Annexure D: Post-retirement medical liability
The Company and its subsidiaries operate a post-employment medical benefit scheme that covers certain retirees and one employee still in service. The liabilities are valued annually using the Projected Unit Credit method prescribed by IAS 19. The latest full actuarial valuation was performed on 30 June 2016.
The following table summarises the components of net benefit expense recognised in the statement of comprehensive income, the funded status and amounts recognised in the statement of financial position.
| 2016 R’000 |
2015 R’000 |
|||
| Net benefit expense | ||||
| Current service cost | 36 | 33 | ||
| Interest cost on benefit obligation | 1 906 | 1 825 | ||
| 1 942 | 1 858 | |||
| Expected contributions within the next 12 months | 39 | 35 | ||
| Defined benefit obligation at 1 July | (22 796) | (22 034) | ||
| Interest cost | (1 906) | (1 825) | ||
| Current service cost | (36) | (33) | ||
| Benefits paid | 1 665 | 1 538 | ||
| Actuarial profits/(losses) on obligation | 6 079 | (442) | ||
| Defined benefit obligation at 30 June | (16 994) | (22 796) |
| Assumptions | % | % | ||
| The assumptions used in the valuations are as follows: | ||||
| Discount rate | 9.90 | 8.70 | ||
| CPI increase | 7.60 | 6.50 | ||
| Healthcare cost inflation | 9.60 | 8.50 | ||
| Expected retirement age | 63 | 63 | ||
| Post-retirement mortality table | PA(90) ultimate table |
PA(90) ultimate table |
| Sensitivity analysis | Valuation R’000 |
+1% R’000 |
-1% R’000 |
|
| The liability was recalculated to show the effect of: | ||||
| 2016 | ||||
| A one percentage point variance in the assumed rate of healthcare costs inflation | (16 994) | (18 790) | (15 462) | |
|---|---|---|---|---|
| A one percentage point variance in the discount rate | (16 994) | (15 506) | (18 767) | |
| A one year variance in the expected retirement age | (16 994) | (17 074) | (16 918) | |
| 2015 | ||||
| A one percentage point variance in the assumed rate of healthcare costs inflation | (22 796) | (25 299) | (20 665) | |
| A one percentage point variance in the discount rate | (22 796) | (20 720) | (25 276) | |
| A one year variance in the expected retirement age | (22 796) | (22 868) | (22 729) |