CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 FINANCIALS 190 191 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2021 YEAR ENDED 31 DECEMBER 2021 25 EMPLOYEE BENEFITS (CONT’D) The fair values of plan assets in each category are as follows: Group 2021 2020 $’000 $’000 Equity 16,200 26,088 Bonds 25,409 16,999 Cash 92,186 92,832 Fair value of plan assets 133,795 135,919 Expenses recognised in profit or loss Current service costs 852 1,370 Past service costs (1,328) – Net interest costs 459 599 Defined benefit obligation expenses (17) 1,969 The expenses are recognised in the following line items in profit or loss: Group Note 2021 2020 $’000 $’000 Cost of sales (593) 847 Administrative expenses 812 934 Other operating expenses (236) 188 Defined benefit obligation expenses 32 (17) 1,969 The life expectancies underlying the value of the accrued liabilities for the UK Plan, based on retirement age of 65, are as follows: 2021 2020 Years Years Males 22 22 Females 24 24 The weighted average duration of the defined benefit obligations as at 31 December 2021 was 17 years (2020: 17 years). The Group expects approximately $5million (£3million) (2020: $2million (£1million)) contributions to be paid to the defined benefit plans in 2022 (2020: 2021). The Group operates various funded pension schemes which are established in accordance with local conditions and practices within the countries concerned. The most significant funds are described below: 25 EMPLOYEE BENEFITS (CONT’D) United Kingdom (UK) The Group makes contributions to a pension scheme for its UK employees, which was set up in 1993. The plan operates a funded defined benefit arrangement together with a defined contribution plan, both with different categories of membership. The defined benefit section of the plan was closed to new entrants in 2001 and at the same time, rights to a guaranteed minimum pension (GMP) under the defined contribution scheme also ceased. The plan entitles a retired employee to receive an annual pension payment. The contributions required are determined by a qualified actuary on the basis of triennial valuations using the projected unit credit method. The last full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 5 April 2020 and this has been updated on an approximate basis to 31 December 2021. The contributions of the Group during the year were about 11% (2020: 11%) of pensionable salary. As the defined benefit section is closed to new entrants, the current service cost, as a percentage of pensionable payroll is likely to increase as the membership ages, although it will be applied to a decreasing pensionable payroll. The assumptions which have the most significant effect on the results of the valuation are those relating to the discount rate and the rates of increase in salaries and pensions. South Korea The Group makes contributions to a defined benefit pension plan for its employees in South Korea. The contributions required are determined by an external qualified actuary using the projected unit credit method. The most recent valuation was carried out on 31 December 2021. The assumptions which have the most significant effect on the results of the valuations are those relating to the discount rate and the rate of increase in salaries. Taiwan The Group makes contributions to a defined benefit pension plan for its employees in Taiwan. The contributions required are determined by an external qualified actuary using the projected unit credit method. The most recent valuation was carried out on 31 December 2021. The contributions of the Group were no less than 6% (2020: 6%) of the employees’ earnings. The assumptions which have the most significant effect on the results of the valuations are those relating to the discount rate and the rate of increase in salaries. The defined benefit plans are administered by pension funds that are legally separated from the Group. The boards of the pension funds are required by law to act in the best interests of the plan participants. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market investment risk. The above plans are substantially funded by the Group’s subsidiaries. The funding requirements are based on pension funds’ actuarial measurement framework set out in the funding policies of the plans.
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