Air New Zealand 2008 Annual Report Download - page 44

AIR NEW ZEALAND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 30 JUNE 2008
25. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)
GROUP AND COMPANY
2008
$M
2007
$M
Major categories of plan assets:
Fixed interest unit fund 55 36
Property unit fund 7 9
New Zealand equity unit fund 8 11
Overseas equity unit fund 20 34
Other assets 4 4
94 94
None of the above relate to the Company’s own financial instruments, nor property occupied by or other assets used by the Company.
Assumptions used
The following table provides the weighted average assumptions used to develop the net periodic pension cost and the actuarial present value of
projected benefit obligations for the Group’s plans:
GROUP AND COMPANY
2008 2007
Gross discount rate 5.4% 5.0%
Expected return on plan assets 4.9% 4.7%
Future salary increases 2.5% 2.3%
The expected rates of return on individual categories of plan assets are determined by independent actuaries with reference to relevant indices
published by the New Zealand Stock Exchange. The overall expected rate of return is calculated by weighting the individual rates in accordance with the
anticipated balance in the plan’s investment portfolio.
Defined contribution plans
The Group operates defined contribution retirement plans for qualifying employees. The assets of the plan are held separately from those of the
Group and invested in funds under the control of trustees. Employees receive a benefit on retirement or upon resignation, based upon the employee’s
accumulated contributions plus a proportion of the company’s contributions depending upon their period of membership. Where employees leave service
prior to vesting fully in the contributions, the forfeited contributions are retained in the plan and may be used by the plan to meet expenses, fund the
company’s future contributions or provide other benefits for members.
The Group contributes to the NPF Defined Benefit Plan Contributors retirement plan, to which other employers contribute in respect of their own
employees. This has been accounted for as a defined contribution plan as insufficient information is available to allocate the plan across all participants
on a meaningful basis. The Group is not a dominant participant in the plan, contributing approximately 11% of the plan’s total annual contributions. The
information in respect of 2008 presented below is the same as that disclosed for 2007 as the actuarial valuation for the scheme was not available at the
time of preparing these financial statements.
GROUP AND COMPANY
2008
$M
2007
$M
Overall position of the plan in respect of all employers:
Present value of defined benefit obligation (295) (295)
Fair value of plan assets 330 330
Past service surplus 35 35
The past service deficit of the plan is actuarially valued each year using the attained age valuation methodology. Participating employers are contractually
obliged to contribute at rates specified by the trustee who act on the advice of the actuary. The agreed contribution requirements seek to fund any deficit
over the future working lifetime of the members. Should the fund be in deficit at the time of winding up the scheme, the Group would be obliged to fund
its own share of that deficit.
Contributions of $15 million were made to Group defined contribution plans during the year (30 June 2007: $16 million). Contributions of $12 million
were made to Company defined contribution plans during the year (30 June 2007: $14 million).
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