans have no direct investments in the Group’s equity securities or in property or other assets currently used by the Group. The allocation of assets between different classes of investment is reviewed regularly and is a key factor in the trustee investment policy. The trustees aim to achieve the plan’s investment objectives through investing partly in a diversified mix of growth assets which, over the long term, are expected to grow in value by more than the low-risk assets. The low-risk assets include cash and gilts, inflation and interest rate hedging and in-substance insured pensioner annuity policies in both the Vodafone Section and CWW Sections of the Vodafone UK plan and an insured pensioner annuity policy in the Vodafone Ireland Pension Plan. A number of investment managers are appointed to promote diversification by assets, organisation and investment style and current market conditions and trends are regularly assessed, which may lead to adjustments in the asset allocation. The key risks in relation to the Vodafone UK plan are set out below, alongside a summary of the steps taken to
Actuarial assumptions The Group’s plan liabilities are measured using the projected unit credit method using the principal actuarial assumptions set out below: 2025 % 2024 % 2023 % Weighted average actuarial assumptions used at 31 March 1 Rate of inflation 2 2.8 2.9 3.0 Rate of increase in salaries 3 3.1 3.0 3.0 Discount rate 5.1 4.5 4.5 Notes: 1. Figures shown represent a weighted average assumption of the individual plans. 2. The rate of increase in pensions in payment and deferred revaluation are dependent on the rate of inflation. 3. Relates only to schemes open to future accrual primarily in Germany, Ireland and India. Mortality assumptions used are based on recommendations from the individual local actuaries which include adjustments for the experience of the Group where appropriate. The Group’s largest plan is the Vodafone UK plan. Life expectancies assumed for the UK plans are 22.5/24.3 years (2024: 22.6/24.3 years) for a male/female pensioner currently aged 65 years and 23.5/25.4 years (2024: 23.6/25.4 years) from age 65 for a male/female non-pensioner member currently aged 40. Charges made to the consolidated income statement and consolidated statement of comprehensive income (‘SOCI’) on the basis of the assumptions stated above are shown in the table below. 2025 2024 2023 €m €m €m Current service cost 36 42 44 Net past service cost 15 – – Net interest (income) included within staff costs – (8) (7) Total net cost included within staff costs 51 34 37 Net interest (income) included in financing costs (4) – – Total net cost included within profit and loss 47 34 37 Actuarial losses recognised in the SOCI 12 77 213
mitigate each risk Risk description
Mitigation
Investment strategy risk Underperformance of the investment strategy relative to the changes in the Vodafone UK Plan's liabilities, which are sensitive to interest rates and inflation, potentially leading to shortfalls in meeting pension obligations. Longevity risk Pensions paid by the Vodafone UK Plan are guaranteed for life, and, therefore, if members are expected to live longer, the
The plan adopts a liability driven investment framework, by investing in assets that aim to match the characteristics of the Vodafone UK Plan's liabilities. This can help to hedge the risk of future changes in interest rate and inflation and also
reduce balance sheet volatility.
The Vodafone UK Plan's funding targets include a margin for prudence to reflect uncertainty in future life expectancy. Both sections of the Vodafone UK Plan have pensioner annuity policies which help reduce exposure to changes in longevity. Longevity risk is also monitored by the trustees on a regular basis through its risk management framework. There is open communication with the trustees and advisors
liabilities increase.
Regulatory risk
Changes in pension regulations and of the Vodafone UK Plan to understand the impact of any accounting standards can impact the Group's changes in regulation and to proactively address potential pension obligations and reporting resulting risks. requirements.
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