COMBINED FINANCIAL STATEMENTS > NOTES TO THE COMBINED FINANCIAL STATEMENTS Pension schemes  (continued) 4 The movement in the net FRS17 surplus/(deficit) before taxation during the year was as follows: Main UK Scheme Aggregate of Schemes £m € m £m € m Net surplus/(deficit) in schemes at beginning of the year 52 80 (137) (210) Movement in the year: Total operating charge (32) (46) (65) (94) Contributions – – 38 55 Finance income 23 33 17 25 Actuarial loss (101) (146) (113) (164) Exchange translation differences – (3) 9 32 Net deficit in schemes at end of the year (58) (82) (251) (356) The principal assumptions made in valuing pension scheme liabilities for the purposes of FRS17 were: The combined profit and loss reserves as at 31 December 2003 of £497m/ € 706m (2002: £764m/ € 1,169m) would have been £285m/ € 405m (2002: £623m/ € 953m), had the accounting methodologies of FRS17 been applied in the 2003 and 2002 financial years. The operating charge, the amount credited to other finance income and the amounts recognised in the statement of total recognised gains and losses in the financial year based on the methodologies and presentation prescribed by FRS17 would have been as follows: Main UK Scheme Aggregate of Schemes 2003 2002 2003 2002 Inflation 2.8% 2.3% 2.9% 2.5% Rate of increase in salaries 4.8% 4.3% 4.4% 4.2% Rate of increase in pensions in payment 2.8% 2.3% 2.8% 2.5% Discount rate 5.5% 5.7% 5.6% 5.9% Main UK Scheme Aggregate of Schemes £m € m £m € m 2003 Charged to operating profit Current service cost (32) (46) (76) (94) Past service cost – – 11 – Total operating charge (32) (46) (65) (94) Credited to other finance income Expected return on pension scheme assets 96 139 131 190 Interest on pension scheme liabilities (73) (106) (114) (165) Net return 23 33 17 25 Amounts recognised in the statement of total recognised  gains and losses Actual return less expected return on pension scheme assets 125 181 153 222 Experience losses arising on the scheme liabilities (57) (83) (96) (139) Changes in assumptions underlying the present value of the scheme liabilities (169) (244) (170) (247) Actuarial loss (101) (146) (113) (164) REED ELSEVIER ANNUAL REPORTS & FINANCIAL STATEMENTS 2003 51