Telkom AR front.qxp

30. EMPLOYEE BENEFITS (continued)
The Telkom Retirement Fund (continued)
Telkom Annual Report 2009 207
Notes to the consolidated annual financial statements (continued)
for the three years ended March 31, 2009
2007 2008 2009
Rm Rm Rm
Present value of funded obligation 6,581 7,101 6,704
Fair value of plan assets (7,661) (7,991) (6,675)
Fund (surplus)/deficit (1,080) (890) 29
Unrecognised net actuarial loss (96) (478) (1,578)
Unrecognised net asset (1,176) (1,368) (1,549)
Expected return on plan assets 489 686 796
Actuarial gain/(loss) on plan assets 1,641 118 (1,735)
Actual gain/(loss) on plan assets 2,130 804 (939)
Included in the fair value of plan assets is:
Office buildings occupied by Telkom 371 596 619
Telkom bonds 21 10 –
Telkom shares 284 141 132
The Telkom Retirement Fund invests its funds in South Africa and internationally.
Twelve fund managers invest in South Africa and five of these managers
specialise in trades with bonds on behalf of the Retirement Fund. The
international investment portfolio consists of global equity and hedged funds.
2007 2008 2009
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 (%) 9.3 10.3 10.7
Pension increase allowance (%) 4.5 6.0 4.0
The overall long-term expected rate of return on assets is 10.7%. 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 Retirement Fund and expected long-term
return on these assets, of which South African equities, foreign investments and South African index-linked bonds are the largest contributors.