Annual Report 2012 - National Savings Bank

217THE RESULTS OF A CHALLENGING YEARNOTES TO THE FINANCIAL STATEMENTSrecognised as income or expense in therespective financial year.The defined benefit asset or liabilitycomprises the present value of the definedbenefit obligation less past service costsnot yet recognised and less the fair value ofplanned assets out of which the obligationsare to be settled directly, less actuariallosses not yet recognised. The value ofany asset is restricted to the sum of anyactuarial losses and past service cost notyet recognised and the present value of anyeconomic benefits available in the form ofrefunds from the plan or reductions in thefuture contributions to the plan.The latest actuarial valuation was carriedout as of 31 December 2012, by PiyalS. Gunatilleke F.S.A.(USA), Member ofthe American Academy of Actuaries andConsulting Actuaries.The principal financial assumptions usedin the valuation as at 31.12.2012 are asfollows:1. Interest/ Discount Rate 12.5 % p.a.2. Increase in Cost of LivingAllowances5 % p.a.3. Increase in AverageBasic Salary5% p.a.The Accounts of the Pension Fund aremaintained separately and are subjectto annual audit by Independent ExternalAuditors. The Statement of Accounts aswell as the Auditor’s Report are tabled andreviewed by the Board of Trustees. Thesestatements of Accounts and Auditor’sReport are also submitted for review of thedisclosure of the Bank, as the Bank has anobligation of ensuring that funding is madeat optimum levels. Pension is payablemonthly as long as the participant is alive.Un-Funded pension Liability.The results of the acturial valuation indicate( as at 31-12-2010) a past service deficit ofRs.2,025 Mn, and this has been provided infull by adjusting the retained earning asat 31-12-2011. The details for Un-FundedPension Liability are given in Note No-34(a).The amount recognised as expense forthe current year is Rs. 705 Million. (Rs.865Million in 2011)2.6.2 GratuityThe employees who joined the Bank onor after 1st January 1996 will be eligiblefor gratuity under the Payment of GratuityAct No. 12 of 1983, as they are not eligibleto join the Pension Scheme described asabove.Other employees whose services areterminated other than by retirement areeligible to receive the terminal gratuityunder the Payment of Gratuity Act No. 12of 1983 at the rate of one half of the GrossSalary applicable to the last month of thefinancial year in which the employment isterminated, for each year of continuousservice, for those who have served inexcess of 5 years.The Bank makes a monthly provisiontowards such Gratuity Payment Liabilitiesand this value is reflected in the FinancialPosition of the Bank. The provision isbased on the Actuarial valuation. The lastActuarial valuation was carried out as of 31December 2011.2.6.3 Post employment medical benefitsThe Bank expenses post employmentmedical benefits as an annual contributionbased on the annual actual expenditure andthe balance of the fund made out of theBank’s contribution at the year end.The amount recognised as expense for thecurrent year is Rs. 25 Million. (Rs.25 Millionin 2011)2.6.4 Defined contribution planThe Bank also operates a definedcontribution plan. The contribution payableto a defined contribution plan is in proportionto the services rendered to the Bank by theemployees and is recorded as an expenseunder ‘Personnel expenses’. Unpaidcontributions are recorded as a liability. TheBank contributes to the following definedcontribution plans:i. Employees’ Provident FundThe Bank and employees contribute 12%and 8% respectively of the employee’smonthly gross salary (excluding overtime)to the Provident Fund. The Bank’s ProvidentFund is an approved fund under theEmployees’ Provident Fund Act.ii. Employees’ Trust FundThe Bank contributes 3% of the employee’smonthly gross salary excluding overtime tothe Employees’ Trust Fund maintained bythe Employees Trust Fund Board.2.7 TaxationCurrent TaxationCurrent tax assets and liabilities consists ofamounts expected to be recovered from orNATIONAL SAVINGS BANK . ANNUAL REPORT 2012