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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 R1,7 million (2018: R2,0 million) and the value amounted to R11,8 million (2018: R14,7 million) at year-end. The
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 2019, which revealed a 134,1% funding level (2018: 129,7%). The financial position of the fund at
the dates of the interim funding checks is set out below:
| |
|
2019
R’000 |
|
|
|
2018
R’000 |
|
| Change in defined benefit obligation |
|
|
|
|
|
|
|
| Benefit obligation at beginning of year |
|
435 471 |
|
|
|
423 600 |
|
| Current service cost |
|
31 377 |
|
|
|
31 200 |
|
| Interest cost |
|
42 130 |
|
|
|
40 435 |
|
| Actuarial gain — assumptions |
|
(48 512) |
|
|
|
(32 743) |
|
| Benefits paid |
|
(45 506) |
|
|
|
(27 021) |
|
| Benefit obligation at end of year |
|
414 960 |
|
|
|
435 471 |
|
| Movement in plan assets |
|
|
|
|
|
|
|
| Fair value of plan assets at beginning of year |
|
564 716 |
|
|
|
516 744 |
|
| Expected return on plan assets |
|
42 088 |
|
|
|
44 830 |
|
| Actuarial loss on plan assets — experience and assumptions |
|
(43 400) |
|
|
|
(8 846) |
|
| Employer contributions |
|
29 420 |
|
|
|
30 261 |
|
| Employee contributions |
|
9 178 |
|
|
|
8 748 |
|
| Benefits paid |
|
(45 506) |
|
|
|
(27 021) |
|
| Fair value of plan assets at end of year |
|
556 496 |
|
|
|
564 716 |
|
| Net surplus at year-end per statement of financial position |
|
141 536 |
|
|
|
129 245 |
|
| Components of periodic expense |
|
|
|
|
|
|
|
| Current service cost |
|
31 377 |
|
|
|
31 200 |
|
| Interest cost |
|
42 130 |
|
|
|
40 435 |
|
| Expected return on plan assets |
|
(42 088) |
|
|
|
(44 830) |
|
| Net pension cost for the year |
|
31 419 |
|
|
|
26 805 |
|
| Plan assets invested as follows: |
|
% |
|
|
|
% |
|
| Equity securities |
|
58 |
|
|
|
60 |
|
| Debt securities |
|
35 |
|
|
|
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:
| |
|
2019
R’000 |
|
|
|
2018
R’000 |
|
| Due within one year |
|
31 318 |
|
|
|
17 170 |
|
| Due within two years |
|
13 117 |
|
|
|
25 157 |
|
| Due within three years |
|
14 709 |
|
|
|
11 206 |
|
| Due within four years |
|
28 695 |
|
|
|
12 624 |
|
| Due within five years |
|
22 119 |
|
|
|
26 946 |
|
| Due between six and 10 years |
|
131 631 |
|
|
|
161 216 |
|
| Due thereafter |
|
173 371 |
|
|
|
181 152 |
|
| |
|
414 960 |
|
|
|
435 471 |
|
| Expected contribution next year |
|
35 503 |
|
|
|
33 026 |
|
| Actual return on assets for the year comprises: |
|
5 194 |
|
|
|
36 967 |
|
| — expected return on plan assets for the year |
|
47 601 |
|
|
|
49 843 |
|
| — actuarial (losses)/gains on plan assets |
|
(42 407) |
|
|
|
(12 876) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Actuarial assumptions |
|
|
|
|
|
|
|
| The above valuations are based on the following principal actuarial assumptions: |
|
|
|
|
|
|
|
| |
|
% |
|
|
|
% |
|
| — Expected return on plan assets |
|
8,58 |
|
|
|
9,51 |
|
| — Pre-retirement interest rate |
|
9,56 |
|
|
|
9,51 |
|
| — Post-retirement interest rate |
|
4,97 |
|
|
|
4,48 |
|
| — Price inflation rate |
|
5,83 |
|
|
|
6,41 |
|
| — Salary inflation rate |
|
6,53 |
|
|
|
7,41 |
|
| — Pension increases |
|
4,37 |
|
|
|
4,81 |
|
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 5,5% per annum below age 25, and reducing to 0,5% 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, on the principal assumptions referred to above:
| 2019 |
|
Pre-retirement
interest |
Post-retirement
interest |
Price inflation |
Salary inflation |
Pension increases |
| Assumptions |
|
increase |
decrease |
|
increase |
decrease |
|
increase |
decrease |
|
increase |
decrease |
|
increase |
decrease |
|
| Impact on
defined benefit
obligation
(R’000) |
|
(31 688) |
38 286 |
|
(42 166) |
31 34 |
|
78 110 |
(50 183) |
|
38 73 |
(32 547) |
|
60 242 |
(30 609) |
|
| 2018 |
|
Interest |
Post-retirement |
Price inflation |
Salary escalation |
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) |
|
|