NOTE 08
NON-FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
The defined benefit obligation has been recalculated
by changing the assumptions as outlined above, whilst
retaining all other assumptions.
(vi) Risk exposure
There are a number of risks to which the Fund
exposes the Employer. The more significant risks
relating to the defined benefits are:
•
•
Investment risk - The risk that investment
returns will be lower than assumed and the
Employer will need to increase contributions to
offset this shortfall.
•
•
Longevity risk - The risk that pensioners
live longer than assumed, increasing
future pensions.
•
•
Pension indexation risk - The risk that pensions
will increase at a rate greater than assumed,
increasing future pensions.
•
•
Salary growth risk - The risk that wages or
salaries (on which future benefit amounts for
active members will be based) will rise more
rapidly than assumed, increasing defined benefit
amounts and thereby requiring additional
employer contributions.
•
•
Legislative risk - The risk is that legislative
changes could be made which increase the cost of
providing the defined benefits.
The defined benefit fund assets are invested with
independent fund managers and have a diversified
asset mix. The Fund has no significant concentration of
investment risk or liquidity risk.
(vii) Defined benefit liability and
employer contributions
Funding arrangements are reviewed at least every three
years following the release of the triennial actuarial
review and was last reviewed following completion of
the triennial review as at 30 June 2012. Contribution
rates are set after discussions between the employer,
STC and NSW Treasury. Funding positions are reviewed
annually and funding arrangements may be adjusted as
required after each annual review.
Expected contributions to defined benefit plans for the
year ending 30 June 2015 are $751k.
The weighted average duration of the defined benefit
obligation is 12.3 years (2013: 12.6 years).
(viii) Amounts recognised in consolidated
income statement
The amounts recognised in the consolidated income
statement are as follows:
Consolidated
2014
$’000
Restated
2013
$’000
Current service cost
536
602
Interest cost on benefit obligation
341
386
Defined benefit cost
877
988
Of the total expenses recognised in profit or loss, $877k (2013 - $988k) were recognised in ‘employee benefits expense’.
(ix) Amounts recognised in other comprehensive income
Consolidated
2014
$’000
Restated
2013
$’000
Actuarial gains/(losses) on liabilities
(4,877)
970
Actual return on Fund assets less interest income
2,732
2,904
Total remeasurement in other comprehensive income
(2,145)
3,874
(g) Non-current liabilities - Defined benefit plans (continued)
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