Notes to the group financial statements for the year ended 31 March 2006               2006  Rm  2005  Rm  44. Retirement benefit obligations   Defined benefit pension fund obligation – United Kingdom (note 44.1) 156  227    Post-retirement medical benefit obligation – South Africa (note 44.3) 80  81        236  308    An analysis of the aggregate movement in retirement benefit obligations is provided below.         Opening balance as previously reported     170    Adoption of IFRS     154    Restated opening balance   308  324    Movement during year:         Charge per income statement   25  42    Contributions and settlements paid   (82) (59)   Foreign subsidiaries exchange differences   (15) 1    Closing balance   236  308  Substantially all employees are covered by defined contribution retirement fund arrangements in the major regions in which the group operates. The group also has defined benefit pension funds in South Africa and the United Kingdom which are closed to new entrants. Provisions for pension obligations are established for benefits payable in the form of retirement, disability and surviving dependant pensions. The benefits offered vary according to the legal, fiscal and economic conditions of each country. Both defined contribution and defined benefit pension funds in South Africa are governed by the Pension Funds Act.  44.1 Defined benefit pension fund obligation – United Kingdom   The closed defined benefit pension fund provides a pension of 1/60th of basic salary for each year of pensionable service. At 31 March 2006, the fund had 129 active members (2005: 147), 487 deferred pensioners (2005: 478) and 116 pensioners (2005: 108). The pension fund is funded with the assets of the fund which are held independently of the group’s assets in a separate trustee administered fund. This fund is valued by actuaries using the projected unit credit method. A full actuarial assessment of the fund was carried out at 1 May 2002 and updated to 31 March 2006 to reflect changes in the fund’s membership. The next full actuarial valuation is to be conducted in June 2006. The group paid contributions to the fund at the rate of 21,8% of pensionable salaries from 1 April 2000 to 30 April 2001, then at 22,1% of pensionable salaries from 1 May 2001 to 31 March 2002 and then at 26,3% of pensionable salaries from 1 April 2002 to 31 March 2003. In addition, a cash payment of £400 000 was made in March 2003. Contributions paid to the fund from 1 April 2003 to 31 January 2006 were at the rate of 23% of pensionable salaries plus a cash contribution of £133 333 per month. From 1 February 2006, contributions are at a rate of 25,8% of pensionable salaries plus a cash contribution of £345 084 per month. A lump sum contribution of £2 117 510 was made to the fund in the current financial year (2005: £1 million). Refer to the commitments note in these financial statements for disclosure of future funding commitments. The pension fund assets are invested in a diversified range of cash, equities and bonds.   The latest actuarial valuation reflects the following:     Defined benefit obligation 892  788      Fair market value of fund assets (714) (572)     Unfunded benefit obligation 178  216      Unrecognised actuarial net (loss)/gain (22) 11      Recognised liability in the balance sheet 156  227      A reconciliation of the movement in the pension fund obligation in the United Kingdom is provided below.         Opening balance as previously reported   111      Adoption of IFRS   134      Restated opening balance 227  245      Movement during year:         Charge per the income statement 20  35      Contributions paid (76) (54)     Foreign subsidiaries exchange differences (15) 1      Closing balance 156  227      The charge per the income statement is made up as follows:           Current service cost 19  30      Interest cost 42  40      Expected return on plan assets (41) (35)       20  35      The principal actuarial assumptions applied are as follows:         Discount rate 4,9% 5,5%     Inflation rate 2,8% 2,8%     Salary increase rate 4,3% 4,3%       Expected rate of return on assets 6,6% 7,0%     Pension increase allowance         Post 1997 pension 2,5% 2,5%     Other 2,8% 2,7%   44.2 Defined benefit pension fund obligation – South Africa         The closed defined benefit pension fund provides a pension of 2% of final pensionable salary for each year of pensionable service plus 0,5% of final pensionable salary for each year of pensionable service in excess of 25 years. At 31 March 2006, the fund had 96 (2005: 112) active members and 190 (2005: 194) pensioners. The pension fund is funded with the assets of the fund which are held independently of the group’s assets in a separate trustee administered fund. This fund is valued by actuaries using the projected unit credit method. A full actuarial assessment of the fund was carried out in October 2005 and updated to 31 March 2006 to reflect current assumptions and market conditions. The actuaries are of the opinion that the fund is in a sound financial position. The pension fund assets are invested in money market instruments. The latest actuarial valuation reflects the following:         Defined benefit obligation 231  209      Fair market value of fund assets (325) (249)     Funded status (94) (40)     Unrecognised actuarial net gain 79  30      Unrecognised asset (15) (10)     Less: Unrecognised amount in terms of Pension Funds Second Amendment Act, 2001 15  10      Amount recognised in the balance sheet —  —      In terms of the Pension Funds Second Amendment Act, 2001 ownership of the surplus in the pension fund cannot be recognised by, nor is it available to the group, until the surplus apportionment exercise is completed. The surplus apportionment scheme has been submitted to the South African Financial Services Board. The scheme showed the fund to be in deficit at the surplus apportionment date, being 1 March 2004. The reasons for the deficit, relative to the surplus shown above, are that the surplus apportionment valuation was performed at a different date when market values were significantly lower and that the assumptions used by the actuary for the surplus apportionment are different to those used for purposes of the financial statements. The use of any future surplus will be decided through consultation between the company and the fund trustees. A reconciliation of the movement in the pension fund obligation in South Africa is provided below.         Opening unrecognised asset as previously reported   (58)     Adoption of IFRS   48      Restated opening unrecognised asset (10) (10)     Movement during year:         Charge per income statement —  8      Contribution paid (5) (8)     Closing unrecognised asset (15) (10)     The charge per the income statement is made up as follows:         Current service cost 6  8      Interest cost 18  17      Expected return on plan assets (24) (19)     Amortisation of unrecognised net loss —  2      Charge per income statement —  8      The principal actuarial assumptions applied are as follows:         Discount rate 7,5% 8,5%     Inflation rate 4,5% 4,0%     Salary increase rate 6,0% 5,5%     Pension increase allowance 1,4% 2,4%     Expected rate of return on assets 8,5% 9,5%   44.3 Post-retirement medical benefit obligation – South Africa         In South Africa, certain employees who joined the group prior to 1 March 1997, are entitled to a post-retirement medical aid subsidy. At 31 March 2006, this applies to a total of 464 people (2005: 465) and comprises 175 active employees (2005: 183) and 289 pensioners (2005: 282). Employees who joined the group after 1 March 1997 are not eligible for post-retirement medical aid subsidies. A hardship fund was established by the group in the 2004 year to provide relief to specifically identified pensioners with regard to medical aid contributions. The main objective is to assist pensioners in financial need, particularly those with chronic medical conditions. The obligation is valued by actuaries using the projected unit credit method. A full actuarial valuation is performed annually. The date of the last actuarial valuation was 31 March 2006. The post-retirement medical obligation is funded through an insurance arrangement with a subsidiary company of the group (the assets of the insurance cell totalled R58 million at 31 March 2006).         The latest actuarial valuation reflects the following:         Medical benefit obligation 76  64      Hardship fund liability 9  9      Less: Unrecognised actuarial (loss)/gain (10) 2      Add: Unrecognised past service cost 5  6      Recognised liability in the balance sheet 80  81      A reconciliation of the movement in the post-retirement medical benefit obligation in South         Africa is provided below.         Opening balance as previously reported   59      Adoption of IFRS   20      Restated opening balance 81  79      Movement during year:         Charge per income statement 5  7      Contribution and settlements paid (6) (5)     Closing balance 80  81      The charge per the income statement is made up as follows         Current service cost 1  2      Interest cost 5  6      Vested past service gain (1) (1)     Charge per income statement 5  7      The principal actuarial assumptions applied are as follows:         Discount rate 7,5% 8,5%     CPIX rate 4,5% 4,0%     Retirement age 60 years 60 years       back | next   |