33.

Retirement benefit information
  33.1 Pensions
    Defined benefit – Assore Pension Fund
    In terms of the Pensions Fund Act, the Assore Pension Fund is actuarially valued every three years. The most recently completed statutory actuarial valuation of the fund was performed as at 1 July 2008 and revealed a 100,3% funding level. An interim funding check was performed for funding purposes as at 30 June 2011 which revealed a 91,4% funding level (2010: 93,9%). The financial positions at the year-end dates are set out below:
        2011 2010
      % %
    Change in defined benefit obligation    
      Benefit obligation at beginning of year 268 974 249 886
      Current service cost 15 626 13 643
      Interest cost 25 625 23 239
      Actuarial (gain)/loss – experience (5 804) 2 432
      Actuarial loss/(gain) – assumptions 25 795 (10 042)
      Benefits paid (59 720) (10 184)
    Benefit obligation at end of year 270 496 268 974
         
    Change in plan assets    
      Fair value of plan assets at beginning of year 252 697 222 851
      Expected return on plan assets 24 006 20 430
      Actuarial (loss)/gain on plan assets – experience and assumptions 9 738 5 104
      Employer contribution 15 186 9 664
      Employees’ contributions 5 415 4 832
      Benefits paid (59 720) (10 184)
    Fair value of plan assets at end of year 247 322 252 697
           
    Net unfunded position (23 174) (16 277)
    Unrecognised actuarial losses 23 174 24 447
    Net pension fund asset (2010: no asset recognised) – 8 170
           
    Components of periodic expense    
      Current service cost 15 626 13 643
      Interest cost 25 625 23 239
      Expected return on plan assets (24 006) (20 430)
      Amortisation of actuarial loss 11 526 653
    Net pension cost 28 771 17 105
         The allocation of plan assets is as follows:    
    Equity securities 68 63
    Debt securities 27 32
    Other (cash in current accounts as awaiting investment) 5 5
    Total 100 100
         
    The principal actuarial assumption for the valuations include:    
    Expected return on assets 9,10 9,50
    Post-retirement interest rate 4,20 4,60
    Price inflation rate 6,51 6,50
    Salary inflation rate 7,50 7,50
    Pension increases 4,88 4,85
      R’000 R’000
    Expected benefit payment next year 11 000 13 000
    Experience adjustments – losses on plan assets and liabilities 5 804 25 804
    Actual return/(deficit) on assets 33 744 (2 432)
    Other assumptions    
   

Active mortality – Nil.

Pensioner mortality PA (90) – ultimate table, adjusted for two years’ additional longevity since the previous year-end.

Merit salary increases as 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.

Defined contribution funds – subsidiary companies
Certain employees are members of a defined contribution fund, and funds are contributed on an agreed basis between the employer and employees at a rate of 15% of payroll. Contributions expensed in the year amounted to R1,6 million (2010: R1,4 million).

Assmang pension and provident funds
Assmang has made provision for pension plans covering all employees which comprise a defined contribution pension fund and two defined contribution provident funds administered by employee organisations within the industries in which members are employed.

Contributions to the funds are 15,0% of payroll, split on an agreed basis between members and the employer. The amount expensed in this regard in the current year was R44,2 million (2010: R34,8 million).
  33.2 Medical aid
   

Subsidiary companies
Subsidiary companies within the group had obligations to fund the medical aid costs of certain employees and pensioners. Agreement has been reached with the pensioners and applicable members of staff in terms of which these obligations have been converted to either purchased annuities or a series of lump sum payments into the defined benefit pension fund on their behalf. The payments or premiums concerned were calculated by an independent actuary and have resulted in the liabilities arising from these obligations being settled.

Medical aid contributions paid on behalf of current members of staff and pensioners by group companies amounted to R3,9 million (2010: R3,8 million).

Joint-venture entity
The joint-venture entity, Assmang, has obligations to fund a portion of certain retiring employees’ medical aid contributions based on the cost of benefits. The anticipated liabilities arising from these obligations have been actuarially determined using the projected unit credit method, and a corresponding liability has been recognised in the statement of financial position.

The following table summarises the components of the net increase/(decrease) in provision recognised in the income statement of the joint-venture entity:
    Current service cost 543 498
    Interest cost on benefit obligation 2 125 1 886
    Benefits (769) (709)
    Net actuarial loss/(gain) recognised during the year 605 (1 776)
    Net increase/(decrease) in provision for the year 2 504 (101)
   

The liability is assessed periodically by an independent actuarial survey based on the following principal actuarial assumptions:

  • a net discount rate of 1,00% per annum;
  • an increase in healthcare costs at a rate of 9,11% per annum;
  • assumed rate of return on assets at 10,2% per annum.

The liabilities raised are based on the present values of the post-retirement benefits and have been recognised in full, based on an actuarial valuation at 30 June 2011.

The provisions raised in respect of post-retirement healthcare benefits amounted to R23,7 million (2010: R21,2 million) at the end of the year. As shown above, an amount of R2,5 million was charged to the income statement in the current year (2010: R0,1 million credited to income), as a result of the increase in the obligation.

Medical aid contributions paid on behalf of current members of staff and pensioners by the joint-venture entity during the year amounted to R63,2 million (2010: R48,5 million).