Financial Statements - United Bank Limited

NOTES TO AND FORMING PART OF THE UNCONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2012
36.10 Five year data on surplus / (deficit) of the plans and experience adjustments
Pension Fund
2012 2011 2010 2009 2008
---------------------------------- (Rupees in '000) ----------------------------------
Present value of defined benefit obligations (3,537,429) (3,671,958) (3,598,231) (3,585,208) (3,625,280)
Fair value of plan assets 5,137,979 5,477,630 5,527,239 6,107,212 6,526,828
Surplus 1,600,550 1,805,672 1,929,008 2,522,004 2,901,548
Experience adjustments on plan liabilities [loss / (gain)] 11,271 (13,450) (214,828) 89,216 (87,141)
Experience adjustments on plan assets [loss / (gain)] (29,096) 23,879 57,726 (282,376) (1,195)
Gratuity Fund
Present value of defined benefit obligations (523,053) (472,157) (417,733) (365,292) (384,786)
Fair value of plan assets 409,974 381,841 325,781 301,174 291,292
Deficit (113,079) (90,316) (91,952) (64,118) (93,494)
Experience adjustments on plan liabilities [loss / (gain)] (28,098) (4,001) 36,338 137,106 43,905
Experience adjustments on plan assets [loss / (gain)] 3,602 8,063 6,400 96,896 55,290
Benevolent Fund
Present value of defined benefit obligations (409,721) (424,851) (420,778) (459,080) (529,647)
Fair value of plan assets 836,962 827,840 799,917 796,302 739,180
Surplus 427,241 402,989 379,139 337,222 209,533
Experience adjustments on plan liabilities [loss / (gain)] (4,034) 4,886 1,505 (8,798) 138,712
Experience adjustments on plan assets [loss / (gain)] 1,473 20,826 2,737 (56,670) 144,550
Post retirement medical benefit
Present value of defined benefit obligations (943,927) (831,508) (826,088) (852,603) (875,509)
Experience adjustments on plan liabilities [loss / (gain)] 99,652 (34,740) (26,232) 37,473 761
Employee compensated absences
Present value of defined benefit obligations 1,067,421 825,137 677,152 731,908 613,602
36.11 Effects of a 1% movement in assumed medical cost trend rates
The annual medical expense entitlement is based on the non-monetized basic pay of employees as on June 30, 2001. Accordingly, movements in medical cost trend rates would not affect current service
cost, interest cost and defined benefit obligations for the post retirement medical benefit scheme.
36.12 Components of plan assets as a percentage of total plan assets
Pension fund
2012 2011
Gratuity Benevolent Pension Gratuity
fund fund fund fund
Benevolent
fund
Government securities 86.69% 95.00% 94.27% 89.02% 98.00% 96.47%
Units of mutual funds 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Ordinary shares of listed companies 1.15% 0.89% 1.24% 0.68% 0.60% 1.23%
Term finance certificates 10.72% 3.36% 1.84% 10.27% 0.69% 2.29%
Others (including bank balances) 1.44% 0.75% 2.65% 0.03% 0.71% 0.01%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
As per actuarial recommendations, the expected return on plan assets was assumed at 12% per annum on Pension Fund assets, Gratuity Fund assets and Benevolent Fund assets. The expected return on
plan assets was determined by considering the expected returns available on the underlying assets.
36.13 Expected contributions to be paid to the funds in the next financial year
The Bank contributes to the pension and gratuity funds according to the actuary's advice. Contribution to the benevolent fund is made by the Bank as per the rates set out in the benevolent fund scheme.
Based on actuarial advice, the management estimates that the charge / (reversal) in respect of defined benefit plans for the year ended December 31, 2013, subject to the provisions of the Trust Deeds,
would be as follows:
Pension
fund
Gratuity
fund
2013
Benevolent
fund
Post retirement
medical
benefit
Employee
compensated
absences
---------------------------------- (Rupees in '000) ----------------------------------
Expected (reversal) / charge for the year (170,393) 80,064 (46,697) 118,736 367,096
37. OTHER EMPLOYEE BENEFITS
37.1 Defined contribution plan
The Bank operates a contributory provident fund scheme for 6,645 (2011: 5,438) employees who are not in the pension scheme. The employer and employee each contribute 8.33% of the basic salary to
the funded scheme every month.
37.2 Employee Motivation and Retention Scheme
The Bank has a long term motivation and retention scheme for its employees. The liability of the Bank in respect of the scheme for each year, if any, is fixed, and is accounted for in the year to which the
scheme relates. The scheme is managed by separate Trusts formed in respect of each year. During the year, Rs.290.612 million (2011: Rs.170.563 million) and Rs.30.796 million (2011: Rs.24.528 million)
were received by the Executives and the Chief Executive respectively from the scheme.
37.3 Benazir Employees’ Stock Option Scheme
On August 14, 2009, the Government of Pakistan (GoP) launched the Benazir Employees' Stock Option Scheme ("the Scheme") for employees of certain State Owned Enterprises (SOEs) and non-SOEs.
The Scheme needs to be accounted for by the covered entities, including the Bank, under the provisions of amended IFRS 2, Share Based Payments. However, keeping in view the difficulties that may be
faced by the entities covered under the Scheme, the SECP has granted exemption to such entities from the application of IFRS 2 to the Scheme.
Had the exemption not been granted, the staff costs of the Bank for the year would have been higher by Rs.583 million (2011: Rs.114 million), profit before taxation would have been lower by Rs.583 million
(2011: Rs.114 million), unappropriated profit would have been lower by Rs.1,279 million (2011: Rs.696 million) and reserves would have been higher by Rs.1,279 million (2011: Rs.696 million), hence, there
would have been no impact on net equity. Further, earnings per share would have been lower by Rs.0.48 per share (2011: Rs.0.09 per share).
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