NOTES TO THE FINANCIAL STATEMENTS - NOTE 27


 

    2014     2013  
    Post-employment
medical
benefits
    Leave     Annual and
performance
bonus
    Other     Total     Total  
    Rm     Rm     Rm     Rm     Rm     Rm  
27. Employee benefit obligations                                  
  Group                                  
  Balance at beginning of the year 9 993     1 719     1 587     612     13 911     11 614  
  Total amount charged to profit or loss and other comprehensive income 524     625     2 397     38     3 584     5 197  
  Amounts used (283)     (522)     (2 206)     (1)     (3 012)     (2 900)  
    10 234     1 822     1 778     649     14 483     13 911  
  Maturity analysis 10 234     1 822     1 778     649     14 483     13 911  
  Non-current 9 922                 9 922     10 282  
  Current 312     1 822     1 778     649     4 561     3 629  
  Company                                  
  Balance at beginning of the year 9 788     1 599     1 469     605     13 461     11 225  
  Total amount charged to profit or loss and other comprehensive income 469     609     2 188     36     3 302     5 041  
  Amounts used (276)     (495)     (2 062)         (2 833)     (2 805)  
    9 981     1 713     1 595     641     13 930     13 461  
  Maturity analysis 9 981     1 713     1 595     641     13 930     13 461  
  Non-current 9 674                 9 674     10 053  
  Current 307     1 713     1 595     641     4 256     3 408  

        Group     Company  
    Note   2014
Rm
    2013
Rm
    2014
Rm
    2013
Rm
 
  The total charge in profit or loss and other comprehensive income is disclosed in the following categories:                          
  Post-employment medical benefits 27.1   524     1 933     469     1 904  
  Leave 27.2   625     597     609     569  
  Annual and performance bonus 27.3   2 397     2 061     2 188     1 963  
  Pension benefits 27.4   1 888     2 308     1 768     2 207  
        5 434     6 899     5 034     6 643  
27.1 Post-employment medical benefits                          
  The group has anticipated expenditure in terms of continued contributions to medical aid subscriptions in respect of qualifying employees who retire.                          
  The amounts recognised in profit or loss are:     1 406     1 161     1 381     1 139  
  Current service cost 34   537     414     531     409  
  Finance cost 41   869     747     850     730  
  The amounts recognised in other comprehensive income are:                          
  Remeasurements of post-employment medical benefits (actuarial (gain)/loss)     (882)     772     (912)     765  
  Demographic assumptions     18              
  Financial assumptions     (831)     983     (845)     974  
  Experience adjustments     (69)     (211)     (67)     (209)  
                             
        524     1 933     469     1 904  
  Measurement of post-employment medical benefits and key actuarial assumptions

The estimated present value of the anticipated expenditure for both in-service and retired members was calculated by independent actuaries.

The group expects to pay R312 million and the company expects to pay R307 million in contributions to this plan in the 2015 financial year.

Expected maturity analysis of undiscounted post-employment medical benefits:

2014 1 year
Rm
  1-2 year
Rm
  2-5 years
Rm
  After 5 years
Rm
  Total
Rm
 
Group                    
Post-employment medical benefits 312   346   1 346   123 920   125 924  
Company                    
Post-employment medical benefits 307   338   1 314   121 740   123 699  

Risks

The post-employment obligation is administered by funds that are legally separated from the group. The boards of the funds are required by law to act in the best interest of the plan participants and are responsible for setting certain policies including investment, contribution and indexation of the funds.

These funds expose the group to a number of risks, the most significant of which are:

changes in bonds yields: a decrease in corporate bond yields will increase plan liabilities
inflation risk: the post-employment obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation)
life expectancy: the majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities

The expected current service cost for the 2015 financial year is estimated at R471 million for the group and R465 million for the company. Refer to note 3(b) for the sensitivity analysis and principal actuarial assumptions used.

        Group     Company  
    Note   2014
Rm
    2013
Rm
    2014
Rm
    2013
Rm
 
27.2 Leave                          
  The group recognises a liability for occasional and service leave (refer to note 3(c)).                          
  The total charge is disclosed in profit or loss in the net employee benefit expense 34   625     597     609     569  
27.3 Annual and performance                          
  The annual bonus equals one month’s salary for employees on Tuned Assessment of Skills and Knowledge (TASK) grading levels 1 to 13. Employees on TASK grading levels 14 to 26 can choose to spread their bonus amount over the year or take it as a thirteenth cheque. The performance bonus is based on the performance of the company and employees.                          
  The total charge is disclosed in profit or loss in the net employee benefit expense 34   2 397     2 061     2 188     1 963  
27.4 Pension benefits                          
  The total contribution is disclosed in profit or loss in the net employee benefit expense 34   1 888     2 308     1 768     2 207  
 

The net benefit asset at the reporting date is not accounted for in the financial statements. The rules of the Eskom Pension and Provident Fund (EPPF) state that any deficit on the valuation of the fund will be funded by increases in future contributions or reductions in benefits. If there is a substantial surplus on the valuation of the fund, future contributions may be decreased or benefits may be improved as determined by the trustees of the fund.

The EPPF is registered in terms of the Pensions Funds Act. All employees are members of the fund. Contributions comprise 20.8% of pensionable emoluments of which members pay 7.3%. The assets of the fund are held separately from those of the group in respect of funds under the control of the trustees.

The fund was valued actuarially on the IAS 19 Employee benefits basis on 31 March 2014 (previous valuation at 31 March 2013). The actuarial present value of retirement benefits at 31 March 2014 was R80 837 million (2013: R82 504 million), while the fair value of the fund’s assets was R106 042 million (2013: R90 571 million).

                         
  Valuation assumptions                          
  The principal actuarial assumptions used were:                          
  Long-term investment return before tax (%)     9.70     8.80     9.70     8.80  
  Future general salary increases (%)     7.90     7.50     7.90     7.50  
  Future pension increases (inflation) (%)     6.40     6.00     6.40     6.00  
  In-service mortality for group and company are the adjusted PA(90) tables rated down by two years.                          
  Pensioner mortality for group and company are the adjusted PA(90) tables rated down by two years.