Telkom AR front.qxp

30. EMPLOYEE BENEFITS (continued)
Medical benefits (continued)
Telkom Annual Report 2009 209
Notes to the consolidated annual financial statements (continued)
for the three years ended March 31, 2009
2007 2008 2009
Rm Rm Rm
Medical aid
Benefit obligation:
At beginning of year 3,904 4,384 4,850
Interest cost 286 322 428
Current service cost 83 84 95
Actuarial loss 283 246 246
Termination settlement – – (5)
Benefits paid from plan assets (94) (125) (141)
Contributions paid by Telkom (78) (61) (63)
Benefit obligation at end of year 4,384 4,850 5,410
Plan assets at fair value:
At beginning of year – 1,961 1,929
Plan asset – initial recognition 1,720 – –
Expected return on plan assets 188 257 223
Benefits paid from plan assets (94) (125) (141)
Actuarial gain/(loss) 147 (164) (393)
Plan assets at end of year 1,961 1,929 1,618
Present value of funded obligation 4,384 4,850 5,410
Fair value of plan assets (1,961) (1,929) (1,618)
Funded status 2,423 2,921 3,792
Unrecognised net actuarial loss (1,284) (1,565) (2,047)
Liability as disclosed in the balance sheet (refer to note 29) 1,139 1,356 1,745
Expected return on plan assets 188 257 223
Actuarial return on plan assets 147 (164) (393)
Actual return on plan assets 335 93 (170)
2007 2008 2009
Principal actuarial assumptions were as follows:
Discount rate (%) 7.5 9.0 8.7
Expected return on plan assets (%) 13.5 12.0 11.0
Salary inflation rate (%) 6.0 7.5 7.2
Medical inflation rate (%) 6.5 8.0 7.7
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.
Contractual retirement age 65 65 65
Average retirement age 60 60 60
Number of members 17,119 15,526 13,883
Number of pensioners 8,494 8,430 8,397