| CIM FINANCE. INTEGRATED REPORT 2022 182 25. POST EMPLOYMENT BENEFIT LIABILITIES (CONT’D) Comments on the results: GROUP COMPANY Sep-22 Sep-21 Sep-22 Sep-21 (viii) Principal actuarial assumptions at end of year: Discount rate 4.9% 4.5% 4.9% 4.5% Rate of salary increases 4.3% 4.0% 4.3% 4.0% Rate of pension increases 2.0% 1.0% 2.0% 1.0% Average retirement age (ARA) 60 60 60 60 Average life expectancy for: - Male at ARA 19.5 years 19.5 years 19.5 years 19.5 years - Female at ARA 24.2 years 24.2 years 24.2 years 24.2years The liability experience loss of MUR 0.3m is mainly due to actual average salary increases being higher than expected over the past year and due to NWOG injection made in respect of one employee at age 60 being higher than the provision previously held for the employee, partly offset by a gain due to investment return earned on members’ PMA being higher than anticipated over the past year. The liability loss due to change in financial assumptions of MUR 11.6m is mainly due to the decrease in the net postretirement discount rate (the difference between the discount rate and the pension increase rate) from 3.5% pa in 2021 to 2.9% pa in 2022, partly offset by a gain due to the increase in the net pre-retirement discount rate (the difference between the discount rate and the salary increase rate) from 0.5% pa in 2021 to 0.6% pa in 2022. The plan exposes the Group to normal risks associated with defined benefit pension plans such as investment, interest, longevity and salary risks. - Investment risk The plan liability is calculated using a discount rate determined by reference to government bond yields; if the return on plan assets is below this rate, it will create a plan deficit and if it is higher, it will create a plan surplus. Currently the Plan has a relatively balanced investment in equity securities, debt instruments and real estate to leverage the return generated by the plan assets. - Interest risk A decrease in the bond interest rate will increase the plan liability; however, this may be partially offset by an increase in the return on the plan’s debt investments and a decrease in inflationary pressures on salary and pension increases. - Longevity risk The plan liability is calculated with reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan liability. - Salary risk The plan liability is calculated with reference to the future projected salaries of plan participants. As such, an increase in the salary of the plan participants above the assumed rate will increase the plan liability whereas an increase below the assumed rate will decrease the liability. There has been no plan amendment, curtailment or settlement during the year. (a) Pension benefits (cont’d) (vii) Future cash flows - The funding policy is to pay contributions to an external legal entity at the rate recommended by the entity’s actuary. - Expected employer contribution for the next year MUR 11.1m. - The average duration of the defined benefit obligations is 5 years. EXPLANATORY NOTES 30 SEPTEMBER 2022
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