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RETIREMENT BENEFIT INFORMATION
Pensions
Assore Limited is a holding company which operates through its joint-venture entities and various subsidiary and associate companies and, as such, does not have any employees.
All subsidiary companies provide retirement benefits through either a defined contribution fund (termed “umbrella fund”) or a defined benefit fund.
Defined contribution fund
The group and employees contribute 10% and 5% of pensionable salary to the umbrella fund respectively. Contributions to the fund amounted to R2,0 million (2016: R4,7 million) and the value amounted to R12,6 million (2016: R16,8 million) at year-end. Decrease in the value of the fund is due to the retrenchments which occurred at Rustenburg Minerals during the year.
Defined benefit – Assore Pension Fund
In terms of the Pension Funds Act, the Assore Pension Fund is actuarially valued every three years. The most recently completed statutory actuarial valuation was performed as at 1 July 2014 and revealed a 111,8% funding level. An interim check was performed for funding purposes as at 1 July 2017, which revealed a 122% funding level (2016: 114,1%). The financial position of the fund at the dates of the interim funding checks is set out below:
| |
|
|
|
| Change in defined benefit obligation |
|
|
|
|
|
|
|
|
| Benefit obligation at beginning of year |
|
|
|
484 098 |
|
|
476 302 |
|
| Current service cost |
|
|
|
33 881 |
|
|
36 490 |
|
| Interest cost |
|
|
|
43 735 |
|
|
41 165 |
|
| Actuarial gain – assumptions |
|
|
|
(55 126) |
|
|
(2 259) |
|
| Benefits paid |
|
|
|
(82 988) |
|
|
(67 600) |
|
| Benefit obligation at end of year |
|
|
|
423 600 |
|
|
484 098 |
|
| Change in plan assets |
|
|
|
|
|
|
|
|
| Fair value of plan assets at beginning of year |
|
|
|
552 168 |
|
|
533 776 |
|
| Expected return on plan assets |
|
|
|
27 632 |
|
|
47 721 |
|
| Actuarial loss on plan assets – experience and assumptions |
|
|
|
(17 682) |
|
|
(890) |
|
| Employer contributions |
|
|
|
28 768 |
|
|
30 475 |
|
| Employee contributions |
|
|
|
8 846 |
|
|
8 686 |
|
| Benefits paid |
|
|
|
(82 988) |
|
|
(67 600) |
|
| Fair value of plan assets at end of year |
|
|
|
516 744 |
|
|
552 168 |
|
| Net surplus at year-end per statement of financial position |
|
|
|
93 144 |
|
|
68 070 |
|
| Components of periodic expense |
|
|
|
|
|
|
|
|
| Current service cost |
|
|
|
33 881 |
|
|
36 490 |
|
| Interest cost |
|
|
|
43 735 |
|
|
41 165 |
|
| Expected return on plan assets |
|
|
|
(27 632) |
|
|
(47 721) |
|
| Net pension cost for the year |
|
|
|
49 984 |
|
|
29 934 |
|
| Plan assets invested as follows: |
|
|
|
% |
|
|
% |
|
| Equity securities |
|
|
|
60 |
|
|
71 |
|
| Debt securities |
|
|
|
33 |
|
|
22 |
|
| Property |
|
|
|
2 |
|
|
1 |
|
| Other (cash, cash awaiting investment, bank account) |
|
|
|
5 |
|
|
6 |
|
| |
|
|
|
100 |
|
|
100 |
|
The maturity profile of the benefit obligation at the end of the year is as follows:
| |
|
|
|
| Due within one year |
|
|
|
22 371 |
|
|
68 429 |
|
| Due within two years |
|
|
|
22 227 |
|
|
20 286 |
|
| Due within three years |
|
|
|
23 871 |
|
|
19 263 |
|
| Due within four years |
|
|
|
15 534 |
|
|
20 027 |
|
| Due within five years |
|
|
|
13 812 |
|
|
11 385 |
|
| Due between six and 10 years |
|
|
|
141 663 |
|
|
126 230 |
|
| Due thereafter |
|
|
|
184 122 |
|
|
218 478 |
|
| |
|
|
|
423 600 |
|
|
484 098 |
|
| Expected contribution next year |
|
|
|
28 579 |
|
|
26 462 |
|
| Actual return on assets for the year comprises: |
|
|
|
35 312 |
|
|
46 831 |
|
| – expected return on plan assets for the year |
|
|
|
32 188 |
|
|
47 721 |
|
| – actuarial gains on plan assets |
|
|
|
3 124 |
|
|
(890) |
|
| |
|
|
|
|
|
|
|
|
| Actuarial assumptions |
|
|
|
|
|
|
|
|
| The above valuations are based on the following principal actuarial assumptions: |
|
|
|
|
|
|
|
|
| |
|
|
|
% |
|
|
% |
|
| Expected return on plan assets |
|
|
|
9,59 |
|
|
9,30 |
|
| Post-retirement interest rate |
|
|
|
4,22 |
|
|
3,60 |
|
| Price inflation rate |
|
|
|
6,87 |
|
|
7,40 |
|
| Salary inflation rate |
|
|
|
7,87 |
|
|
8,40 |
|
| Pension increases |
|
|
|
5,15 |
|
|
5,50 |
|
Other assumptions
Mortality rate for members still in service assumed at zero.
Pension mortality PA (90) – ultimate table, adjusted for two years’ additional longevity since the previous year-end.
Merit salary increases per sliding scale depending on age starting at 5% per annum below age 25, and reducing to zero above age 50.
Spouse’s benefits for active members – on average, husbands are assumed to be two years older than their wives, and married at date of retirement.
For current pensioners, their actual marital status and, where applicable, the exact age of their spouse has been taken into account.
Set out below is a quantitative sensitivity analysis on the principal assumptions referred to above:
| 2017 |
|
|
| Assumptions |
|
|
| Impact on defined benefit obligation |
|
|
(36 941) |
|
50 611 |
|
(27 514) |
|
54 822 |
|
86 274 |
|
(49 955) |
|
43 990 |
|
(32 182) |
|
57 637 |
|
(28 170) |
|
| 2016 |
|
|
Interest |
|
Post-retirement |
|
Price inflation |
|
Salary escalation |
|
Pension increases |
|
| Assumptions |
|
|
1%
increase |
|
1%
decrease |
|
1%
increase |
|
1%
decrease |
|
1%
increase |
|
1%
decrease |
|
1%
increase |
|
1%
decrease |
|
1%
increase |
|
1%
decrease |
|
| Impact on defined benefit obligation |
|
|
(42 217) |
|
57 839 |
|
(31 444) |
|
62 652 |
|
98 595 |
|
(57 089) |
|
50 273 |
|
(36 778) |
|
65 869 |
|
(32 193) |
|
|