Page 111 - ICD-AR22-English

Notes to the Separate Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
Under RMSP, retirees will have their actual medical costs covered as per the minimum guaranteed benefit schedule. This mainly covers hospitalization and emergency care, repatriation and ambulance transport. Overseas specialist hospitalization and outpatient care is also covered but only in specified countries.
Members of RMSP started to receive benefits as from April 1, 2022 (the start date of the Plan).
RMSP contributions are funded on 4/4/4 % basis. Employees contribute 4% of their pensionable salaries and the employer matches it with 4%. Retirees also contribute 4% of their pension (before commutation withdrawals). Both Employer and Employee contributions started to accrue on January 1, 2019 and at August 1, 2021, employees started cash contributions to RMSP. These contributions cumulated before April 1, 2022 have been recognized as part of plan assets during the year.
Retirees did not contribute up until April 1, 2022 and received benefits under the RMSP up until that point.
Administration of SRPs
The Pension Committee appointed by the President of IsDB Group, administers SRPs as separate funds on behalf of its employees. The Pension Committee is responsible for the oversight of investment and actuarial activities of the SRPs. The SRP’s assets are invested in accordance with the policies set out by the Pension Committee. The Bank and its affiliates underwrite the investment and actuarial risk of the SRPs and share the administrative expenses.
Risks
Investment risk
The present value of the SRPs’ liability is calculated using a discount rate determined by reference to high quality corporate bond yields; if the return on SRPs’ asset is below this rate, it will create a plan deficit. Currently the SRPs’ have a relatively balanced investment in equity securities, debt instruments and real estate. Due to the long-term nature of the SRPs’ liabilities, the administrator of SRPs’ consider it appropriate that a reasonable portion of the SRPs’ assets should be invested in equity securities and in real estate to leverage the return generated by the fund.
Discount rate
A decrease in the bond return rate will increase the SRPs’ liability but this will be partially offset by an increase in the return on the SRPs’ debt investments.
Longevity risk
The present value of the SRPs’ liability is calculated by reference to the best estimate of the mortality of SRPs’ participants both during and after their employment. An increase in the life expectancy of the SRPs’ participants will increase the SRPs’ liability.
Salary risk
The present value of the SRPs’ liability is calculated by reference to the future salaries of SRPs’ participants. As such, an increase in the salary of the SRPs’ participants will increase the SRP’ liability.
REINVIGORATING THE PRIVATE SECTOR TO SHAPE A BETTER FUTURE 109