21. Retirement Benefit Obligations (Group and RTÉ)

The Group is the principal sponsoring employer of:

(a) the RTÉ Superannuation Scheme (a funded, contributory, final salary defined benefit pension scheme to which no new employees have been admitted since 1989);

(b) the RTÉ “50/50” Risk-Sharing Pension Scheme (a funded, contributory pension scheme with a core defined benefit (DB) promise based on a capped salary level with a defined contribution (DC) arrangement for earnings above the cap); and

(c) the RTÉ Defined Contribution Pension Scheme (a funded, contributory DC scheme) and also makes contributions to a number of other smaller defined contribution pension schemes on behalf of employees.

The schemes above are established as separate trust funds, each managed by a board of trustees who have responsibility for overseeing the scheme’s operations, including the investment of the scheme’s assets.

(i) Pension charge

The employer pension charge in respect of each year for the various schemes was:

	2020	2019
	€’000	€’000
RTÉ Superannuation Scheme
- current service cost	(1,232)	(1,528)
RTÉ “50/50” Risk-Sharing Pension Scheme (DB section)
- current service cost	(1,987)	(1,571)
	(3,219)	(3,099)
RTÉ “50/50” Risk-Sharing Pension Scheme (DC section)	(394)	(411)
RTÉ Defined Contribution Pension Scheme	(9,917)	(9,520)
Other schemes	(21)	(23)

(ii) Defined benefit arrangements

As is required by the Pensions Act, 1990, independent actuarial valuation reports based on actuarially determined long-term funding assumptions are regularly carried out in respect of the RTÉ Superannuation Scheme. The most recent actuarial funding valuation report is dated 1 January 2021 and was completed subsequent to the 2020 year end by the actuaries, Mercer, who are neither officers nor employees of the Group. This actuarial funding valuation uses the “attained age” method of valuation to derive the future service cost. For this valuation the actuary has provided a surplus calculated on a total-service funding position. This compares total liabilities (past and future service) with the value of assets plus the value of future employee and employer contributions at standard rates. The total-service funding position at 1 January 2021 shows a surplus of €56 million. The equivalent surplus at 1 January 2020 was €55 million. The actuarial funding valuation report is not available for public inspection; however the results of valuations are advised to members.

The actuaries have also carried out a valuation in accordance with the minimum funding standard (MFS) as at 1 January 2021 and have reported a surplus on this basis of €179 million (1 January 2020: surplus of €204 million). An Actuarial Funding Certificate has been submitted on this basis. The scheme also met the funding standard reserve at 1 January 2021 and a certificate confirming this outcome has been submitted to the Pension Authority.

As required by the accounting standard IAS 19 (2011), the actuaries, Mercer, also prepare a report setting out the position of the RTÉ Superannuation Scheme using the accounting valuation methodology specified in IAS 19 (2011). The IAS 19 (2011) approach to defined benefit fund accounting valuation and reporting uses the projected unit credit method to derive annual future pension charges, values assets at current fair market value and discounts future liabilities (using high grade corporate bond rates of approximate duration to the estimated life of the liabilities of the scheme) to arrive at a net present value of the liabilities of the scheme. The difference between the asset and liability valuations at 31 December 2020 amounts to an asset of €147 million.

The Group expects to pay €0.3 million in contributions to the RTÉ Superannuation Scheme in 2021.

RTÉ “50/50” Risk-Sharing Pension Scheme:

The most recent actuarial funding valuation in respect of the RTÉ “50/50” Risk-Sharing Pension Scheme was carried out as at 1 January 2021 and was completed subsequent to the 2020 year end by the scheme actuary, Mercer. This actuarial funding valuation, which uses the “attained age” method of valuation to derive the future service cost, discloses the scheme to have a surplus of €9.3 million (1 January 2020: surplus €6.4 million). The actuarial funding valuation report is not available for public inspection; however the results of valuations are advised to members.

The employer contribution rate to the defined benefit section of the RTÉ “50/50” Risk-Sharing Pension Scheme for the year ended 31 December 2020 was 8.75% of employee members’ remuneration (defined as pensionable salary and allowances up to the cap, currently €48,000 p.a.). The actuaries have also carried out a valuation in accordance with the MFS provisions of the Pensions Act, 1990 and have reported a surplus on this basis of €18 million (1 January 2020: surplus €15 million).

As for the RTÉ Superannuation Scheme, Mercer prepares a report setting out the position of the RTÉ “50/50” Risk-Sharing Pension Scheme using the accounting valuation methodology specified in IAS 19 (2011). For this scheme, the difference between the asset and liability valuation at 31 December 2020 amounts to an asset of €4.0 million.

The Group expects to pay €1.6 million in contributions to the RTÉ “50/50” Risk-Sharing Pension Scheme (DB section) in 2021.

Both schemes carry the normal investment and funding risks associated with defined benefit schemes, and short-term volatility in their financial position can be expected. The regulatory risk is, however, limited, as there is no statutory requirement in Ireland for employers to maintain defined benefit plans in existence or to meet any funding shortfalls should they wind up in deficit.

(iii) Net defined benefit asset

At 31 December 2020, the net defined benefit asset in relation to the two defined benefit arrangements is as follows:

	2020	2019
Group and RTÉ	€’000	€’000
Net pension asset in RTÉ Superannuation Scheme	146,826	107,024
Net pension asset in RTÉ “50/50” Risk-Sharing Pension Scheme	3,990	3,380
	150,816	110,404

Movement in net defined benefit asset/(liability)

RTÉ Superannuation Scheme

	Defined benefit obligation		Fair value of plan assets		Net defined benefit asset/(liability)
	2020	2019	2020	2019	2020	2019
	€’000	€’000	€’000	€’000	€’000	€’000
Balance at 1 January	(983,579)	(951,400)	1,090,603	997,992	107,024	46,592
Included in Income Statement
Current service cost	(1,232)	(1,528)	-	-	(1,232)	(1,528)
Interest (cost)/income	(11,496)	(17,598)	12,785	18,492	1,289	894
	(12,728)	(19,126)	12,785	18,492	57	(634)
Included in OCI
Remeasurements gain/(loss)
Actuarial gain/(loss) arising from:
Financial assumptions	(34,338)	(59,239)	-	-	(34,338)	(59,239)
Demographic assumptions	35,560	-	-	-	35,560	-
Experience	507	840	-	-	507	840
Return on plan assets excluding interest income	-	-	37,348	118,695	37,348	118,695
	1,729	(58,399)	37,348	118,695	39,077	60,296
Other
Employer contributions	-	-	668	770	668	770
Employee contributions	(555)	(642)	555	642	-	-
Benefits paid	45,898	45,988	(45,898)	(45,988)	-	-
	45,343	45,346	(44,675)	(44,576)	668	770
Balance at 31 December	(949,235)	(983,579)	1,096,061	1,090,603	146,826	107,024

RTÉ “50/50” Risk-Sharing Pension Scheme

	Defined benefit obligation		Fair value of plan assets		Net defined benefit asset
	2020	2019	2020	2019	2020	2019
	€’000	€’000	€’000	€’000	€’000	€’000
Balance at 1 January	(20,199)	(15,432)	23,579	18,396	3,380	2,964
Included in Income Statement
Current service cost	(1,987)	(1,571)	-	-	(1,987)	(1,571)
Interest (cost)/income	(343)	(386)	420	486	77	100
	(2,330)	(1,957)	420	486	(1,910)	(1,471)
Included in OCI
Remeasurements gain/(loss)
Actuarial gain/(loss) arising from:
Financial assumptions	(2,110)	(2,845)	-	-	(2,110)	(2,845)
Demographic assumptions	975	-	-		975	-
Experience	129	464	-	-	129	464
Return on plan assets excluding interest income	-	-	1,878	2,778	1,878	2,778
	(1,006)	(2,381)	1,878	2,778	872	397
Other
Employer contributions	-	-	1,648	1,490	1,648	1,490
Employee contributions	(868)	(781)	868	781	-	-
Benefits paid	4	272	(4)	(272)	-	-
Insurance premium	85	80	(85)	(80)	-	-
	(779)	(429)	2,427	1,919	1,648	1,490
Balance at 31 December	(24,314)	(20,199)	28,304	23,579	3,990	3,380

(iv) Scheme assets

The fair value of the assets at 31 December was:

	RTÉ Superannuation Scheme		RTÉ “50/50” Risk-Sharing Pension Scheme
	2020	2019	2020	2019
	Fair value €’000	Fair value €’000	Fair value €’000	Fair value €’000
Debt instruments:
Government bonds	467,415	445,192	-	-
Corporate bonds	59,558	58,361	-	-
Total debt instruments	526,973	503,553	-	-
Derivatives	2	67	-	-
Investment funds:
Equity	361,895	408,956	13,151	10,456
Bonds	-	-	12,645	11,602
Cash	39,709	-	-	-
Property	41,151	41,792	1,032	1,135
Hedge funds	56,501	58,414	-	-
Private equity	64,734	61,814	-	-
Total investment funds	563,990	570,976	26,828	23,193
Cash and cash equivalents:
Cash	3,424	13,859	573	56
Other investment balances	1,672	2,148	903	330
Total cash and cash equivalents	5,096	16,007	1,476	386
Total fair value of assets	1,096,061	1,090,603	28,304	23,579

Equities are held as funds with underlying assets quoted in an active market. Debt instruments are held on a segregated basis (RTÉ Superannuation Scheme).

(v) Defined benefit obligation

(i) Actuarial assumptions

Below are the major assumptions used for the purposes of the IAS 19 (2011) based accounting valuation of the pension schemes.

	RTÉ Superannuation Scheme		RTÉ “50/50” Risk-Sharing Pension Scheme
	2020	2019	2020	2019
Average projected rate of increase in salaries:
Over the next two years	1.0%	1.0%	1.0%	1.0%
Over the following two years	1.0%	1.0%	1.0%	1.0%
Thereafter	1.25%	1.25%	1.25%	1.25%
Average projected rate of increase in pensions:
Over the next two years	1.17%	1.0%	1.25%	1.25%
Thereafter	1.25%	1.25%	1.25%	1.25%
Discount rate	0.9%	1.2%	1.4%	1.7%
Inflation assumption	1.25%	1.25%	1.25%	1.25%
Mortality	Years	Years	Years	Years
Life expectancy future retirees
Male of age 65 (born 1966)	24.3	25.3	24.3	25.3
Female of age 65 (born 1966)	26.3	27.4	26.3	27.4
Life expectancy existing pensioners
Male of age 65 (Born 1956)	23.5	24.1	23.5	24.1
Female of age 65 (Born 1956)	25.4	26.2	25.4	26.2

At 31 December 2020, the weighted average duration of the defined benefit obligations were:

RTÉ Superannuation Scheme: 12.6 years

RTÉ “50/50” Risk-Sharing Pension Scheme: 31.1 years

(ii) Sensitivity analysis

Consideration has been given to the impact on the defined benefit obligation of changes in the key underlying actuarial assumptions. The impact shown is as at the reporting date and in each case it is assumed that all other assumptions remain unchanged.

	RTÉ Superannuation Scheme		RTÉ “50/50” Risk-Sharing Pension Scheme
	Assumption	Benefit obligation €000s	Assumption	Benefit obligation €000s
Discount rate
Current rate	0.9%	949,235	1.4%	24,314
-0.25%	0.65%	978,932	1.15%	26,261
+0.25%	1.15%	920,524	1.65%	22,540
Salary & pension increases
Current assumption (long term)	1.25%	949,235	1.25%	24,314
0.25% lower increases	1.0%	923,549	1.0%	22,554
0.25% higher increases	1.5%	975,635	1.5%	26,235
Mortality
Current assumption (offset from standard table)	-1 year	949,235	-1 year	24,314
No offset	0 years	909,236	0 years	23,631
Two years offset	-2 years	989,875	-2 years	24,999