34 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 (2017: R2,0 million) and the value amounted to R14,7 million (2017: R12,6 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 2017 and revealed a 121,4% funding level. An interim check was performed for funding purposes as at 1 July 2018, which revealed a 129,1% funding level (2017: 122%). The financial position of the fund at the dates of the interim funding checks is set out below:

      2018 
R’000 		       2017 
R’000 		  
Change in defined benefit obligation                         
Benefit obligation at beginning of year        423 600           484 098    
Current service cost        31 200           33 881    
Interest cost        40 435           43 735    
Actuarial gain – assumptions        (32 743)          (55 126)   
Benefits paid        (27 021)          (82 988)   
Benefit obligation at end of year        435 471           423 600    
Movement in plan assets                           
Fair value of plan assets at beginning of year        516 744           552 168    
Expected return on plan assets        44 830           27 632    
Actuarial loss on plan assets – experience and assumptions        (8 846)          (17 682)   
Employer contributions        30 261           28 768    
Employee contributions        8 748           8 846    
Benefits paid        (27 021)          (82 988)   
Fair value of plan assets at end of year        564 716           516 744    
Net surplus at year-end per statement of financial position        129 245           93 144    
Components of periodic expense                           
Current service cost        31 200           33 881    
Interest cost        40 435           43 735    
Expected return on plan assets        (44 830)          (27 632)   
Net pension cost for the year        26 805           49 984    
Plan assets invested as follows:        %           %    
Equity securities        60           60    
Debt securities        33           33    
Property        2           2    
Other (cash, cash awaiting investment, bank account)       5           5    
          100           100    

The maturity profile of the benefit obligation at the end of the year is as follows:

      2018 
R’000 		       2017
R’000		  
Due within one year        17 170           22 371    
Due within two years        25 157           22 227    
Due within three years        11 206           23 871    
Due within four years        12 624           15 534    
Due within five years        26 946           13 812    
Due between six and 10 years        161 216           141 663    
Due thereafter        181 152           184 122    
         435 471           423 600    
Expected contribution next year        33 026           28 579    
Actual return on assets for the year comprises:        36 967           35 312    
– expected return on plan assets for the year        49 843           32 188    
– actuarial (losses)/gains on plan assets        (12 876)          3 124    
Actuarial assumptions                         
The above valuations are based on the following principal actuarial assumptions:                         
         %           %    
Expected return on plan assets        9,51           9,59    
Post-retirement interest rate        4,48           4,22    
Price inflation rate        6,41           6,87    
Salary inflation rate        7,41           7,87    
Pension increases        4,81           5,15    

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, based on a 1% movement (increase/decrease), on the principal assumptions referred to above:

2018     Interest Post-retirement Price inflation Salary inflation Pension increases  
Assumptions     increase  decrease increase  decrease increase  decrease  increase decrease  increase decrease   
Impact on defined benefit obligation (R’000)     (34 773) 46 407 (26 689) 54 250 84 753 (53 880) 46 407 (31 047) 63 837 (30 616)  
2017     Interest Post-retirement Price inflation Salary inflation Pension increases  
Assumptions     increase  decrease increase  decrease increase decrease  increase decrease  increase decrease   
Impact on defined benefit obligation (R’000)     (34 773) 46 407 (26 689) 54 250 84 753 (53 880) 46 407 (31 047) 63 837 (30 616)