Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 116
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SASOL LIMITED GROUP
Provisions continued
35 Post-retirement benefit obligations continued
35.1
Post-retirement healthcare obligations continued
The sensitivity analysis is performed in order to assess how the post-retirement healthcare obligation would be affected by changes
in the actuarial assumptions underpinning the calculation.
South Africa
United States of America
2021
Rm
2020
Rm
Increase in the healthcare cost inflation
Decrease in the healthcare cost inflation
411
(344)
325
(280)
Increase in the discount rate
Decrease in the discount rate
(329)
399
(264)
310
for the year ended 30 June
2021
Rm
2020
Rm
1% point change in actuarial assumptions:
–*
–*
(25)
34
–*
–*
(38)
47
* A change in the healthcare cost inflation for the United States of America will not have an effect on the above components or the obligation as
the employer's cost is capped and all future increases due to the healthcare cost inflation are borne by the participants. There are no automatic
pension increases for the United States pension plan.
A change in the pension increase assumption will not have an effect on the above obligation. In South Africa the post-retirement
benefit contributions are linked to medical aid inflation and based on a percentage of income or pension. Where pension increases
differ from medical aid inflation, the difference will need to be allowed for in a change in the percentage of income or pension
charged. The are no automatic pension increase for the United states pension plan.
The sensitivities may not be representative of the actual change in the post-retirement healthcare obligation, as it is unlikely that
the changes would occur in isolation of one another, and some of the assumptions may be correlated.
Healthcare cost inflation risk
Healthcare cost inflation is consumer price index inflation plus two percentage points over the long term. An increase in healthcare
cost inflation will increase the obligation of the plan.
Discount rate risk
The discount rate is derived from prevailing bond yields. A decrease in the discount rate will increase the obligation of the plan.
Pension increase risk
The South African healthcare plan is linked to pension benefits paid, which are to some extent linked to inflation. Accordingly,
increased inflation levels represent a risk that could increase the cost of paying the funds committed to benefits.
Other
Changes in other assumptions used could also affect the measured liabilities. There is also a regulatory risk as well as foreign funds
under the jurisdiction of other countries. To the extent that governments can change the regulatory frameworks, there may be a risk
that minimum benefits or minimum pension increases may be instituted, increasing the associated cost for the fund.
35.2 Pension benefits
South African operations
Background
In 1994, all members were given the choice to voluntarily transfer to the newly established defined contribution section of the
pension fund and approximately 99% of contributing members chose to transfer to the defined contribution section.
Defined benefit option for defined contribution members
In terms of the rules of the fund, on retirement, employees employed before 1 January 2009 have an option to purchase a defined
benefit pension with their member share. Should a member elect this option, the group is exposed to actuarial risk. In terms
of IAS 19, the classification requirements stipulate that where an employer is exposed to any actuarial risk, the fund must be
classified as a defined benefit plan.
Fund assets
The assets of the fund are held separately from those of the company in a trustee administered fund, registered in terms of the
South African Pension Funds Act, 1956. Included in the fund assets at 31 March 2021 are 2 082 248 (2020 – 2 079 248) Sasol ordinary
shares valued at R454 million (2020 – R275 million) at year-end purchased under terms of an approved investment strategy, and
property valued at R1 521 million (2020 – R1 555 million) that is currently occupied by Sasol.
Membership
A significant number of employees are covered by union sponsored, collectively bargained, and in some cases, multi-employer
defined contribution pension plans. Information from the administrators of these plans offering defined benefits is not sufficient to
permit the company to determine its share, if any, of any unfunded vested benefits.
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Sasol Annual Financial Statements 2021