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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2016 28.2 Defined benefit plan The Group used to operate a funded defined benefit plan (gratuity) for qualifying employees of the Group. This scheme has been discontinued with accrued benefits up to 31st December, 2014 transferred to an independent fund. The difference between the assets transferred to the fund and the accrued benefits is carried in the Statement of Financial position as a current liability. The plan typically exposes the Group to actuarial risks such as; investment risk, interest rate risk, longevity risk and salary risk. Investment risk The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to government bond yields; if the return on plan assets is below this rate, it will create a plan deficit. Currently the plan has a relatively balanced investment in Government Securities and money market instruments. Due to the long-term nature of the plan liabilities, the board of the pension fund considers it appropriate that a reasonable portion of the plan assets should be invested in equity securities and in real estate to leverage the return generated by the fund. Interest rate risk Longevity risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan’s debt investments. The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants during their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability. Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability. The principal assumptions used for the purposes of the actuarial valuations were as follows. Group & Company Discount rate(s) Expected rate(s) of salary increase Inflation rate Movements in the fair value of plan assets are as follows: Group & Company At 1st January Interest income Re-measurement loss- Return on plan assets excluding amounts included in net interest expense Benefit paid by the employer Curtailment At 31st December 202 Annual Report 2016 31-Dec-16 31-Dec-15 ₦’million 974 - - - (974) - ₦’million 964 164 (47) (107) - 974 31-Dec-16 31-Dec-15 % % 12 11 9 - - -

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