| 2020 R'000 | 2019 R'000 |
|||||
|---|---|---|---|---|---|---|
| 32. | Post-retirement obligations | |||||
| Post-retirement assets | ||||||
| Defined benefit pension surplus | (214 329) | (241 390) | ||||
| Post-retirement obligations | ||||||
| Post-retirement medical aid obligations | 79 075 | 74 317 | ||||
| (135 254) | (167 073) | |||||
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.
The PHS Group, acquired in the current year, operates a defined benefit scheme, which is closed to new members. The assets of the scheme are measured using closing market values. The scheme liabilities are measured using the projected unit method discounted at rates of return of a high quality bond of equivalent term and currency to the liability. The summarised details of the Warner Howard Limited Pension and Life Assurance Plan are included.
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 Group operates a defined benefit fund through The Bidvest South Africa Pension Fund.
Employer contributions to defined contribution funds are set out in note 2 Profit before finance charges and associate income.
Summarised details of the defined benefit pension funds
| 2020 R'000 |
2019 R'000 |
||||||
|---|---|---|---|---|---|---|---|
| Defined benefit pension obligations (assets) of the fund | |||||||
| The Bidvest South Africa Pension Fund | (214 329) | (241 390) | |||||
| (214 329) | (241 390) | ||||||
| Contributions to the fund | |||||||
| Employee contributions | 338 | 356 | |||||
| Total pension fund asset | |||||||
| Fair value of plan assets | 587 143 | 625 295 | |||||
| Actuarial present value of defined benefit obligations | (363 155) | (381 253) | |||||
| Net surplus in the plans | 223 988 | 244 042 | |||||
| Amounts not recognised due to ceiling adjustments and other limitations | (9 659) | (2 652) | |||||
| 214 329 | 241 390 | ||||||
| Movement in the liability for defined benefit obligations | |||||||
| Balance at beginning of year | (381 253) | (390 780) | |||||
| Benefits paid | 27 797 | 25 496 | |||||
| Risk premiums and expenses | 990 | 999 | |||||
| Current service costs | (2 338) | (2 296) | |||||
| Transfers in for the benefit of pensioners | (1 399) | - | |||||
| Interest expense | (34 580) | (37 000) | |||||
| Member contributions | (338) | (356) | |||||
| Actuarial gains | 27 966 | 22 684 | |||||
| Balance at end of year | (363 155) | (381 253) | |||||
| Movement in the plans' assets | |||||||
| Balance at beginning of year | 625 295 | 623 979 | |||||
| Transfer in * | 2 797 | 101 | |||||
| Contributions paid into the plans | 338 | 356 | |||||
| Benefits paid | (27 797) | (25 496) | |||||
| Risk premiums and expenses | (990) | (1 986) | |||||
| Interest income | 57 059 | 59 345 | |||||
| Return on plan assets in excess of interest income | (69 559) | (31 004) | |||||
| Balance at end of year | 587 143 | 625 295 | |||||
| * From the unclaimed benefits reserve (2019: to pensioner pool in respect of ex-gratia payments) | |||||||
| The plans' assets comprise | |||||
| Cash | 56 366 | 64 405 | |||
|---|---|---|---|---|---|
| Equity securities | 267 737 | 310 772 | |||
| Bills, bonds and securities | 110 970 | 108 801 | |||
| Property | 21 137 | 18 759 | |||
| International | 124 474 | 117 555 | |||
| Other | 6 459 | 5 003 | |||
| 587 143 | 625 295 | ||||
| Amounts recognised in the income statement | |||||
| Current service costs | 2 338 | 2 296 | |||
| Transfer in from unclaimed benefit reserve | – | (101) | |||
| Interest on obligations | 34 580 | 37 000 | |||
| Interest income on plan assets | (57 059) | (59 345) | |||
| Ceiling adjustments and other limitations | 247 | 836 | |||
| Risk premiums and expenses | – | 987 | |||
| (19 894) | (18 327) | ||||
| Amounts recognised in other comprehensive income | |||||
| Return on plan assets in excess of interest income | 69 559 | 31 004 | |||
| Actuarial gains | (27 966) | (22 684) | |||
| Transfers in | (1 398) | - | |||
| Ceiling adjustments and other limitations | 6 760 | (6 806) | |||
| 46 955 | 1 514 | ||||
| Key actuarial assumptions used in the actuarial valuations: | |||||
| The Bidvest South Africa Pension Fund | |||||
| Number of in service members 30 June | 15 | 19 | |||
| Number of pensioners 30 June | 530 | 537 | |||
| Discount rate (%) | 10.6 | 9.3 | |||
| Inflation rate (%) | 5.6 | 5.6 | |||
| Salary increase (%) | 6.6 | 6.6 | |||
| Pension increase allowance (%) | 3.9 | 3.9 | |||
| Date of valuation of all funds | 30 June 2020 | 30 June 2019 | |||
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 plan, while holding all the other assumptions constant.
| 2020 Impact of an increase in assumption R'000 |
2019 Impact of an increase in assumption R'000 |
|||
|---|---|---|---|---|
| The Bidvest South Africa Pension Fund | ||||
| Discount rate – 1% | 4 346 | 7 497 | ||
| Pension increase – target 100% of inflation (assumption 70%) | (14 343) | (12 060) | ||
| Salary increase – 1% | (1 284) | (4 650) |
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.
| 2020 R'000 |
2019 R'000 |
|||
|---|---|---|---|---|
| Defined benefit pension obligations (assets) of the fund | ||||
| Warner Howard Limited Pension and Life Assurance Plan | – | – | ||
| Total pension fund asset | ||||
| Fair value of plan assets | 272 073 | – | ||
| Actuarial present value of defined benefit obligations | (240 939) | – | ||
| Net surplus in the plans | 31 134 | – | ||
| Amounts not recognised due to ceiling adjustments and other limitations | (31 134) | – | ||
| – | – | |||
| Movement in the liability for defined benefit obligations | ||||
| Benefits paid | 1 378 | – | ||
| Interest expense | (1 072) | – | ||
| Actuarial gains | (30 774) | – | ||
| Acquisition of businesses | (232 062) | – | ||
| Exchange rate adjustments on foreign plans | 21 591 | – | ||
| Balance at end of year | (240 939) | – | ||
| Liabilities are measured | ||||
| Movement in the plans' assets | ||||
| Benefits paid | (1 378) | – | ||
| Interest income | 1 247 | – | ||
| Return on plan assets in excess of interest income | 28 937 | – | ||
| Acquisition of businesses | 268 095 | – | ||
| Exchange rate adjustments on foreign plans | (24 828) | – | ||
| Balance at end of year | 272 073 | – | ||
| The plans' assets comprise | ||||
| Cash | 272 | – | ||
| Equity securities | 92 505 | – | ||
| Bills, bonds and securities | 179 296 | – | ||
| 272 073 | – | |||
| Amounts recognised in the income statement | ||||
| Interest on obligations | 1 072 | – | ||
| Interest income on plan assets | (1 247) | – | ||
| Ceiling adjustments and other limitations | 175 | – | ||
| – | – | |||
| Amounts recognised in other comprehensive income | ||||
| Return on plan assets in excess of interest income | (28 937) | – | ||
| Actuarial losses | 30 774 | – | ||
| Ceiling adjustments and other limitations | (1 837) | – | ||
| – | – | |||
| Key actuarial assumptions used in the actuarial valuations: | ||||
| Number of pensioners 30 June | 143 | – | ||
| Discount rate (%) | 1.4 | – | ||
| Inflation rate (%) | 3.3 | – | ||
| Pension increase allowance (%) | 3.2 | – | ||
| Date of valuation of all funds | 30 June 2020 |
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 plan, while holding all the other assumptions constant.
| 2020 Impact of an increase R'000 |
2019 Impact of an increase R'000 |
|||
|---|---|---|---|---|
| Warner Howard Limited Pension and Life Assurance Plan | ||||
| Discount rate – 1% | 28 773 | – | ||
| Pension increase – target 100% of inflation | (10 886) | – |
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.
| 2020 R'000 |
2019 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. | ||||
| Provision for post-retirement medical aid obligations | ||||
| Opening provision raised against unfunded obligation | 74 317 | 76 943 | ||
| Current service costs (relief) | 369 | (244) | ||
| Interest expense | 5 667 | 6 170 | ||
| Benefits paid | (7 722) | (7 981) | ||
| Actuarial adjustments recognised in other comprehensive income | (8 226) | (571) | ||
| Acquisition of businesses | 15 660 | – | ||
| Disposal of businesses and transfer to discontinued operations | (990) | – | ||
| Closing provision raised against unfunded obligation | 79 075 | 74 317 | ||
| % | % | |||
| Key actuarial assumptions | ||||
| Discount rate | 9.0 | 8.7 | ||
| Inflation rate (CPI) | 4.4 | 5.7 | ||
| Health care cost inflation | 6.4 | 7.7 | ||
| Date of valuation | 30 June 2020 | 30 June 2019 |
A change in the medical inflation rates will not have a significant impact on the post-retirement medical aid cost and related obligations.