South African Local Government Association
Schedule 3A public entity i.t.o. the Public Finance Management Act, 1999 and recognised i.t.o. the
Organised Local Government Act, 1997
Annual Financial Statements for the year ended 31 March 2017
Notes to the Annual Financial Statements
2017
Figures in Rand
7.
2016
Employee benefit obligations (continued)
SALGA contracted NMD Consultants and Actuaries (Pty) Ltd, an independent firm of actuaries not
connected to SALGA, to assist with the determination of the post-employment medical obligation as
at 31 March 2017. The report provided by the actuaries valued the obligation at R 677 992 (2016: R 666
000). The increase in the post-employment medical obligation is due to a surplus of R 27 000 as a result
of changes in financial assumptions; a deficit of R 17 000 due to health care cost inflation compared to
expectations and a deficit of R 31 000 due to actual demographic profile of the membership compared
to expectations.
The amounts recognised in the statement of financial position are as follows:
Carrying value
Present value of the defined benefit obligation - wholly unfunded 677 992 666 000
Non-current liabilities
Current liabilities 607 850
70 142
677 992 602 459
63 541
666 000
Changes in the present value of the defined benefit obligation are as follows:
Opening balance
Benefits paid
Net expenses recognised in the statement of financial performance
666 000
(67 008)
79 000
677 992 637 000
(61 000)
90 000
666 000
58 000
21 000
79 000 48 000
42 000
90 000
9.04%
8.06%
6.56%
0.91%
11.47% 9.20%
8.77%
7.27%
0.40%
10.72%
Net expense recognised in the statement of financial performance
Interest cost
Re-measurement or actuarial gain or loss
Key assumptions used
Assumptions used at the reporting date:
Discount rates used
Medical cost trend rates
Consumer price inflation
Real discount rate
Expected increase in healthcare costs
The post-employment health care liabilities have been valued using the projected unit credit
discounted cash flow method. This method was used to determine the past-service liabilities at the
valuation date and projected annual expense in the year following the valuation date.
199
SALGA ANNUAL REPORT
2016/17