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AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 201444
28. PENSION OBLIGATIONS
Defined benefit plans
The Group operates two defined benefit plans for qualifying employees in New Zealand and overseas. The New Zealand plan is now
closed to new members. The plans provide a benefit on retirement or resignation based upon the employee’s length of membership and
final average salary. Each year an actuarial calculation is undertaken using the Projected Unit Credit Method to calculate the present
value of the defined benefit obligation and the related current service cost. The most recent actuarial valuations were provided for
30 June 2014.
Movement in net defined benefit obligation
The following table shows a reconciliation from the opening balances to the closing balances for the net defined obligation and
it’s components.
GROUP AND COMPANY
DEFINED BENEFIT
OBLIGATION
GROUP AND COMPANY
FAIR VALUE OF PLAN
ASSETS
GROUP AND COMPANY
NET DEFINED BENEFIT
OBLIGATION
2014
$M
2013
$M
2014
$M
2013
$M
2014
$M
2013
$M
Balance at the beginning of the year (131) (134) 126 114 (5) (20)
Included in profit or loss
Current service cost
Interest (expense)/income
(2)
(4)
(3)
(3)
-
4
-
3
(2)
-
(3)
-
(6) (6) 4 3 (2) (3)
Included in OCI
Remeasurements gain/(loss):
Actuarial gain/(loss) arising from:
- financial assumptions
- experience assumptions
Return on plan assets excluding interest income
Effect of movements in exchange rates
Other
7
(4)
-
-
1
(3)
-
-
1
4
-
-
4
-
-
-
-
12
(1)
-
7
(4)
4
-
1
(3)
-
12
-
4
42411 813
Other
Contributions paid by employer
Contributions paid by members
Benefits paid
-
(2)
19
-
(2)
9
5
2
(19)
5
2
(9)
5
-
-
5
-
-
17 7(12) (2) 5 5
Balance at the end of the year (116 ) (131) 122 126 6(5)
Represented by:
Defined benefit asset
Defined benefit liability
7
(1)
-
(5)
The Group expects to contribute approximately $5 million to its defined benefit plans in 2015.
GROUP AND COMPANY
2014 2013
Major categories of plan assets:
Fixed interest unit fund
New Zealand equity unit fund
Overseas equity unit fund
Commodities fund
Other assets
55%
7%
36%
-
2%
55%
7%
33%
3%
2%
100 % 100%
The fair value of plan assets is predominantly determined based on quoted prices in active markets for identical assets and liabilities
(level 1 of the fair value hierarchy). 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 by the actuaries to develop the net periodic pension cost and the
actuarial present value of projected benefit obligations for the Group’s plans:
GROUP AND COMPANY
2014 2013
Gross discount rate
Future base salary increases
3.9%
3.5%
3.1%
3.3%
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 30 JUNE 2014