STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED 30 JUNE 2014
16. NON-CURRENT PROVISIONS
Provision for Post-retirement Health Care Benefits Liability 137 067 656 122 448 303
Provision for Long-term Service Awards 11 507 791 11 409 059
Provision for Rehabilitation of Landfill Sites 10 813 033 12 608 732
Total Non-current Provisions 159 388 480 146 466 094
2014 2013
R R
16.1 Post-retirement Health Care Benefits Liability
Balance at beginning of Year 128 277 171 117 256 440
Contributions to Provision 14 876 057 11 020 731
Balance at end of Year 143 153 228 128 277 171
Transfer to Current Provisions (6 085 572) (5 828 868)
Total Post-retirement Health Care Benefits Liability 137 067 656 122 448 303 -
-
2014 2013
In-service Members (Employees) 682 673
In-service Members (Employees) - Non-members 368 465
Continuation Members (Retirees, widowers and orphans) 178 177
Total Members 1 228 1 315
In-service Members 55 110 432 43 661 898
In-service non-members 7 921 197 7 066 072
The members of the Post-Retirement Health Care Benefit Plan are made up as follows:
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 30 June 2013 by Arch Actuaries, Fellow of the Actuarial Society of South Africa. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method.
The municipality provides certain post-retirement health care benefits by funding the medical aid contributions of qualifying retired members of the municipality. According to the rules of the Medical Aid Funds, with which the municipality is associated, a member (who is on the current
Conditions of Service) is entitled to remain a continued member of such medical aid fund on retirement, in which case the municipality is liable for a certain portion of the medical aid membership fee. The municipality operates an unfunded defined benefit plan for these qualifying employees. No other post-retirement benefits are provided to these employees.
The liability in respect of past service has been estimated as follows:
The fair value of Long-term Liabilities was determined after considering the standard terms and conditions of agreements entered into between the municipality and the relevant financing institutions.
The management of the municipality is of the opinion that the carrying value of Long-term Liabilities recorded at amortised cost in the Annual Financial Statements approximate their fair values.
Annuity Loans are repaid over a period of 20 years and at interest rates varying from 6.25% to 15.45% (2013: 6.25% to 15.45%) per annum.
Refer to Appendix "A" for more detail on Long-term Liabilities.
TLOKWE CITY COUNCIL
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
- Hosmed - Bonitas - Keyhealth - LA Health - Samwumed
2014 2013
Discount Rate 8.84% 8.39%
Health Care Cost Inflation Rate 8.07% 7.51%
Net Effective Discount Rate 0.71% 0.81%
Expected Rate of Salary Increase 7.08% 6.82%
Expected Retirement Age - Females 58 58
Expected Retirement Age - Males 63 63
2014 2013
Movements in the present value of the Defined Benefit Obligation were as follows: R R
Balance at the beginning of the year 128 277 171 122 627 664
Current service costs 4 610 191 4 308 361
Interest cost 10 516 796 9 171 623
Benefits paid (5 828 868) (5 371 224)
Actuarial losses / (gains) 5 577 938 -2 459 253
Present Value of Fund Obligation at the end of the Year 143 153 228 128 277 171
Actuarial losses / (gains) unrecognised - -
Total Recognised Benefit Liability 143 153 228 128 277 171
The amounts recognised in the Statement of Financial Performance are as follows:
Current service cost 4 610 191 4 308 361
Interest cost 10 516 796 9 171 623
Actuarial losses / (gains) 5 577 938 (2 459 253)
Total Post-retirement Health Care Benefit included in Employee Related Costs (Note 25) 20 704 925 11 020 731 The history of experienced adjustments is as follows:
2014 2013 2012 2011 2010
R R R R R
Present Value of Defined Benefit
Obligation 143 153 228 128 277 171 122 627 664 106 110 852 87 839 522 Deficit 143 153 228 128 277 171 122 627 664 106 110 852 87 839 522
2014 2013
R R
The effect of a 1% movement in the assumed rate of health care cost inflation is as follows:
Increase:
Effect on the aggregate of the current service cost and the interest cost 2 148 400 2 448 700
Effect on the defined benefit obligation 19 299 000 16 564 000
The municipality makes monthly contributions for health care arrangements to the following Medical Aid Schemes:
The Current-service Cost for the year ending 30 June 2014 is estimated to be R4 610 191, whereas the cost for the ensuing year is estimated to be R5 096 724.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
The movement in Non-current Provisions are reconciled as follows:
Long-term
Service Awards Landfill Sites
R R
30 June 2014
Balance at beginning of year 12 504 329 12 608 732
Contributions to provision 362 173 (1 795 699)
12 866 502
10 813 033
Transfer to current provisions (1 358 711) -
Balance at end of year 11 507 791 10 813 033
30 June 2013
Balance at beginning of year 11 052 856 11 509 116
Contributions to provision 1 451 473 1 099 616
12 504 329
12 608 732
Transfer to current provisions (1 095 279) -
Balance at end of year 11 409 050 12 608 732
-
- - - 16.2 Long-term Service Awards
2014 2013
R R
Discount Rate 7.84% 7.23%
Net Effective Discount Rate 0.74% 0.39%
Expected Rate of Salary Increase 7.08% 6.82%
Expected Retirement Age - Females 58 58
Expected Retirement Age - Males 63 63
Movements in the present value of the Defined Benefit Obligation were as follows:
Balance at the beginning of the year 12 504 329 11 052 856
Current service costs 1 550 550 1 417 669
Interest cost 865 290 663 112
Benefits paid (1 095 279) (1 115 167)
Actuarial losses / (gains) (958 388) 485 859
Present Value of Fund Obligation at the end of the Year 12 866 502 12 504 329 The municipality operates an unfunded defined benefit plan for all its employees. Under the plan, a Long-term Service Award is payable after 10 years of continuous service and every 5 years thereafter to employees.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
The Current Service Cost for the year ending 30 June 2014 is estimated to be R1 550 550, whereas the cost for the ensuing year is estimated to be R1 077 763.
At year end, 1 050 (2013: 1 140) employees were eligible for Long-Term Services Awards.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 30 June 2014 by Mr C Weiss, Fellow of the Actuarial Society of South Africa. The present value of the defined benefit obligation, and the related Current Service Cost and past service cost, were measured using the Projected Unit Credit Method.
TLOKWE CITY COUNCIL
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014
2014 2013
The amounts recognised in the Statement of Financial Performance are as follows: R R
Current service cost 1 550 550 1 417 669
Interest cost 865 290 663 112
Actuarial losses / (gains) (958 388) 485 859
Total Long-term Services Awards included in Employee Related Costs (Note 25) 1 457 452 2 566 640
2014 2013 2012 2011 2010
R R R R R
Present Value of Defined Benefit
Obligation 12 866 502 12 504 329 11 052 856 10 712 920 9 455 314 Deficit 12 866 502 12 504 329 11 052 856 10 712 920 9 455 314
2014 2013
R R
The effect of a 1% movement in the assumed rate of long service cost inflation is as follows:
Increase:
Effect on the aggregate of the current service cost and the interest cost 154 100 134 100
Effect on the defined benefit obligation 771 000 795 000
Decrease:
Effect on the aggregate of the current service cost and the interest cost (138 700) (120 100)
Effect on the defined benefit obligation (705 000) (724 000)
16.3 Rehabilitation of Landfill Sites
2014 2013
R R