Annual Report

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66 Ausgrid and Controlled Entity Notes to financial statements For the year ended 30 June 2015 27. SUPERANNUATION – DEFINED BENEFITS PLAN Ausgrid has a defined benefit superannuation plan covering a significant number of employees, which requires contributions to be made to a separately administered fund. a. Nature of the benefits provided by the fund The Energy Industries Superannuation Scheme (the Scheme) is divided into seven divisions, of which Divisions B, C and D provide defined benefits, that is at least a component of the final benefit is derived from a multiple of member salary and years of membership. Members receive lump sum or pension benefits on retirement, death, disablement and withdrawal. Divisions B, C and D are closed to new members except for members of eligible schemes who can transfer their entitlements into the Scheme. Disclosures below are prepared in relation to Divisions B, C and D only; these Divisions are referred to collectively as "the Fund" hereafter. b. Description of the regulatory framework The Scheme was established on 30 June 1997 by a Trust Deed made under an Act of the NSW Parliament, for the purpose of providing retirement benefits for employees of certain Energy Industries bodies in NSW. The Scheme is regulated primarily by the Superannuation Industry (Supervision) Act 1993 (Cth) ("the SIS legislation"), but is also subject to regulation under the Superannuation Administration Act 1996 (NSW). The SIS legislation governs the superannuation industry and provides the framework within which superannuation plans operate. The SIS Regulations require an actuarial valuation to be performed for each defined benefit superannuation plan every three years, or every year if the plan pays defined benefit pensions, unless an exemption has been obtained. The prudential regulator, the Australian Prudential Regulation Authority (APRA), licenses and supervises regulated superannuation plans. The Scheme has received an exemption from annual actuarial valuation and therefore actuarial valuations are only required triennially. The last actuarial valuation of the Scheme was performed as at 30 June 2012. The next actuarial valuation is due as at 30 June 2015 with the report expected to be released by the end of December 2015. c. Risk exposure There are a number of risks to which the Fund exposes the Employer. The more significant risks relating to the defined benefits are: • Investment risk – The risk that investment returns will be lower than assumed and the Employer will need to increase contributions to offset this shortfall. • Longevity risk – The risk that pensioners live longer than assumed, increasing future pensions. • Pension indexation risk – The risk that pensions will increase at a rate greater than assumed, increasing future pensions. • Salary growth risk – The risk that wages or salaries (on which future benefit amounts for active members will be based) will rise more rapidly than assumed, increasing defined benefit amounts and thereby requiring additional employer contributions. • Legislative risk – The risk is that legislative changes could be made which increase the cost of providing the defined benefits. The defined benefit fund assets are invested with independent fund managers and have a diversified asset mix. The Fund has no significant concentration of investment risk or liquidity risk. d. Description of other entities' responsibilities for the governance of the fund The Scheme's Trustee is responsible for the governance of the Scheme. The Trustee has a legal obligation to act solely in the best interests of the Scheme beneficiaries. The Trustee has the following roles: • Administration of the Scheme and payment to the beneficiaries from Scheme assets when required in accordance with the Scheme rules; • Management and investment of the Scheme assets; • Compliance with other applicable regulations, and • Compliance with the Trust Deed. e. Description of significant events There were no fund amendments or curtailments during the year.
Ausgrid – <strong>Annual</strong> <strong>Report</strong> 2014/15 67 f. Reconciliation of the Net Defined Benefit Liability/(Asset) The following tables summarise the components of net benefit expense recognised in the profit or loss, actuarial gains and losses recognised in other comprehensive income, and funded status and amounts recognised in the Statement of Financial Position of the Energy Industry Superannuation Scheme. Present value of obligation $M Fair value of plan assets $M At 1 July 2013 995.9 (729.5) 266.4 Current service cost 23.7 – 23.7 Interest expense/(income) 35.4 (27.3) 8.1 Expense/(income) recognised in profit or loss 59.1 (27.3) 31.8 Contributions by Fund participants Employers – (32.6) (32.6) Plan participants 7.9 (7.9) – Remeasurements Total $M 7.9 (40.5) (32.6) Return on plan assets, excluding amounts included in interest expense/(income) – (57.5) (57.5) (Gain)/loss from liability experience 5.5 – 5.5 (Gain)/loss from change in financial assumptions 21.3 – 21.3 Expense/(income) recognised in other comprehensive income 26.8 (57.5) (30.7) Benefits paid (56.8) 56.8 – Taxes, premiums and expenses paid (6.3) 6.3 – At 30 June 2014 1 026.6 (791.7) 234.9 At 1 July 2014 1 026.6 (791.7) 234.9 Current service cost 21.7 – 21.7 Interest expense/(income) 34.4 (27.7) 6.7 Settlement (125.0) 114.9 (10.1) Expense/(income) recognised in profit or loss (68.9) 87.2 18.3 Contributions by Fund participants Employers – (30.7) (30.7) Plan participants 6.2 (6.2) – Remeasurements 6.2 (36.9) (30.7) Return on plan assets, excluding amounts included in interest expense/(income) – (22.3) (22.3) (Gain)/loss from change in liability experience (49.4) – (49.4) (Gain)/loss from change in financial assumptions (37.9) – (37.9) Expense/(income) recognised in other comprehensive income (87.3) (22.3) (109.6) Benefits paid (143.0) 143.0 – Taxes, premiums and expenses paid (11.7) 11.7 – At 30 June 2015 721.9 (609.0) 112.9
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