10a Employee information
The details of the emoluments of the directors of Pearson plc are shown in Directors' Remuneration.

All figures in £ millions			2004	2003
Staff costs
Wages and salaries			1,023	1,027
Social security costs			105	99
Post-retirement costs			68	62
			1,196	1,188
	UK	US	Other	Total
Average number employed 2004
Pearson Education	2,071	16,133	4,080	22,284
FT Group	1,709	1,352	2,594	5,655
The Penguin Group	1,067	2,026	992	4,085
Other	792	572	1	1,365
	5,639	20,083	7,667	33,389
	UK	US	Other	Total
Average number employed 2003
Pearson Education	1,443	14,438	4,097	19,978
FT Group	1,885	1,397	2,362	5,644
The Penguin Group	1,223	2,115	980	4,318
Other	414	513	1	928
	4,965	18,463	7,440	30,868

10b Pensions
SSAP 24 accounting The Group operates a number of pension schemes throughout the world, the principal ones being in the UK and US. The major schemes are self-administered with the schemes' assets being held independently of the Group. Pension costs are assessed in accordance with the advice of independent qualified actuaries. The UK scheme is a hybrid scheme with both defined benefit and defined contribution sections but, predominantly, consisting of defined benefit liabilities. There are a number of defined contribution schemes, principally overseas. The cost of the schemes is as follows:

All figures in £ millions							2004	2003
UK Group scheme
Regular pension cost
- Defined benefit sections							10	10
- Defined contribution sections							8	7
Variation cost							9	6
							27	23
Other schemes
Defined benefit schemes							6	7
Defined contribution schemes							29	27
							35	34
							62	57
Note From 1 January 2003 the UK Group scheme only offers defined contribution benefits to new joiners. The main US defined benefit scheme was closed to the majority of active members in 2001. The changes to these schemes will give rise to a reduction in defined benefit and an increase in defined contribution costs.
Included in the balance sheet, there is a pension provision of £19m (2003: £29m) as measured in accordance with SSAP 24 (see note 22). A full actuarial valuation of the UK Group scheme was performed as at 1 January 2004 using the projected unit method of valuation. The market value of the assets of the scheme at 1 January 2004 was £1,091m. The major assumptions used to determine the SSAP 24 charge are as follows:
All figures in percentages								UK Group scheme
Inflation								2.75
Rate of increase in salaries								4.75
Rate of increase for pensions in payment and deferred pensions								2.0 - 4.5
Return on investments								7.1
Level of funding								95
The funding policy differs from the accounting policy to the extent that more conservative assumptions are used for funding purposes. In particular, the deficit measured on the funding assumptions was £137m (compared to £56m on the SSAP 24 assumptions). Please refer to Note 10b for further details of the funding of the scheme. The next full actuarial valuation of the UK Group scheme for funding purposes is due to be carried out as at 1 January 2006. The date of the most recent valuation of the US plan was 1 January 2004. FRS 17 disclosures The disclosures required under the transitional arrangements of FRS 17 for the Group's defined benefit schemes and the UK Group hybrid scheme are set out below. The disclosures for the UK Group hybrid scheme are in respect of both the defined benefit and defined contribution sections. For the purpose of these disclosures, the latest full actuarial valuations of the UK Group scheme and other schemes have been updated by independent actuaries to 31 December 2004. The assumptions used are shown below. Weighted average assumptions have been shown for the other schemes.
	2004			2003			2002
All figures in percentages	UK Group scheme	Other schemes		UK Group scheme	Other schemes		UK Group scheme	Other schemes
Inflation	2.80	3.00		2.75	3.00		2.25	3.00
Rate of increase in salaries	4.80	4.50		4.75	4.50		4.25	4.50
Rate of increase for pensions in payment	2.80			2.75			2.25
and deferred pensions	-4.00	-		-4.00	-		-4.00	-
Rate used to discount scheme liabilities	5.40	5.85		5.50	6.10		5.70	6.75
The assets of the UK Group scheme and the expected rate of return on these assets, and the assets of the other defined benefit schemes and the expected rate of return on these assets shown as a weighted average, are as follows:
	Long-term rate of return expected at 31 Dec 2004 %	Value at 31 Dec 2004 £m		Long-term rate of return expected at 31 Dec 2003 %	Value at 31 Dec 2003 £m		Long-term rate of return expected at 31 Dec 2002 %	Value at 31 Dec 2002 £m
UK Group scheme
Equities	7.50	638		7.75	589		8.00	472
Bonds	4.75	276		5.00	262		4.75	284
Properties	6.25	113		6.50	107		6.50	112
Other	6.25	174		6.50	133		6.50	108
Total market value of assets		1,201			1,091			976
Present value of scheme liabilities		(1,495)			(1,316)			(1,189)
Deficit in the scheme		(294)			(225)			(213)
Related deferred tax asset		88			68			64
Net pension liability		(206)			(157)			(149)
Other schemes
Equities	8.50	45		9.00	41		9.75	33
Bonds	5.50	26		6.00	25		6.00	23
Other	3.75	2		2.80	1		2.75	1
Total market value of assets		73			67			57
Present value of scheme liabilities		(102)			(104)			(96)
Deficit in the schemes		(29)			(37)			(39)
Related deferred tax asset		10			13			14
Net pension liability		(19)			(24)			(25)
Note The measurement of the deficit in the scheme for FRS 17 follows a different approach to SSAP 24. The FRS 17 measurement date is 31 December 2004. Although the rise in stock markets in 2004 increased the market value of the UK Group scheme assets, this is more than offset by the increase in the present value of the UK Group scheme liabilities. This increase has largely been caused by use of the 1 January 2004 formal funding valuation and the change in both economic and mortality assumptions used for FRS 17 purposes since 31 December 2003. This has resulted in an increased deficit in the UK Group scheme under FRS 17.
All figures in £ millions		UK Group scheme		Defined benefit other	Sub-total		Defined contribution	2004 Total
Operating charge
Current service cost		(24)		(1)	(25)		(29)	(54)
Past service cost		-		-	-		-	-
Total operating charge		(24)		(1)	(25)		(29)	(54)
Other finance income/(charge)
Expected return on pension scheme assets		73		5	78		-	78
Interest on pension scheme liabilities		(70)		(6)	(76)		-	(76)
Net finance credit/(charge)		3		(1)	2		-	2
Net profit and loss impact		(21)		(2)	(23)		(29)	(52)
Statement of total recognised gains and losses
Actual return less expected return on pension scheme assets		60		2	62
Experience (losses)/gains arising on the scheme liabilities		(62)		1	(61)
Changes in assumptions underlying the present value of the scheme liabilities		(76)		(4)	(80)
Exchange differences		-		2	2
Actuarial (loss)/gain		(78)		1	(77)
Movement in deficit during the year
Deficit in scheme at beginning of the year		(225)		(37)	(262)
Current service cost		(24)		(1)	(25)
Past service cost		-		-	-
Contributions		30		9	39
Other finance charge		3		(1)	2
Actuarial (loss)/gain		(78)		1	(77)
Deficit in scheme at end of the year		(294)		(29)	(323)
Related deferred tax asset		88		10	98
Net pension deficit		(206)		(19)	(225)
Following the 1 January 2004 actuarial valuation for funding purposes, the Group has agreed to pay contributions of 14.8% of pensionable salaries, plus contributions in respect of the Money Purchase 2003 section introduced with effect from 1 January 2003, in respect of future service benefits. Further, the Group has agreed to pay contributions of £10m in respect of 2004, £15m in respect of 2005 and £21m in respect of each year from 2006 to 2013 to fund the past service deficit revealed by the funding valuation.
All figures in £ millions		UK Group scheme		Defined benefit other	Sub-total		Defined contribution	2003 Total
Operating charge
Current service cost		(20)		(1)	(21)		(27)	(48)
Past service cost		-		(1)	(1)		-	(1)
Total operating charge		(20)		(2)	(22)		(27)	(49)
Other finance income/(charge)
Expected return on pension scheme assets		65		5	70		-	70
Interest on pension scheme liabilities		(66)		(7)	(73)		-	(73)
Net finance charge		(1)		(2)	(3)		-	(3)
Net profit and loss impact		(21)		(4)	(25)		(27)	(52)
Statement of total recognised gains and losses
Actual return less expected return on pension scheme assets		80		8	88
Experience losses arising on the scheme liabilities		(1)		(8)	(9)
Changes in assumptions underlying the present value of the scheme liabilities		(95)		(6)	(101)
Exchange differences		-		3	3
Actuarial loss		(16)		(3)	(19)
Movement in deficit during the year
Deficit in scheme at beginning of the year		(213)		(39)	(252)
Current service cost		(20)		(1)	(21)
Past service cost		-		(1)	(1)
Contributions		25		9	34
Other finance charge		(1)		(2)	(3)
Actuarial loss		(16)		(3)	(19)
Deficit in scheme at end of the year		(225)		(37)	(262)
Related deferred tax asset		68		13	81
Net pension deficit		(157)		(24)	(181)
The contribution rate for 2003 for the UK Group scheme was 17.1% of pensionable salaries, plus £1m in respect of the new Money Purchase section introduced with effect from 1 January 2003. In addition, a one-off contribution of £5m was paid into this scheme to improve the funding position. The experience gains and losses of both the UK Group scheme and other schemes are shown below:
					2004		2003	2002
History of experience gains and losses
Difference between the actual and expected return on scheme assets					£62m		£88m	£(176)m
As a percentage of year end assets					5%		8%	(17)%
Experience gains and (losses) on scheme liabilities					£(61)m		£(9)m	£16m
As a percentage of year end liabilities					(4)%		(1)%	1%
Total amount recognised in statement of total recognised gains and losses					£(77)m		£(19)m	£(159)m
As a percentage of year end liabilities					(5)%		(1)%	(12)%
If the above amounts had been recognised in the financial statements, the Group's net assets and profit and loss reserve at 31 December 2004 would be as follows:
All figures in £ millions							2004	2003
Net assets excluding pension liability (see note below)							2,835	3,117
FRS 17 pension liability							(225)	(181)
Net assets including FRS 17 pension liability							2,610	2,936
Profit and loss reserve excluding pension reserve (see note below)							(52)	252
FRS 17 pension reserve							(225)	(181)
Profit and loss reserve including FRS 17 pension reserves							(277)	71
Note The net assets and profit and loss reserve exclude the pension liability of £19m (2003: £29m) included within provisions (see note 22).

10c Other post-retirement benefits
UITF 6 accounting The Group provides certain healthcare and life assurance benefits principally for retired US employees and their dependents. These plans are unfunded. Retirees are eligible for participation in the plans if they meet certain age and service requirements. Plans that are available vary depending on the business division in which the retiree worked. Plan choices and retiree contributions are dependent on retirement date, business division, option chosen and length of service. The valuation and costs relating to other post-retirement benefits are assessed in accordance with the advice of independent qualified actuaries. The cost of the benefits and the major assumptions used, based on a valuation with a measurement date of 31 December 2003, are as follows:

All figures in £ millions		2004	2003
Other post-retirement benefits		6	5
All figures in percentages
Inflation			3.0
Initial rate of increase in healthcare rates			12.0
Ultimate rate of increase in healthcare rates (2008)			5.0
Rate used to discount scheme liabilities			6.1
Included in the balance sheet, there is a post-retirement medical benefits provision of £51m (2003: £51m). In accordance with UITF 6, the cost of post-retirement benefits, and related provisions, are based on the equivalent US GAAP standard, FAS 106 (see note 22). FRS 17 disclosures The disclosures required under the transitional arrangements of FRS 17 are set out below. For the purpose of these disclosures the valuation of the schemes has been updated to 31 December 2004 using the assumptions listed below.
All figures in percentages	2004	2003	2002
Inflation	3.00	3.00	3.00
Initial rate of increase in healthcare rates	12.00	12.00	12.00
Ultimate rate of increase in healthcare rates (2009; 2008; 2007)	5.00	5.00	5.00
Rate used to discount scheme liabilities	5.85	6.10	6.75
The value of the unfunded liability is as follows:
Present value of unfunded liabilities	(58)	(61)	(63)
Related deferred tax asset	20	21	22
Net post-retirement healthcare liability	(38)	(40)	(41)
Operating charge
Current service cost	(1)	(1)
Past service cost	-	-
Total operating charge	(1)	(1)
Other finance charge
Interest on pension scheme liabilities	(3)	(4)
Net finance charge	(3)	(4)
Net profit and loss impact	(4)	(5)
Statement of total recognised gains and losses
Experience gains arising on the scheme liabilities	5	3
Changes in assumptions underlying the present value of the scheme liabilities	(5)	(6)
Exchange differences	4	6
Actuarial gain	4	3
Movement in deficit during the year
Deficit in scheme at beginning of the year	(61)	(63)
Current service cost	(1)	(1)
Contributions	3	4
Other finance charge	(3)	(4)
Actuarial gain	4	3
Deficit in scheme at end of the year	(58)	(61)
Related deferred tax asset	20	21
Net post-retirement deficit	(38)	(40)
The experience gains and losses for the schemes are shown below:
History of experience gains and losses
Experience gains on scheme liabilities	£5m	£3m	£3m
As a percentage of year end liabilities	9%	5%	4%
Total amount recognised in statement of total recognised gains and losses	£4m	£3m	£1m
As a percentage of year end liabilities	7%	5%	2%
If the above amounts had been recognised in the financial statements, the Group's net assets and profit and loss reserves at 31 December 2004 would be as follows:
All figures in £ millions		2004	2003
Net assets excluding post-retirement healthcare liability (see note below)		2,867	3,139
FRS 17 post-retirement healthcare liability		(38)	(40)
Net assets including FRS 17 post-retirement healthcare liability		2,829	3,099
Profit and loss reserve excluding post-retirement healthcare reserve (see note below)		(20)	274
FRS 17 post-retirement healthcare reserve		(38)	(40)
Profit and loss reserve including FRS 17 post-retirement healthcare reserve		(58)	234

Note The net assets and profit and loss reserve exclude the post-retirement healthcare liability of £51m (2003: £51m) included within provisions (see note 22).