Annual Report - JD Group

Notes to the Group annual financial statements continued
23. Employee benefit plans
23.1 Retirement benefits
The Group has made provision for pension and provident schemes covering substantially all employees. All eligible employees are
members of either a defined benefit or a defined contribution scheme administered by Alexander Forbes Financial Services, Old Mutual
Employee Benefits Industry Funds Unit or the Social Security Fund in Poland.
One defined benefit scheme and 12 defined contribution schemes are in operation. The assets of these schemes are held in
administered trust funds separated from the Group’s assets. Scheme assets primarily consist of listed shares, property trust units
and fixed income securities. The schemes are governed by the South African Pension Funds Act of 1956 or the Polish Social Securities
System Act of 1998.
The defined benefit fund is valued actuarially at intervals of not more than three years using the projected unit credit method. The
scheme was valued for financial reporting purposes at year end. The date of the next statutory actuarial valuation is 31 December 2004.
In arriving at their conclusion, the actuaries took into account the following reasonable long term estimates:
52
2004 2003
% %
Inflation 5,0 7,0
Increase in salaries 6,5 8,5
Increase in pensions 2,8 4,7
Return on investment 10,0 12,0
Discount rate 10,0 12,0
The actuarially determined fair value of the assets of the defined benefit scheme was R91 million (2003: R83 million) which corresponds
with the market value at that date. This is sufficient to cover the benefits that had accrued to members, allowing for expected future
increases in earnings, amounting to R67 million (2003: R64 million).
2004 2003
Rm Rm
Cost recognised 6,9 6,3
Current service cost 3,6 4,0
Interest cost 6,7 7,8
Expected return on plan assets (8,6) (8,5)
Asset utilised 5,2 3,0
As the Group has not conducted the surplus apportionment process as required by the Pension Funds Amendment Act, 2001,
ownership of the surplus, if any, cannot be determined. As a result, the surplus in the fund has not been recognised as an asset.
Any deficit as determined by the actuaries is funded either immediately or through increased contributions to ensure the ongoing
soundness of the scheme.
23.2 Disability fund
The Group has a commitment to the Group Disability Fund of R6,3 million for estimated current and future benefits in respect of
108 members which is fully provided for.