Annual Financial Statements for the year ended 30 June 2021 0 - Book - Page 118
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SASOL LIMITED GROUP
Provisions continued
35 Post-retirement benefit obligations continued
35.2 Pension benefits continued
Reconciliation of the projected net pension liability/(asset) recognised in the statement of financial position
South Africa
Foreign
Total
2021
Rm
2020
Rm
2021
Rm
2020
Rm
2021
Rm
2020
Rm
Projected benefit obligation (funded)
57 054
47 228
3 240
4 757
60 294
51 985
defined benefit portion
defined benefit option for defined
contribution members
25 119
20 860
3 240
4 757
28 359
25 617
31 935
26 368
–
–
31 935
26 368
(60 671)
(50 618)
(3 732)
(4 502)
(64 403)
(55 120)
(28 736)
(23 020)
(3 732)
(4 502)
(32 468)
(27 522)
(31 935)
(27 598)
(31 935)
(27 598)
for the year ended 30 June
Plan assets
defined benefit portion
defined benefit option for defined
contribution members
Projected benefit obligation
(unfunded)
Asset not recognised due to asset
limitation
Net liability/(asset) recognised
–
–
–
–
10 028
11 564
10 028
11 564
3 571
2 923
–
–
3 571
2 923
9 536
11 819
9 490
11 352
(46)
(467)
The increase of R648 million in the asset limitation (2020 – R604 million) was recognised as a loss in other comprehensive income.
The obligation which arises for the defined contribution members with the option to purchase into the defined benefit fund is limited
to the assets that they have accumulated until retirement date. However, after retirement date, there is actuarial risk associated with
the members as full defined benefit members.
Based on the latest actuarial valuation of the fund and the approval of the trustees of the surplus allocation, the company has an
unconditional entitlement to only the funds in the employer surplus account and the contribution reserve. As part of the group's
continued cash conservation measures in the current financial year, the employer surplus account was utilised to fund the employer
contributions towards the retirement fund. The remaining estimated surplus due to the company amounted to approximately
R46 million (2020 – R467 million) and has been included in the pension asset recognised in the current year.
Investment risk
The actuarial valuation assumes certain asset returns on invested assets. If actual returns on plan assets are below the assumption,
this may lead to a strain on the fund, which, over time, may lead to a plan deficit. In order to mitigate the concentration risk, the fund
assets are invested across equity securities, property securities and debt securities. Given the long-term nature of the obligations,
it is considered appropriate that investment is made in equities and real estate to improve the return generated by the fund. These
may result in improved pension benefits to members.
Pension increase risk
Benefits in these plans are to some extent linked to inflation so increased inflation levels represent a risk that could increase the cost
of paying the funds committed to benefits. This risk is mitigated as pension benefits are subject to affordability.
Discount rate risk
The discount rate is derived from prevailing bond yields. A decrease in the discount rate used will increase the obligation of the plan.
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.
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Sasol Annual Financial Statements 2021