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GROUP |
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COMPANY |
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2005 |
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2004 |
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2005 |
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2004 |
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Rm |
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Rm |
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Rm |
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Rm |
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| 24. |
RETIREMENT BENEFIT OBLIGATIONS |
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24.1
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Post-retirement medical benefit
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Balance at the beginning of the year |
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40,6 |
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9,9 |
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0,1 |
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0,5 |
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Subsidiaries acquired |
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– |
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32,6 |
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– |
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– |
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Current service cost |
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1,4 |
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1,3 |
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– |
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– |
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Contributions paid |
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(2,0) |
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(1,8) |
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– |
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– |
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Interest cost |
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2,6 |
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2,1 |
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– |
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– |
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Actuarial gains |
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(3,0) |
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(3,5) |
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– |
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(0,4) |
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Settled in terms of FSB-approved pension fund surplus |
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(19,8) |
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– |
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– |
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– |
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Balance at the end of the year |
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19,8 |
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40,6 |
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0,1 |
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0,1 |
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During September 2005 approval was obtained from the Financial Services Board to
allocate the pension fund surplus of the Feltex Retirement Fund (a pension fund
as defined) on a 60/40 basis to the employer and employees. The surplus
apportionment was done on condition that the employer surplus account be
utilised first to settle the post retirement medical aid liability of all
qualifying members. In terms of legislation, control over the employer surplus
lies with the employer– trustees and would be used as a contribution holiday
for all qualifying members. |
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The principal actuarial assumptions applied in determination of fair values include: |
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Dano |
Feltex |
Bull Brand, Mossop, |
KAP International |
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Feltex Autoleathers |
Holdings Limited |
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Health-care cost inflation |
7,04% |
6,5% |
7,4% |
6,5% |
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Discount rate |
9,04% |
8,5% |
7,2% |
8,0% |
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Contribution at retirement |
50% – 100% |
100% |
100% |
67% |
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The group has
a post–employment medical defined benefit liability in respect of the
Kolosus Pension Fund, Dano Textile Industries Pension Fund, Kolosus
Retirement Fund, Feltex Retirement Fund and Courthiel Holdings Provident
Fund. |
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The group had previously restricted the liability to a fixed number of retired employees and had fixed the amount of the contribution to such employees for the remainder of their lives. |
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Actuarial valuations are performed on an annual basis. The latest actuarial valuation of medical subsidies was carried out by independent actuaries as at 31 December 2005. The main actuarial assumption is that the company continues to provide subsidies at current levels, but subject to annual review.
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24.2
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Defined contribution plans
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The group operates a number of defined contribution plans, the assets of which are generally held in separate trustee-administered funds. The pension plans are generally funded by payments from employees and the relevant group companies. The funds cover eligible employees other than those employees who opt to be or are required by legislation to be members of various industry funds. |
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During the year the majority of the eligible employees belonged to one of the following funds: |
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Dano Textile Industries Staff Provident Fund, Courthiel Holdings Provident Fund, Hosaf Provident Fund, Leather Industry Provident Fund, Kolosus Retirement Fund, Kolosus Top-hat Provident Fund, Kolosus Pension Fund and the Feltex Retirement Fund. |
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The retirement benefit plans are governed by the Pension Funds Act, 1956 (Act 24 of 1956), as amended. All of the funds are defined contribution plans. By the nature of these funds, they are not subject to actuarial review. |
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The group contributions in respect of retirement benefit obligations amounted to R26,9 million (2004: R18,1 million). The company contribution in respect of retirement benefit obligations amounted to R0,4 million (2004:
Rnil). |
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24.3
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Defined benefit plans
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In the past, the entities in the group operated the following post-employment defined benefit plans: Dano Textile Industries Pension Fund (closed) and Feltex Retirement Fund (closed). |
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The Dano Textile Industries Pension Fund was closed before the acquisition of
Dano Textile Industries (Proprietary) Limited and no further contributions have
been made to the fund. The fund is in the process of being wound up. During the
year the Feltex Retirement Fund allocated its surplus on a 60/40 basis to
employers and employees respectively. Refer to note 10
for more details. |
