| 20. |
RETIREMENT BENEFIT OBLIGATIONS |
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It is the policy of the Group to provide for retirement benefit liabilities by payments to separate funds which are statutorily independent from the Group. These funds cover eligible employees, other than those who opt to be or are required by legislation to be members of various industry funds. |
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The South African employees not covered by way of legislated funds are covered by way of defined contribution provident funds governed by the Pension Funds Act, 1956, with varying contributions. Benefits are determined in proportion to each member’s equitable share of the total assets of the funds on termination of membership. |
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In line with the Group’s policy of accounting for post-retirement medical obligations, an independent actuarial valuation was performed in June 2009 and provision made in the balance sheet. Principal assumptions used incorporate the following: |
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– A discount rate of 8,3% per annum (2008: 10,0% per annum).
– A medical inflation rate of 5,8% per annum (2008: 7,5% per annum).
– An expected return on plan assets of 9,8% (2008: 11,7%), versus the actual return achieved of 11,5% (2008: 10,8%).
– Salary rate assumptions were not required for 2009 or 2008, as there were no salary-related contributions during either 2009
or 2008. |
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This valuation has been performed using the projected unit credit funding method to determine the past service liabilities at valuation date. |
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2009
R’million |
Restated
2008
R’million |
| Amounts recognised in the balance sheet |
|
|
| Post-retirement medical obligation |
9,4 |
9,4 |
| Deferred tax effect |
(2,6) |
(2,3) |
| |
6,8 |
7,1 |
| Post-retirement medical obligation comprises |
|
|
| Present value of obligations |
19,0 |
18,6 |
| Fair value of plan assets |
(9,6) |
(9,2) |
| Retirement benefit obligations |
9,4 |
9,4 |
| The movement in the liability recognised on the balance sheet is as follows |
|
|
| At the beginning of the year |
18,6 |
15,9 |
| Interest cost |
1,8 |
1,3 |
| Current service cost |
0,6 |
0,7 |
| Contributions paid to the scheme on behalf of pensioners |
— |
(0,1) |
| Actuarial gains |
(1,7) |
(0,4) |
| Other |
(0,3) |
1,2 |
| |
19,0 |
18,6 |
The movement in the fair value of plan assets recognised on the balance sheet
is as follows |
|
|
| At the beginning of the year |
9,2 |
8,7 |
| Actuarial losses |
(0,5) |
(0,3) |
| Expected returns on plan assets |
0,9 |
0,8 |
| |
9,6 |
9,2 |
| The amounts recognised in the income statement |
|
|
| Current service cost |
0,6 |
0,7 |
| Interest cost |
1,8 |
1,3 |
| Expected returns on plan assets |
(0,9) |
(0,8) |
| Actuarial gains |
(1,2) |
(0,1) |
| Total included in staff costs |
0,3 |
1,1 |
| The charge was classified as follows on the income statement |
|
|
| Selling and distribution expenses |
0,1 |
0,6 |
| Administrative expenses |
0,2 |
0,5 |
| |
0,3 |
1,1 |
| The actual return on plan assets was R0,9 million (2008: R1,0 million). |
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|
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Mortality rate
Assumptions regarding future mortality experience are set out based on advice, published statistics and experience in each territory. |
|
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| The average life expectancy in years of a pensioner retiring at age 65 on the balance sheet date is as follows |
|
|
| Male |
17,1 |
17,1 |
| Female |
19,7 |
19,7 |
| The mortality assumptions remained unchanged from 2008. |
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|
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Increase
R’million |
Decrease
R’million |
| The effect of a 1% movement in the assumed medical inflation rate was as follows |
|
|
| Effect on the aggregate of the current service cost and interest cost |
0,4 |
(0,3) |
| Effect on the post-retirement medical obligation |
3,1 |
(2,5) |
| Aspen’s plan assets are invested in a group insurance annuity policy. All funds in this policy are invested in the South African money market. The fair value equals the book value. |
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| The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current insurance policy. |
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| No contributions were paid to the plan for the year ended 30 June 2009. |
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|
|
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| As at 30 June |
2009
R’million |
2008
R’million |
2007
R’million |
2006
R’million |
| Present value of post-retirement medical obligation |
19,0 |
18,6 |
15,9 |
15,8 |
| Fair value of plan assets |
(9,6) |
(9,2) |
(8,7) |
(8,5) |
| Deficit |
9,4 |
9,4 |
7,2 |
7,3 |
| Experience adjustments on plan liabilities |
(0,8) |
— |
— |
(1,3) |
| Experience adjustments on plan assets |
0,2 |
0,5 |
0,5 |
2,9 |
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