CSL Ltd Annual Report 2021

Movements in Accrued benefits and assets During the financial year the value of accrued benefits increased by $42.4m, mainly attributable to: • Service cost charged to the profit and loss of $49.4m. This amount represents the increased benefit entitlement of members, arising from an additional year of service and salary increases. • Interest costs of $7.5m, representing the discount rate on the benefit obligation and anticipated monthly benefit payments. • Contributions made by employees of $14.3m. • Unfavourable foreign currency movements of $16.2mwhich are taken directly to the Foreign Currency Translation Reserve. • Offsetting these increases were benefits paid by the plans of $33.5m and actuarial adjustments, due primarily to changes in assumptions at the end of the year than originally anticipated by the actuary, generating a decrease in accrued benefits of $36.7m. These adjustments do not affect the profit and loss as they are recorded in Other Comprehensive Income. Plan assets increased by $106.0m during the financial year. The increase is mainly attributable to the following factors: • Contributions made by employer and employee increased plan assets by $43.5m; • Investment returns increased plan assets by $69.1m; and • Offsetting these increases were benefits paid by the plans of $29.7m and favourable foreign currency movements of $1.6mwhich are taken directly to the Foreign Currency Translation Reserve. The principal actuarial assumptions, expressed as weighted averages, at the reporting dates are: 2021 % 2020 % Discount rate 0.7% 0.7 % Future salary increases 2.1% 2.1 % Future pension increases 0.5% 0.5 % Plan Assets: The major categories of total plan assets are as follows: 2021 US$m 2020 US$m Cash 63.0 21.9 Instruments quoted in active markets: Equity instruments 313.0 241.7 Bonds 290.6 328.9 Unquoted investments – property 169.7 143.3 Other assets 5.2 (0.3) Total Plan Assets 841.5 735.5 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 $43.5m. An increase in the average discount rate of 0.25% would reduce the defined benefit obligation by $40.5m. 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. Within one year $50.9m (2020: $44.4m) Between two and five years $185.0m (2020: $164.1m) Between five and ten years $215.6m (2020: $197.5m) Beyond ten years $672.4m (2020: $676.0m) CSL Limited Annual Report 2020/21 140 Notes to the Financial Statements