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for the year ended 30 June
NOTES TO THE GROUP FINANCIAL STATEMENTS continued
25. OTHER NON CURRENT LIABILITIES (continued)
Post-retirement medical aid liability (continued)
Movement in unfunded obligation:
Benefit obligation at beginning of year 84 86
Interest cost 8 10
Current service cost 3 4
Actuarial gain (19) (15)
Benefits paid (1) (1)
Benefit obligation at end of year 75 84
The amounts recognised in the statement of comprehensive income are as follows:
Current service cost 3 4
Interest cost 8 10
Actuarial gain (19) (15)
Total (8) (1)
The effect of a 1% movement in the assumed retirement cost trend rate is as follows:
The effect of a 1% increase relates to increasing the future rate of increase of the medical aid
subsidy assumption from 4.89% per annum to 5.89% per annum and hence reducing the gap
between the discount rate and the company subsidy rate from 4.36% per annum to 3.36% per
annum. The resultant increase in the liability is equal to R13.5 million, or 17.8% and the resultant
increase in the total of the service and interest costs is R2 million, or 19.2%.
The effect of a 1% decrease relates to reducing the future rate of increase of the medical aid subsidy
assumption from 4.89% per annum to 3.89% per annum and hence widening the gap between
the discount rate and the company subsidy rate from 4.36% per annum to 5.36% per annum. The
resultant reduction in the liability is equal to R11 million, or 14.5% and the resultant reduction in
the total of the service and interest costs is R1.6 million, or 15.5%.
The expected expense to be recognised in the statements of comprehensive income for the year
ending 30 June 2011 is R10 million.
The principal actuarial assumptions used for accounting purposes were:
Discount rate 9.25% 9.25%
Price inflation allowed by group 4.89% 5.75%
The average life expectancy in years of a pensioner retiring at age 60 on the statement of financial
position date and of a member retiring at age 60, 20 years after the statement of financial position
date are as follows:
Male 19.4 19.4
Female 24.2 24.2
2010
Rm
2009
Rm
175