Notes to the Group annual financial statements

for the period ended 3 March 2013
23.   RETIREMENT BENEFITS  
  The Group provides post-retirement benefits to its employees in accordance with local benchmarks in the countries in which it operates. These benefits are provided through defined contribution plans.  
  One of the Group’s defined-contribution funds is the Pick n Pay Retirement Scheme. Certain members of this fund were guaranteed that should their defined-contribution benefit be less than their previous defined-benefit guarantee (under the previous Pick n Pay Retirement Fund) they would retain the former. Due to this guarantee, and the fact that the pensioners are also paid by this scheme, the scheme’s liabilities may be broken down between those which are defined contribution in nature and those which are defined benefit and for which the employer has an obligation to make additional contributions to ensure this element of the scheme is fully funded.  
        Group    
    Pensioners’  
defined-  
benefit  
guarantee  
Rm  		 Retirement  
defined-  
benefit  
guarantee  
Rm  		 Post-  
retirement  
medical  
guarantee  
Rm  		 Total  
obligation  
2013  
Rm  		 Total  
obligation  
2012  
Rm  
23.1   The Pick n Pay Retirement Scheme            
  Defined-benefit obligations            
  The amount recognised in the statement of financial position is as follows:            
  Present value of funded obligations   447.6   545.9   54.4   1 047.9   993.4  
  Fair value of assets   (447.6)  (547.7)  (54.4)  (1 049.7)  (984.4) 
  Funded position   —   (1.8)  —   (1.8)  9.0  
  Amounts recognised in the statement of comprehensive income are as follows:            
  Current service cost   —   21.7   0.5   22.2   26.5  
  Interest on the obligation   32.8   49.2   6.8   88.8   88.2  
  Expected return on the plan assets   (34.6)  (52.6)  (6.2)  (93.4)  (95.3) 
  Total included in employee costs   (1.8)  18.3   1.1   17.6   19.4  
  Cumulative unrecognised gains:            
  Net cumulative unrecognised gain – beginning of period   —   —   —   —   —  
  Actuarial (loss)/gain – obligation   (82.4)  (8.1)  9.3   (81.2)  56.7  
  Actuarial gain/(loss) – assets   80.6   (9.9)  5.3   76.0   (46.5) 
  Actuarial gain/(loss) to be recognised (before tax)  1.8   18.0   (14.6)  5.2   (10.2) 
  Net cumulative unrecognised gain – end of period   —   —   —   —   —  
  Movement in the liability recognised on the statement of financial position is as follows:            
  Net liability – beginning of period   —   1.2   7.8   9.0   27.1  
  Total included in employee costs in statement of comprehensive income   (1.8)  18.3   1.1   17.6   19.4  
  Amount recognised in other comprehensive income   1.8   18.0   (14.6)  5.2   (10.2) 
  Contributions   —   (39.3)  5.7   (33.6)  (27.3) 
  Net (asset)/liability – end of period   —   (1.8)  —   (1.8)  9.0  
  Movement in the fund’s obligations and plan assets recognised on the statement of financial position is as follows:            
  Liability – beginning of period   360.5   547.1   85.8   993.4   996.4  
  Service cost   —   21.7   0.5   22.2   26.5  
  Interest cost   32.8   49.2   6.8   88.8   88.2  
  Actuarial loss/(gain)  82.4   8.1   (9.3)  81.2   (56.7) 
  Benefits paid   (28.1)  (80.2)  (29.4)  (137.7)  (61.0) 
  Liability – end of period   447.6   545.9   54.4   1 047.9   993.4  
  Plan assets – beginning of period   360.5   545.9   78.0   984.4   969.3  
  Expected return   34.6   52.6   6.2   93.4   95.3  
  Actuarial gain/(loss)  80.6   (9.9)  5.3   76.0   (46.5) 
  Contributions by employer   —   39.3   (5.7)  33.6   27.3  
  Benefits paid   (28.1)  (80.2)  (29.4)  (137.7)  (61.0) 
  Plan assets – end of period   447.6   547.7   54.4   1 049.7   984.4  
    %   %   %   %   %  
  Actuarial return on plan assets   28.5   7.8   17.2   16.7   5.0  
  Asset mix            
  Equity   34.3   67.1   67.1   53.1   50.1  
  Fixed interest   63.7   29.0   29.0   43.8   46.9  
  Property   2.0   3.9   3.9   3.1   3.0  
    100.0   100.0   100.0   100.0   100.0  
    Group
    November  
2012  
% per  
annum  		 November  
2011  
% per  
annum  
  The principal actuarial assumptions at the last valuation date are:      
  Discount rate   9.25   9.50  
  Future salary increases   7.56   6.71  
  Future pension increases   6.00   6.00  
  Annual increase in health care costs   7.50   7.50  
  Expected rate of return^   9.75   10.00  
 
^ The expected rate of return on plan assets was determined by assuming that the fixed interest assets would earn a return equal to the discount rate of 9.5%, with a further 2.25% risk premium applied to the equities and property, giving a weighted average return of 9.75% based on the current asset allocation.  
  At 3 March 2013, if the discount rate had been 1% higher or 1% lower (with all other variables held constant), the impact on the financial statements would have been as follows:  
    -1%  
8.25%  
Rm  		 As reported  
9.25%  
Rm  		 +1%  
10.25%  
Rm  
  Statement of comprehensive income        
  Expense included in employee costs   17.7   17.6   17.5  
  Statement of financial position        
  Asset at end of period   (1.7)  (1.8)  (1.9) 
          Group
          2013   2012  
          Rm   Rm  
23.2   Defined current contribution benefits            
  Current contributions         278.6   295.6  
  Continuing operations         278.6   261.8  
  Discontinued operation         —   33.8  
        Group  
    2013   2012   2011   2010   2009  
    Rm   Rm   Rm   Rm   Rm  
23.3   Historical information            
  Present value of defined-benefit obligation   1 047.9   993.4   996.4   973.3   975.5  
  Fair value of plan assets   (1 049.7)  (984.4)  (969.3)  (984.6)  (1 004.0) 
  (Surplus)/deficit in the plan   (1.8)  9.0   27.1   (11.3)  (28.5)