Telkom AR front.qxp

302
Telkom Annual Report 2009
Notes to the annual financial statements (continued)
for the three years ended March 31, 2009
25. EMPLOYEE BENEFITS (continued)
The Telkom Retirement Fund (continued)
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.
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 Telkom Retirement Fund and expected longterm
return on these assets, of which South African equities, foreign
investments and South African index-linked 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 (%) 100 100 100
The number of pensioners registered under the Telkom Retirement Fund
The number of in-service employees registered under the Telkom
14,451 14,255 13,617
Retirement Fund 25,766 24,939 23,389