Telkom AR front.qxp

30. EMPLOYEE BENEFITS (continued)
Telkom Annual Report 2009 205
Notes to the consolidated annual financial statements (continued)
for the three years ended March 31, 2009
2007 2008 2009
Rm Rm Rm
The Telkom Pension Fund (continued)
Present value of funded obligation 205 204 199
Fair value of plan assets (284) (311) (247)
Fund surplus (79) (107) (48)
Unrecognised net actuarial gain/(loss) 25 23 (46)
Fund surplus (54) (84) (94)
Asset limitation – 29 39
Recognised net asset (54) (55) (55)
Expected return on plan assets 19 27 28
Actuarial return/(loss) on plan assets 75 10 (67)
Actual return/(loss) on plan assets 94 37 (39)
Principal actuarial assumptions were as follows:
Discount rate (%) 7.5 9.0 8.7
Yield on government bonds (%) 7.5 9.0 8.7
Long-term return on equities (%) 10.5 11.0 12.0
Long-term return on cash (%) 5.5 7.0 7.5
Expected return on plan assets (%) 9.7 9.8 10.5
Salary inflation rate (%) 6.0 7.5 7.2
Pension increase allowance (%) 2.9 4.3 4.0
The overall long-term expected rate of return on assets is 10.5%. This is
based on the portfolio as a whole and not the sum of the returns of
individual asset categories. The expected return takes into account the
asset allocation of the Telkom Pension Fund and expected long-term
return of these assets, of which South African equities and bonds
are the largest contributors.
The assumed rates of mortality are determined by reference to the
SA85-90 (Light) Ultimate table, as published by the Actuarial Society
of South Africa, for pre-retirement purposes and the PA(90) Ultimate
table, minus one year age rating as published by the Institute and
Faculty of Actuaries in London and Scotland, for retirement purposes.
Funding level per statutory actuarial valuation (%) 100.0 100.0 100.0
The number of employees registered under the Telkom Pension Fund
The fund portfolio consists of the following:
153 146 123
Equities (%) 74 54 57
Bonds (%) 5 5 25
Cash (%) 3 23 3
Foreign investments (%) 16 18 15
Insurance policies (%) 2 – –
The total expected contributions payable to the pension fund for the next financial year are R1 million.