Notes to the consolidated financial statements – Note 29

    2014
R’000		     2013
R’000		  
29. Post-retirement obligations          
  Post-retirement assets          
  Defined-benefit pension assets (124 767)     (101 794)  
  Post-retirement obligations 345 253     312 739  
     Defined-benefit pension obligations 84 331     –  
     Post-retirement medical aid obligations 105 768     124 825  
     Unfunded defined-benefit early retirement plan 155 154     187 914  
    220 486     210 945  
  Pension and provident funds

The Group provides retirement benefits for its permanent employees through pension funds with defined benefit and defined contribution categories and defined contribution provident funds or appropriate industry funds.

There are also a number of small funds within various employers of the Group. All funds are administered independently of the Group and are subject to the relevant pension fund legislation.

The defined-benefit funds operated by the Group are The Bidvest South Africa Pension Fund, the Zwitserleven Pension Plan in the Netherlands and Angliss Hong Kong Food Service Limited Retirement Benefit Plan.

Employer contributions to defined-contribution funds are set out in note 2.

         
  Defined-benefit pension funds          
  Defined-benefit pension obligations (assets) of the various funds          
  The Bidvest South Africa Pension Fund (124 767)     (94 673)  
  Zwitserleven Pension Plan 79 972     –  
  Angliss Hong Kong Food Service Limited Retirement Benefit Plan 4 359     (7 121)  
    (40 436)     (101 794)  
  Contributions to the funds          
     Employer contribution 88 309     78 617  
     Employee contribution 10 084     935  
  Total pension fund asset (unfunded pension liability)          
     Fair value of plan assets 1 697 479     1 306 321  
     Actuarial present value of defined-benefit obligations (1 628 385)     (1 197 304)  
     Net surplus in the plans 69 094     109 017  
     Amounts not recognised due to ceiling adjustments and other limitations (28 658)     (7 223)  
    40 436     101 794  
  Movement in the liability for defined-benefit obligations          
     Balance at beginning of year (1 197 304)     (847 436)  
     Transfer from early retirement fund (33 808)     –  
     Benefits 47 199     41 210  
     Risk premiums and expenses 1 299     –  
     Current service costs (75 255)     (68 949)  
     Interest (66 060)     (52 062)  
     Member contributions (10 084)     (935)  
     Actuarial losses (236 834)     (128 548)  
     Settlements 27 557     –  
     Exchange rate adjustments on foreign plans (85 095)     (140 584)  
     Balance at end of year (1 628 385)     (1 197 304)  
  Movement in the plans’ assets          
     Balance at beginning of year 1 306 321     1 010 886  
     Transfer from early retirement fund 33 808     –  
     Contributions paid into the plans 98 393     79 552  
     Benefits (47 199)     (41 210)  
     Risk premiums and expenses (6 142)     (2 837)  
     Interest income 76 069     *  
     Return on plan assets in excess of interest 153 297     *  
     Expected return on plan assets       65 607*  
     Actuarial gains       56 677*  
     Exchange rate adjustments on foreign plans 82 932     137 646  
     Balance at end of year 1 697 479     1 306 321  
  The plans’ assets comprise          
     Cash 70 238     20 929  
     Equity securities 455 003     306 076  
     Bills, bonds and securities 1 128 291     898 155  
     Property 29 298     20 044  
     Other 14 649     61 117  
    1 697 479     1 306 321  
  Amounts recognised in the income statement          
     Current service costs 75 255     68 949  
     Interest on obligations 66 060     52 062  
     Interest on assets (76 069)     *  
     Expected return on plan assets       (65 607)*  
     Ceiling adjustments and other limitations 1 835     21 539  
     Risk premiums and expenses 4 843     2 837  
     Net actuarial gain recognised       (1 528)*  
     Gain arising from settlements, plan amendments and curtailments (27 557)     –  
    44 367     78 252  
  Amounts recognised in other comprehensive income          
     Return on plan assets in excess of interest (153 297)     *  
     Actuarial losses 236 834     *  
     Ceiling adjustments and other limitations 13 174     *  
    96 711     –  
  Key actuarial assumptions used in the actuarial valuations:          
  The Bidvest South Africa Pension Fund          
     Number of in-service members June 30 73     51  
     Number of pensioners June 30 637     646  
     Discount rate (%) 8,7     8,2  
     Inflation rate (%) 6,4     5,7  
     Salary increase (%) 7,4     6,7  
     Pension increase allowance (%) 4,5     4,0  
  Zwitserleven Pension Plan          
     Number of in-service members June 30 888     929  
     Number of pensioners June 30 624     582  
     Discount rate (%) 3,1     3,5  
     Inflation rate (%) 2,0     1,9  
     Salary increase (%) 2,0     1,9  
     Pension increase allowance (%) 0,7     0,7  
  Angliss Hong Kong Food Service Limited Retirement Benefit Plan          
     Number of in-service members June 30 302     294  
     Number of pensioners June 30 –     –  
     Discount rate (%) 1,9     2,2  
     Inflation rate (%) 3,3     3,3  
     Salary increase (%) 5,0     5,0  
  Date of valuation of all funds June 30 2014     June 30 2013  
  Assumptions regarding future mortality are based on published statistics and mortality tables.

Sensitivity analysis

The table below summarises the impact that a reasonably possible change in the respective assumption, occurring at the end of the year, would have, by increasing (decreasing) the net surplus in the plans, while holding all the other assumptions constant.
    Impact of an
increase in
assumption
R’000		     Impact of a
decrease in
assumption
R’000		  
  The Bidvest South Africa Pension Fund          
     Discount rate – 1% 19 214     (24 649)  
     Pension increase – 1% 16 091     (31 210)  
     Salary increase – 1% 7 473     (8 889)  
  Zwitserleven Pension Plan          
     Discount rate – 0,25% 54 332     (73 977)  
     Pension increase – 0,25% 65 445     (23 517)  
     Salary increase – 0,25% 12 115     (10 765)  
  Angliss Hong Kong Food Service Limited Retirement Benefit Plan          
     Discount rate – 0,25% 1 514     (1 564)  
     Salary increase – 0,25% 1 426     (1 389)  
  The sensitivity analyses presented above may not be representative of the actual change in the net surplus in the plans as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
    2014
R’000		     2013
R’000		  
  Post-retirement medical aid obligations          
  The Group provides post-retirement medical benefit subsidies to certain retired employees and is responsible for the provision of post-retirement medical benefit subsidies to a limited number of current employees.          
  Movement in liability for post-retirement medical aid obligations          
     Opening provision raised against unfunded obligation 124 825     185 203  
     Current service costs (relief) (4 229)     649  
     Interest 8 637     14 664  
     Actuarial gain recognised in the income statement       (45 955)  
     Payments charged against provisions (21 680)     (29 736)  
     Actuarial adjustments recognised in other comprehensive income (3 561)        
     Acquisition of businesses 1 776     –  
  Closing provision raised against unfunded obligation 105 768     124 825  
  Key actuarial assumptions %     %  
     Discount rate 8,6     8,2  
     Inflation rate 6,2     5,7  
     Healthcare cost inflation 8,2     8,1  
     Date of valuation June 30 2014     June 30 2013  
  A reasonably possible change in the key actuarial assumptions will not have a significant impact on the post-retirement medical aid cost and relating obligations.          
  Unfunded defined-benefit early retirement plan          
  A subsidiary provides an early retirement plan for its employees. The liability recognised is based on the actuarial valuation performed as at June 30.          
  Number of members at June 30 428     423  
    R’000     R’000  
  Movement in the liability for unfunded defined-benefit early retirement plan          
     Balance at beginning of year 187 914     195 466  
     Benefits paid by employer (46 663)     (48 374)  
     Current service costs 5 376     4 413  
     Interest 3 161     5 628  
     Transfer to pension fund (24 989)     –  
     Actuarial gain recognised in the income statement       (6 254)*  
     Actuarial adjustments recognised in other comprehensive income 12 389     *  
     Exchange rate adjustments on foreign plans 17 966     37 035  
     Balance at end of year 155 154     187 914  
  Key actuarial assumptions %     %  
     Discount rate 1,9     3,5  
     Salary increase rate 1,5     1,9  
     Date of valuation June 30 2014     June 30 2013  
  A reasonably possible change in the key actuarial assumptions will not have a significant impact on the liability for the unfunded defined-benefit early retirement plan cost and relating obligations.

* As a result of the Group adopting the revised IAS19 Employee Benefits, on a prospective basis, based on materiality (see note 2 of accounting policies), certain information is not relevant in the current period based on the prior period’s treatment or in the prior year based on the current year’s treatment. Information has been re-presented, where possible, to provide more meaningful disclosure.

Notes to the consolidated financial statements – Note 29