35

RETIREMENT BENEFIT INFORMATION

    
35.1 Pensions    
  Assore is a holding company which operates through its 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 respectively to the umbrella fund. Contributions to the fund amounted to R4,9 million (2014: R3,7 million) and the value of the fund at year-end amounted to R26,2 million (2014: R22,5 million).

Defined benefit fund – 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 2015 and revealed a 111,8% funding level. An interim check was performed for funding purposes as at 1 July 2014, which revealed a 112,9% funding level (2014: 113,3%). The financial position of the fund at the dates of the interim funding checks is set out below:
       
    2015  2014 
  R’000  R’000 
  Change in defined benefit obligation    
  Benefit obligation at beginning of year 428 273  365 007 
  Current service costs 34 813  30 749 
 

Interest cost

 39 010  34 111 
  Actuarial gain – experience (1 381) (5 624)
  Actuarial (gain)/loss – assumptions (14 067) 24 288 
  Benefits paid (10 346) (20 258)
  Benefit obligation at end of year 476 302  428 273 
  Change in plan assets    
  Fair value of plan assets at beginning of year 485 246  377 322 
  Expected return on plan assets 45 261  32 500 
  Actuarial (gain)/loss on plan assets – experience and assumptions (19 233) 69 742 
  Employer contribution 24 502  18 257 
  Employees’ contributions 8 346  7 683 
  Benefits paid (10 346) (20 258)
  Fair value of plan assets at end of year 533 776  485 246 
  Net surplus at year-end per statement of financial position 57 474  56 973 
  Components of periodic expense    
  Current service costs 34 813  30 749 
 

Interest cost

 39 010  34 111 
  Expected return on plan assets (45 261) (32 500)
 

Net pension cost for the year

 28 562  32 360 
  Plan assets invested as follows: %  % 
  Local and offshore equity securities 70  70 
  Local and offshore debt securities 23  15 
  Property 1  1 
  Other (cash, cash awaiting investment, bank account) 6  14 
    100  100 
    2015  2014 
    R’000  R’000*
 

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

    
  Due within one year 44 227  23 857 
  Due within two years 19 394  26 345 
  Due within three years 57 694  17 025 
  Due within four years 21 858  51 014 
  Due within five years 26 479  19 113 
  Due between six and 10 years 81 216  84 389 
  Due thereafter 225 434  206 530 
    476 302  428 273 
  Actual return on assets for the year comprises: 26 028  102 242 
  – expected return on plan assets for the year 45 261  32 500 
  – actuarial (losses)/gains on plan assets (19 233) 69 742 
  Expected contribution next year 39 417  37 975 
  Actuarial assumptions    
  The above valuations are based on the following principal actuarial assumptions: %  % 
  Expected return on plan assets 8,80  9,00 
  Post-retirement interest rate 3,60  3,60 
  Price inflation rate 6,90  7,20 
  Salary inflation rate 7,90  8,20 
  Pension increases 5,20  5,40 
  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:
                       
  2015  Interest Post retirement Price inflation Salary escalation Pension increases
    1%  1%  1%  1%  1%  1%  1%  1%  1%  1% 
  Assumptions increase decrease increase decrease increase decrease increase decrease increase decrease
  Impact on defined benefit obligation (43 629) 57 323  (32 899) 62 159  97 512  (61 703) 45 920  (38 136) 63 552  (34 477)
  2014* Interest Post retirement Price inflation Salary escalation Pension increases
    1%  1%  1%  1%  1%  1%  1%  1%  1%  1% 
  Assumptions increase decrease increase decrease increase decrease increase decrease increase decrease
  Impact on defined benefit obligation (47 013) 63 102  (37 844) 58 210  78 179  (58 232) 49 525  (40 944) 55 546  (33 243)
 
* The maturity profile and the impact of changes to assumptions have been restated for the prior year to be actuarially consistent with the calculation methodology adopted in the current year.