Notes to the annual financial statements

10.	Retirement benefits

	Statement of financial position obligations	2010 R million	2009 R million
	Retirement benefits	(16)	(9)
	Post-retirement medical benefits	(164)	(147)
		(180)	(156)
	Statement of financial position assets	121	100
	Retirement benefits	9	9
	Defined-contribution fund employer’s surplus	112	91

	Net defined-benefit post-retirement obligation	(59)	(56)

	Represented by:
	Retirement benefits (refer note 10.1)	(7)	–
	Post-retirement medical benefits (refer note 10.2)	(164)	(147)
	Defined-contribution fund employer’s surplus	112	91
		(59)	(56)

	Income statement
	Retirement benefits*	10	5
	Post-retirement medical benefits	21	13
	Expense/(income)	31	18
	* Refer to note 24

	10.1	Retirement benefits
		Some of the Company’s subsidiaries have various defined-benefit and defined-contribution funds which are privately administered independent of the finances of the Group. The Group operates defined-benefit funds in South Africa, governed by the Pension Funds Act, 1956 (as amended), and the United Kingdom. All salaried employees are obliged to accept membership of one of these funds. For statutory purposes the defined-benefit pension funds are actuarially valued every three years by independent actuaries using the projected unit credit method. The latest actuarial valuations of these funds were conducted between 31 March 2007 and 31 March 2010.


		Statement of financial position				Income statement
	Fair value of plan assets R million	Present value of funded obligations R million	Unrecognised actuarial (gains)/ losses R million	Pension fund surplus limitation* R million	Amount recognised in statement of financial position R million	Included in staff costs R million
Balances at 1 April 2008	875	(845)	2	(113)	(81)
Current service cost	–	(2)	–	–	(2)	2
Interest cost	–	(54)	–	–	(54)	54
Expected return on assets	66	–	–	–	66	(66)
Surplus limitation utilisation	–	–	(47)	32	(15)	15
Contributions	79	–	–	–	79	–
Exchange rate differences	(88)	108	(13)	–	7	–
Benefit payments	(43)	43	–	–	–	–
Actuarial movements:
fund obligation	–	53	(53)	–	–	–
Actuarial movements:
plan assets	(171)	–	171	–	–	–
Balances at 31 March 2009	718	(697)	60	(81)	–	5
Current service cost	–	(1)	–	–	(1)	1
Interest cost	–	(45)	–	–	(45)	45
Expected return on assets	53	–	–	–	53	(53)
Surplus limitation utilisation	–	–	29	(41)	(12)	12
Actuarial gain amortisation	–	–	(5)	–	(5)	5
Transferred to defined-
contribution fund**	(19)	14	–	5	–	–
Exchange rate differences	(87)	109	(19)	–	3	–
Benefit payments	(38)	38	–	–	–	–
Actuarial movements:
fund obligation	–	(114)	114	–	–	–
Actuarial movements:
plan assets	117	–	(117)	–	–	–
Balances at 31 March 2010	744	(696)	62	(117)	(7)	10

	*	The Financial Services Board approved the surplus allocation scheme on 6 September 2005. The present value of economic benefits recognised in the financial statements is limited to the value of the surplus allocated to the Employer Surplus Account. The Trustees have decided not to allocate any of the current surpluses in the Fund.
	**	During the year, Rainbow Chicken’s pension fund was replaced by a defined-contribution fund.

	2010 R million	2009 R million
Amount of plan assets represented by investment in the entity’s own financial instruments	–	6
Actual return on plan assets	170	(105)
Adjustment for experience on funded obligations	(9)	3
Expected contributions to retirement funds for the year ended 31 March 2011: R1 million

	Number	Number
Number of members	389	7 870

Composition of plan assets	%	%
Cash	8.88	7.16
Equity	20.22	21.23
Bonds	3.72	1.80
Property	0.69	1.15
International	65.41	68.66
Other	1.08	–
	100.00	100.00

Principal actuarial assumptions on reporting date
Discount rate	5.50 – 9.25	6.50 – 9.25
Expected rates of return on plan assets*	6.23 – 10.00	6.76 – 10.25
Future salary increases	8.00	6.25 – 7.25
Future pension increases	3.50 – 5.25	3.00 – 5.25
Inflation rate	5.50	5.25
* The expected return on plan assets is determined with reference to the expected long-term returns on equity, cash and bonds.

Fund history for the current and previous 4 years	2010 R million	2009 R million	2008 R million	2007 R million	2006 R million
Fair value of plan assets	744	718	875	771	722
Present value of funded obligations	(696)	(697)	(845)	(767)	(633)
Surplus	48	21	30	4	89

10.2	Post-retirement medical benefits
		Statement of financial position				Income statement
		Fair value of plan assets R million	Present value of funded obligations R million	Unrecognised actuarial (gains)/ losses R million	Amount recognised in statement of financial position R million	Included in staff costs R million
	Balances at 1 April 2008	37	(153)	(22)	(138)
	Current service cost	–	(5)	–	(5)	5
	Interest cost	–	(13)	–	(13)	13
	Expected return on assets	3	–	–	3	(3)
	Amortisation of actuarial (gains)/losses	–	–	2	2	(2)
	Contributions	–	2	–	2	–
	Benefit payments	(2)	4	–	2	–
	Actuarial movements	(4)	(29)	33	–	–
	Balances at 31 March 2009	34	(194)	13	(147)	13
	Current service cost	–	(6)	–	(6)	6
	Interest cost	–	(16)	–	(16)	16
	Expected return on assets	3	–	–	3	(3)
	Amortisation of actuarial (gains)/losses	–	(2)	–	(2)	2
	Liability assumed as part of VenFin
	acquisition	1	(2)	–	(1)	–
	Benefit payments	(2)	7	–	5	–
	Actuarial movements	4	21	(25)	–	–
	Balances at 31 March 2010	40	(192)	(12)	(164)	21

	2010 R million	2009 R million
Amount of plan assets represented by investment in the entity’s own financial instruments	1	2
Actual return on plan assets	7	(1)
Expected contributions to retirement funds for the year ended 31 March 2011: R12 million


				Number	Number
Number of members				895	959

Fund history for the current and previous 4 years	2010 R million	2009 R million	2008 R million	2007 R million	2006 R million
Fair value of plan assets	40	34	37	35	16
Present value of funded obligations	(192)	(194)	(153)	(146)	(121)
Surplus/(deficit)	(152)	(160)	(116)	(111)	(105)


Composition of plan assets	2010 %	2009 %
Cash	16.00	16.00
Equity	78.00	81.00
Bonds	6.00	3.00
	100.00	100.00
Principal actuarial assumptions on reporting date
Discount rate	9.25 – 9.50	8.25 – 9.00
Expected rates of return on plan assets*	10.25	10.00
Annual increase in healthcare costs	5.50 – 5.75	5.25 – 7.25

* The expected return on plan assets is determined with reference to the expected long-term returns on equity, cash and bonds.

	2010 Increase R million	2010 Decrease R million
The effect of a 1% movement in the above-mentioned expected yearly increase in healthcare costs is as follows:
Post-retirement medical liability	28	27
Current service costs and interest on obligation	5	4

10.