Annual Report 2015
107
9 EMPLOYEE BENEFITS
(continued)
j) Sensitivity analysis
The calculations of the defined benefit and medical obligations are sensitive to the assumptions used. The following table
summarises how these obligations as at September 30, 2015 would have changed as a result of a change in the assumptions
used.
Defined benefit Post-retirement
pension plans medical benefits
1% p.a.
1% p.a.
1% p.a.
1%p.a.
increase
decrease
increase
decrease
$’000
$’000
$’000
$’000
-
Discount rate
(405,458)
522,087
(70,513)
96,101
-
Future salary increases
204,637
(175,762)
267
(229)
-
Future pension cost increases
228,000
–
–
–
-
Medical cost increases
–
–
94,621
(71,238)
An increase of 1 year in the assumed life expectancies shown above would increase the defined benefit obligation at September
30, 2015 by $65.4 million and the post-retirement medical benefit by $15.59 million.
These sensitivities were calculated by re-calculating the defined benefit obligations using the revised assumptions.
k) Funding
The Group meets the entire cost of funding the defined benefit pension plan. The funding requirements are based on regular
actuarial valuations of the Plan made every three years and the assumptions used to determine the funding required may differ
from those set out above. The Group expects to pay $9.3 million to the pension plan in the 2016 financial year.
The Group operates the post-retirement medical benefit plan as a self-insured arrangement administered by insurance brokers.
Retirees contribute at a fixed rate depending on the level of cover selected. The Group pays ‘premiums’ of twice the retiree
contributions but will be required to meet the balance of cost of the benefits if these joint premiums prove inadequate. The
Group expects to pay $7.8 million to the medical plan in the 2016 financial year.
