Tiger Brands | ANNUAL FINANCIAL STATEMENTS 2024 - Post-retirement medical aid obligations

Post-retirement medical aid obligations

The group provides post-retirement healthcare benefits to certain of its retirees based on the qualifying employee remaining in service up to retirement age in the form of a defined benefit medical plan. The expected costs of these benefits are accrued over the period of employment, using the projected unit credit method. Valuations are based on assumptions which include employee turnover, mortality rates, discount rate based on current bond yields of appropriate terms, healthcare inflation costs and rates of increase in salary costs. Valuations of these obligations are carried out by independent qualified actuaries.

Actuarial gains or losses are recognised in the same manner as those of defined benefit pension obligations noted in the previous accounting policy.


	GROUP
(R'million)	2024	2023
Balance at the end of the year
Present value of obligations	251,0	238,0
Liability at reporting date	251,0	238,0
Movement in the liability recognised in the statement of financial position:
Balance at the beginning of the year	238,0	322,9
Contributions paid	(23,3)	(28,8)
Buy-out¹	(1,4)	(52,8)
Other expenses included in staff costs	28,2	40,7
Current service cost	1,1	1,4
Interest cost	27,1	39,3
Actuarial loss/(gain) released in terms of IAS 19R	9,5	(44,0)
Balance at the end of the year	251,0	238,0

¹ Represents the buy-out of one member in the current year and 75 members in the prior year

The employer’s estimate of contributions expected to be paid for the 2025 financial year is R24,3 million (2024: R23,4 million).

Detailed disclosure and the respective assumptions and valuation inputs have been included below.

This information noted below summarises all key assumptions, valuation inputs and key disclosures relating to Tiger Brands

The company and its subsidiaries operate post-employment medical benefit schemes that cover certain of their employees and retirees. This practice has since been stopped for new employees. The liabilities are valued annually using the projected unit credit method. The latest actuarial valuation was performed on 30 September 2024.


	GROUP
	2024	2023
The principal actuarial assumptions used for accounting purposes were:
Discount rate	11,1%	12,1%
Medical inflation	6,9%	7,9%
Future salary increases	5,9%	6,9%
	PA(90) ultimate rated down 2 years plus	PA(90) ultimate rated down 2 years plus
Post-retirement mortality tables	1% improvement p.a. from 2006	1% improvement p.a. from 2006

The risks faced by the group as a result of the post-retirement medical aid obligation can be summarised as follows:

Inflation: The risk that future CPI inflation and healthcare cost inflation are higher than expected and uncontrolled
Longevity: The risk that pensioners live longer than expected and thus their healthcare benefit is payable for longer than expected
Open-ended, long-term liability: The risk that the liability may be volatile and uncertain in the future
Future changes in legislation: The risk that changes to legislation with respect to the post-employment liability may increase the liability for Tiger Brands
Future changes in the tax environment: The risk that changes in the tax legislation governing employee benefits may increase the liability for Tiger Brands
Perceived inequality between current employees: The risk of dissatisfaction of current employees who are not eligible for a post-employment healthcare subsidy
Administration: Administration of this liability poses a burden to Tiger Brands
Future National Health Insurance (NHI): The risk that the liability could be impacted due to the implementation of NHI and its impact on medical schemes
Enforcement of eligibility criteria and rules: The risk that eligibility criteria and rules are not strictly or consistently enforced


	Base case	Medical inflation		Base case	Medical inflation
	2024			2023
Sensitivity analysis*
Key assumption	6,9%	(1,0%)	1,0%	7,9%	(1,0%)	1,0%
Accrued liability 30 September (R’million)	251,0	233,1	271,5	238,0	219,3	259,4
% change		(7,1)	8,2		(7,9)	9,0
Current service cost plus interest cost (R’million)	27,8	25,6	30,3	28,4	26,0	31,2
% change		(7,8)	9,0		(8,5)	9,9


	Base case	Discount rate		Base case	Discount rate
	2024			2023
Key assumption	11,1%	(1,0%)	1,0%	12,1%	(1,0%)	1,0%
Present value of obligations 30 September (R’million)	251,0	272,7	232,3	238,0	258,2	220,5
% change		8,6	(7,4)		8,5	(7,3)


	Base case	Expected retirement age		Base case	Expected retirement age
	2024			2023
Key assumption	60/63/	1 year	1 year	60/63/	1 year	1 year
	65 years	younger	older	65 years	younger	older
Present value of obligations 30 September (R’million)	251,0	252,4	249,3	238,0	239,6	236,1
% change		0,6	(0,7)		0,7	(0,8)

* The sensitivity analysis relates to the total liability for the year

The duration of the liability at 30 September 2024 is 9,0 years (2023: 9,1 years).