Note 18: Detailed Information – People Costs continued Movements in accrued benefits and assets During the financial year the value of accrued benefits decreased by $258.9m, mainly attributable to: • Benefits paid by the plans of $91.9m; • 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 $162.9m. These adjustments do not affect the profit and loss as they are recorded in other comprehensive income; • Favourable foreign currency movements of $63.0m which are taken directly to the Foreign Currency Translation Reserve; • Offsetting these movements were increases from: – Service cost charged to the profit and loss of $42.9m, representing the increased benefit entitlement of members, arising from an additional year of service and salary increases; – Interest costs of $7.2m, representing the discount rate on benefit obligation and anticipated monthly benefit payments; and – Contributions made by employees of $13.4m. Plan assets decreased by $160m during the financial year. The decrease is mainly attributable to the following factors: • Benefits paid by the plans of $87.2m; • Actuarial adjustments due primarily to changes in assumptions at the end of the year than originally anticipated by the actuary and experience adjustments, generating a decrease in plan assets of $5.0m; • Changes in the asset ceiling18 resulting in the derecognition of plan assets of $75.6m; • Unfavourable foreign currency movements of $37.0m which are taken directly to the Foreign Currency Translation Reserve; and • Offsetting these movements were increases from contributions made by employer and employee that increased plan assets by $40.4m and investment returns increased plan assets by $4.3m. The major categories of total plan assets are as follows: 2022 US$m 2021 US$m Cash 24.1 63.0 Instruments quoted in active markets: Equity instruments 225.8 313.0 Bonds 224.0 290.6 Unquoted investments – property 177.7 169.7 Other assets 29.9 5.2 Total Plan Assets 681.5 841.5 The principal actuarial assumptions, expressed as weighted averages, at the reporting dates are: 2022 % 2021 % Discount rate 2.0% 0.7% Future salary increases 2.2% 2.1% Future pension increases 0.4% 0.5% 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 $27.6m. An increase in the average discount rate of 0.25% would reduce the defined benefit obligation by $25.8m. 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 $48.3m (2021: $50.9m) Between two and five years $175.0m (2021: $185.0m) Between five and ten years $83.8m (2021: $215.6m) Beyond ten years $558.2m (2021: $672.4m) CSL Limited Annual Report 2021/22 133
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