23 PENSION OBLIGATIONS CONTINUED¡
(a) Defined benefit plans (Continued)
The debt instruments are analysed by issuer’s credit rating as follows:
2015
2014
Percentage
Percentage
Aaa/AAA
24%
24%
Aa1/AA+
12%
12%
Aa2/AA
2%
2%
Aa3/AA-
5%
5%
A1/A+
8%
8%
A2/A
6%
6%
A3/A-
7%
7%
Baa1/BBB+
2%
2%
Baa2/BBB
7%
7%
Other lower grade
7%
7%
No investment grade
20%
20%
100%
100%
The fair value of the above equity instruments and debt instruments are determined based on quoted market prices.
There is no immediate requirement for the Group to fund the deficit between the fair value of defined benefit plan assets and
the present value of the defined benefit plan obligations disclosed at 31 December 2014 and 2015. Contributions to fund the
obligations are based upon the recommendations of independent qualified actuaries for each of the pension plans of the
Group to fully fund the relevant schemes on an ongoing basis. The realisation of the deficit is contingent upon the realisation
of the actuarial assumptions made which is dependent upon a number of factors including the market performance of plan
assets. Funding requirements of the major defined benefit plans of the Group are detailed below.
The Group operates two principal plans in Hong Kong. One plan, which has been closed to new entrants since 1994,
provides benefits based on the greater of the aggregate of the employee and employer vested contributions plus a
minimum interest thereon of 6% per annum, and a benefit derived by a formula based on the final salary and years of
service. A formal independent actuarial valuation, undertaken for funding purposes under the provision of Hong Kong’s
Occupational Retirement Schemes Ordinance (“ORSO”), at 1 August 2015 reported a funding level of 127% of the accrued
actuarial liabilities on an ongoing basis. The valuation used the attained age valuation method and the main assumptions
in the valuation are an investment return of 6% per annum and salary increases of 4% per annum. The valuation was
performed by Tian Keat Aun, a Fellow of The Institute of Actuaries, of Towers Watson Hong Kong Limited. The second
plan provides benefits equal to the employer vested contributions plus a minimum interest thereon of 5% per annum.
At 31 December 2015, this plan is fully funded for the funding of vested benefits in accordance with the ORSO funding
requirements. During the year ended 31 December 2015, forfeited contributions totalling HK$729,000 (2014: HK$885,000)
were used to reduce the level of contributions of the year ended 31 December 2015 and no forfeited contribution was
available at 31 December 2015 (2014: Nil) to reduce future year’s contributions.
Notes to the
Financial Statements
OPTIMISING FOR THE FUTURE
106
