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HSRC Annual Report 2016/17
PART E: Annual Financial Statements
12.4 Particulars of the liabilities
The membership details of the members in active employment and who are entitled to a subsidy after continuation
as at reporting date:
Number of members
Average past service – years
2017
2016
2017
2016
Male members (Age band: 45–49)
1
1
26.2
25.2
Total/weighted average
1
1
26.2
25.2
The average age of these members was 50 years as at 31 March 2017, compared to 49 years in respect of the active
members as at 31 March 2016. Average monthly employer contributions 2017: R2,192.50 (2016: R4,026.00)
Details of the continuation members (being members no longer employed by the HSRC) as at reporting date:
Number of
members
Average premium
principal member
per month – R’s
Average weighted
age – years
2017
2016
2017
2016
2017
2016
Total/weighted average
70
74
529
518
81.7
80.7
The table below summarises the profile of the continuation pensioners subsided by the HSRC as at 31 March 2017:
Age band: 50–54
0
Age band: 75–79
12
Age band: 55–59
1
Age band: 80–84
31
Age band: 60–64
1
Age band: 85–89
14
Age band: 65–69
1
>90
7
Age band: 70–74
6
12.5 Key financial assumptions
12.5.1 Summary assumptions
The economic assumptions for the 31 March 2017 valuation are shown in the table below, and compared to those used
as at the previous valuation date.
% per annum
2017
% per annum
2016
Discount rate
8.69
9.20
Consumer Price Inflation
5.85
6.78
Healthcare cost inflation rate – in service employees
7.35
8.28
Net discount rate
1.25
0.85
12.5.1.1 Discount rate
GRAP 25 requires that the discount rate used in the valuation be determined by reference tomarket yields on government
bonds as at the reporting date. The currency and term of the government bonds shall be consistent with the currency
and estimated term of the post-employment benefit obligations.
At the previous valuation date, 31 March 2016, the duration of the liabilities was 7.19 years. At this duration, the discount
rate determined by using the Bond Exchange Zero Coupon Yield Curve as at 31 March 2017 is 8.69% per annum.
12.5.1.2 Healthcare cost inflation
A healthcare cost inflation rate of 7.35% was assumed. This is 1.5% in excess of the expected inflation over the expected
term of the liability, at 5,85%. However, it is the relative levels of the discount rate and healthcare inflation to one another
that are important, rather than the nominal values. We have thus assumed a net discount factor of 1.25% per annum.