Employee Benefit Obligations

The amounts (in Rs.) recognised in the balance sheet are as follows:

 

	Defined benefit pension plans		Post-employment medical benefits
	20X5-X6	20X4-X5	20X5-X6	20X4-X5
Present value of funded obligations	20,300 _18,420_   1,880	17,400 _17,280_   120	–        -______   _	– __-__   _
Fair value of plan assets
Present value of unfunded obligations	2000   _(450)_     _3,430	1000   _(650)_   _ _470	7,337   __-____   _7,337	6,405   ___-___   6,405_
Unrecognised past service cost Net liability
Amounts in the balance sheet:
Liabilities Assets Net liability	3,430 ____-__ 3,430	560 ___(90)_ __470	7,337 ____-_ 7,337	6,405 _____-_ 6,405

 

The pension plan assets include equity shares issued by [name of reporting enterprise] with a fair value of Rs. 317 (20X4-X5: Rs. 281). Plan assets also include property occupied by [name of reporting enterprise] with a fair value of Rs. 200 (20X4-X5: Rs. 185).

The amounts (in Rs.) recognised in the statement of profit and loss are as follows:

The amounts (in Rs.) recognised in the statement of profit and loss are as follows:

 

	Defined benefit                                                                                                             Post-employment pension plans                                                                                                                  medical benefits 20X5-X6                                          20X4-X5                                 20X5-X6                                20X4-X5
Current service cost	850	750	479	411
Interest on obligation	950	1,000	803	705
Expected return on plan assets	(900)	(650)
Net actuarial losses (gains) recognised in year	2,650	(650)	250	400
Past service cost	200	200
Losses (gains) on curtailments and settlements	175	(390)
Total, included in ’employee benefit expense’	3,925	260	1,532	1,516
Actual return on plan assets	600	2,250	__-____	__-____

 

Changes in the present value of the defined benefit obligation representing reconciliation of opening and closing balances thereof are as follows:

 

	Defined benefit           Post-employment pension plans               medical benefits 20X5-X6 20X4-X5 20X5-X6 20X4-X5
Opening defined benefit
obligation	18,400	11,600	6,405	5,439
Service cost	850	750	479	411
Interest cost	950	1,000	803	705
Actuarial losses (gains)	2,350	950	250	400
Losses (gains) on curtailments	(500)	–
Liabilities extinguished on settlements	–	(350)
Liabilities assumed in an amalgamation in the nature of purchase	–	5,000
Exchange differences on foreign plans	900	(150)
Benefits paid	(650)	(400)	(600)	(550)
Closing defined benefit obligation	22,300	18,400	7,337	6,405

 

Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows:

	Defined benefit                                                                                                                       Post-employment pension plans                                                                                                                             medical benefits 20X5-X6                                                20X4-X5                             20X5-X6                                 20X4-X5
Opening defined benefit
obligation	18,400	11,600	6,405	5,439
Service cost	850	750	479	411
Interest cost	950	1,000	803	705
Actuarial losses (gains)	2,350	950	250	400
Losses (gains) on curtailments	(500)	–
Liabilities extinguished on settlements	–	(350)
Liabilities assumed in an amalgamation in the nature of purchase	–	5,000
Exchange differences on foreign plans	900	(150)
Benefits paid	(650)	(400)	(600)	(550)
Closing defined benefit obligation	22,300	18,400	7,337	6,405

 

Changes in the fair value of plan assets representing reconciliation of the opening and closing balances thereof are as follows:

	Defined benefit pension plans           20X5-X6                                                                                    20X4-X5
Opening fair value of plan assets	17,280	9,200
Expected return	900	650
Actuarial gains and (losses)	(300)	1,600
Assets distributed on settlements	(400)	–
Contributions by employer	700	350
Assets acquired in an amalgamation in the nature of purchase	–	6,000
Exchange differences on foreign plans	890	(120)
Benefits paid	(650)	(400)
	18,420	17,280

 

The Group expects to contribute Rs. 900 to its defined benefit pension plans in 20X6-X7.

The major categories of plan assets as a percentage of total plan assets are as follows:

	Defined benefit pension plans		Post-employment medical benefits
	20X5-X6	20X5-X5	20X5-X6	20X5-X5
Government of India Securities	80%	82%	78%	81%
High quality corporate bonds	11%	10%	12%	12%
Equity shares of listed companies	4%	3%	10%	7%
Property	5%	5%	–	–

 

Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

	20X5-X6	20X4-X5
Discount rate at 31 March	5.0%	6.5%
Expected return on plan assets at 31 March	5.4%	7.0%
Proportion of employees opting for early retirement	30%	30%
Annual increase in healthcare costs	8%	8%
Future changes in maximum state health care benefits	3%	2%

 

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Assumed healthcare cost trend rates have a significant effect on the amounts recognised in the statement of profit and loss. At present, healthcare costs, as indicated in the principal actuarial assumption given above, are expected to increase at 8% p.a. A one percentage point change in assumed healthcare cost trend rates would have the following effects on the aggregate of the service cost and interest cost and defined benefit obligation:

	One percentage point increase	One percentage point decrease
Effect on the aggregate of the service cost and interest cost	190	(150)
Effect on defined benefit obligation	1,000	(900)

 

Amounts for the current and previous four periods are as follows:

Defined benefit pension plans

	20X5-X6	20X4-X5	20X3-X4	20X2-X3	20X1-X2
Defined benefit obligation	(22,300)	(18,400)	(11,600)	(10,582)	(9,144)
Plan assets	18,420	17,280	9,200	8,502	10,000
Surplus/(deficit) Experience adjustments	(3,880)	(1,120)	(2,400)	(2,080)	856
Experience adjustments on plan liabilities	(1,111)	(768)	(69)	543	(642)
Experience adjustments on plan assets	(300)	1,600	(1,078)	(2,890)	2,777
Post-employment medical benefits					______

 

	20X5-X6	20X4-X5	20X3-X4	20X2-X3	20X1-X2
Defined benefit obligation	7,337	6,405	5,439	4,923	4,221
Experience adjustments on plan liabilities	(232)	829	490	(174)	(103)

 

The group also participates in an industry-wide defined benefit plan which provides pensions linked to final salaries and is funded in a manner such that contributions are set at a level that is expected to be sufficient to pay the benefits falling due in the same period. It is not practicable to determine the present value of the group’s obligation or the related current service cost as the plan computes its obligations on a basis that differs materially from the basis used in [name of reporting enterprise]’s financial statements. [describe basis] On that basis, the plan’s financial statements to 30 September 20X3 show an unfunded liability of Rs. 27,525. The unfunded liability will result in future payments by participating employers. The plan has approximately 75,000 members, of whom approximately 5,000 are current or former employees of [name of reporting enterprise] or their dependants. The expense recognised in the statement of profit and loss, which is equal to contributions due for the year, and is not included in the above amounts, was Rs. 230 (20X4-X5: Rs. 215). The group’s future contributions may be increased substantially if other enterprises withdraw from the plan.