CSL Ltd Annual Report 2020

CSL Limited Annual Report 2020 131 Movements in Accrued benefits and assets During the financial year the value of accrued benefits increased by $111.6m, mainly attributable to three main factors: • Actuarial adjustments, due primarily to lower discount rates at the end of the year than originally anticipated by the actuary, generated an increase in accrued benefits of $46.6m. These adjustments do not affect the profit and loss as they are recorded in Other Comprehensive Income. • Service cost charged to the profit and loss of $41.1m. This amount represents the increased benefit entitlement of members, arising from an additional year of service and salary increases. • Interest costs of $9.1m, representing the discount rate on the benefit obligation and anticipated monthly benefit payments. In the prior year the value of accrued benefits increased by $131.5m. The increase is mainly attributable to three main factors: • Actuarial adjustments, due primarily to lower discount rates at the end of the year than originally anticipated by the actuary, generated an increase in accrued benefits of $46.7m. These adjustments do not affect the profit and loss as they are recorded in Other Comprehensive Income. • Service cost charged to the profit and loss of $33.1m. This amount represents the increased benefit entitlement of members, arising from an additional year of service and salary increases. • Interest costs of $11.9m, representing the discount rate on the benefit obligation and anticipated monthly benefit payments. Plan assets increased by $70.4m during the financial year. The increase is mainly attributable to the following factors: • Contributions made by employer and employee increased plan assets by $39.3m. Investment returns increased plan assets by $27.1m; and Offsetting these increases were benefits paid by the plans of $9.3m and unfavourable foreign currency movements of $0.4mwhich are taken directly to the Foreign Currency Translation Reserve. In the prior year the value of plan assets increased by 38.3m. Contributing factors were investment returns earned on plan assets ($5.9m), employer and employee contributions ($37.9m); offset by benefits paid by the plan ($3.7m) and unfavourable currency movements ($1.1m). The principal actuarial assumptions, expressed as weighted averages, at the reporting date are: 2020 % 2019 % Discount rate 0.7% 1.0% Future salary increases 2.1% 2.1% Future pension increases 0.5% 0.4% Plan Assets: The major categories of total plan assets are as follows: 2020 $m 2019 $m Cash 21.9 40.8 Instruments quoted in active markets: Equity Instruments 241.7 227.3 Bonds 328.9 278.7 Unquoted investments – property 143.3 115.1 Other assets (0.3) 3.2 Total Plan assets 735.5 665.1 The variable with the most significant impact on the defined benefit obligation is the discount rate applied in the calculation of accrued benefits. A decrease in the average discount rate applied to the calculation of accrued benefits of 0.25% would increase the defined benefit obligation by $70.6m. An increase in the average discount rate of 0.25% would reduce the defined benefit obligation by $66.7m. The defined benefit obligation will be discharged over an extended period as members exit the plans. The plan actuaries have estimated that the following payments will be required to satisfy the obligation. The actual payments will depend on the pattern of employee exits from the Group’s plans. Year ended 30 June 2020 $44.4m (2019: 22.8m) Between two and five years $164.1m (2019: 99.3m) Between five and ten years $197.5m (2019: 148.1m) Beyond ten years $676.0m (2019: 699.7m)