19. 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:
2021 | 2020 | |
€’000 | €’000 | |
RTÉ Superannuation Scheme | ||
- current service cost | (997) | (1,232) |
RTÉ “50/50” Risk-Sharing Pension Scheme (DB section) | ||
- current service cost | (2,293) | (1,987) |
(3,290) | (3,219) | |
RTÉ “50/50” Risk-Sharing Pension Scheme (DC section) | (433) | (394) |
RTÉ Defined Contribution Pension Scheme | (10,213) | (9,917) |
Other schemes | (24) | (21) |
(ii) Defined benefit arrangements
RTÉ Superannuation Scheme:
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. This actuarial funding valuation uses the “attained age” method of valuation to derive the future service cost and has reported 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 actuarial funding valuation report is not available for public inspection; however the results of valuations are advised to members.
The actuaries also carried out a valuation in accordance with the minimum funding standard (MFS) as at 1 January 2021 and have reported a surplus. 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 2021 amounts to an asset of €146.8 million.
The Group expects to pay €0.2 million in contributions to the RTÉ Superannuation Scheme in 2022.
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 2022. This actuarial funding valuation, which uses the “attained age” method of valuation to derive the future service cost, reported the scheme to have a surplus. 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 2021 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.
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 2021 amounts to an asset of €1.0 million.
The Group expects to pay €1.5 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 2021, the net defined benefit asset in relation to the two defined benefit arrangements is as follows:
2021 | 2020 | |
Group and RTÉ | €’000 | €’000 |
Net pension asset in RTÉ Superannuation Scheme | 146,755 | 146,826 |
Net pension asset in RTÉ “50/50” Risk-Sharing Pension Scheme | 959 | 3,990 |
147,714 | 150,816 |
Movement in net defined benefit asset/(liability)
RTÉ Superannuation Scheme
Defined benefit obligation | Fair value of plan assets | Net defined benefit asset/(liability) | ||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
€’000 | €’000 | €’000 | €’000 | €’000 | €’000 | |
Balance at 1 January | (949,235) | (983,579) | 1,096,061 | 1,090,603 | 146,826 | 107,024 |
Included in Income Statement | ||||||
Current service cost | (997) | (1,232) | - | - | (997) | (1,232) |
Interest (cost)/income | (8,317) | (11,496) | 9,641 | 12,785 | 1,324 | 1,289 |
(9,314) | (12,728) | 9,641 | 12,785 | 327 | 57 | |
Included in OCI | ||||||
Remeasurements gain/(loss) | ||||||
Actuarial gain/(loss) arising from: | ||||||
Financial assumptions | (136,236) | (34,338) | - | - | (136,236) | (34,338) |
Demographic assumptions | - | 35,560 | - | - | - | 35,560 |
Experience | 854 | 507 | - | - | 854 | 507 |
Return on plan assets excluding interest income | - | - | 134,482 | 37,348 | 134,482 | 37,348 |
(135,382) | 1,729 | 134,482 | 37,348 | (900) | 39,077 | |
Other | ||||||
Employer contributions | - | - | 502 | 668 | 502 | 668 |
Employee contributions | (426) | (555) | 426 | 555 | - | - |
Benefits paid | 47,171 | 45,898 | (47,171) | (45,898) | - | - |
46,745 | 45,343 | (46,243) | (44,675) | 502 | 668 | |
Balance at 31 December | (1,047,186) | (949,235) | 1,193,941 | 1,096,061 | 146,755 | 146,826 |
RTÉ “50/50” Risk-Sharing Pension Scheme
Defined benefit obligation | Fair value of plan assets | Net defined benefit asset | ||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |
€’000 | €’000 | €’000 | €’000 | €’000 | €’000 | |
Balance at 1 January | (24,314) | (20,199) | 28,304 | 23,579 | 3,990 | 3,380 |
Included in Income Statement | ||||||
Current service cost | (2,293) | (1,987) | - | - | (2,293) | (1,987) |
Interest (cost)/income | (340) | (343) | 413 | 420 | 73 | 77 |
(2,633) | (2,330) | 413 | 420 | (2,220) | (1,910) | |
Included in OCI | ||||||
Remeasurements gain/(loss) | ||||||
Actuarial gain/(loss) arising from: | ||||||
Financial assumptions | (4,316) | (2,110) | - | - | (4,316) | (2,110) |
Demographic assumptions | - | 975 | - | - | 975 | |
Experience | (5) | 129 | - | - | (5) | 129 |
Return on plan assets excluding interest income | - | - | 1,794 | 1,878 | 1,794 | 1,878 |
(4,321) | (1,006) | 1,794 | 1,878 | (2,527) | 872 | |
Other | ||||||
Employer contributions | - | - | 1,716 | 1,648 | 1,716 | 1,648 |
Employee contributions | (874) | (868) | 874 | 868 | - | - |
Benefits paid | 147 | 4 | (147) | (4) | - | - |
Insurance premium | 135 | 85 | (135) | (85) | - | - |
(592) | (779) | 2,308 | 2,427 | 1,716 | 1,648 | |
Balance at 31 December | (31,860) | (24,314) | 32,819 | 28,304 | 959 | 3,990 |
(iv) Scheme assets
The fair value of the assets at 31 December was:
RTÉ Superannuation | RTÉ “50/50” Risk-Sharing | |||
2021 | 2020 | 2021 | 2020 | |
Fair value €’000 | Fair value €’000 | Fair value €’000 | Fair value €’000 | |
Debt instruments: | ||||
Government bonds | 482,998 | 467,415 | - | - |
Corporate bonds | 59,875 | 59,558 | - | - |
Total debt instruments | 542,873 | 526,973 | - | - |
Derivatives | 39 | 2 | - | - |
Investment funds: | ||||
Equity | 368,445 | 361,895 | 15,927 | 13,151 |
Bonds | - | - | 14,208 | 12,645 |
Cash | 49,569 | 39,709 | - | - |
Property | 51,632 | 41,151 | 837 | 1,032 |
Hedge funds | 65,020 | 56,501 | - | - |
Private equity | 100,867 | 64,734 | - | - |
Total investment funds | 635,533 | 563,990 | 30,972 | 26,828 |
Cash and cash equivalents: | ||||
Cash | 13,928 | 3,424 | 548 | 573 |
Other investment balances | 1,568 | 1,672 | 1,299 | 903 |
Total cash and cash equivalents | 15,495 | 5,096 | 1,847 | 1,476 |
Total fair value of assets | 1,193,941 | 1,096,061 | 32,819 | 28,304 |
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 | |||
2021 | 2020 | 2021 | 2020 | |
Average projected rate of increase in salaries: | ||||
Over the next two years | 2.0% | 1.0% | 2.0% | 1.0% |
Over the following two years | 2.0% | 1.0% | 2.0% | 1.0% |
Thereafter | 2.0% | 1.25% | 2.0% | 1.25% |
Average projected rate of increase in pensions: | ||||
Over the next two years | 2.5% | 1.17% | 2.0% | 1.25% |
Thereafter | 2.5% | 1.25% | 2.0% | 1.25% |
Discount rate | 1.1% | 0.9% | 1.7% | 1.4% |
Inflation assumption | 2.0% | 1.25% | 2.0% | 1.25% |
Mortality | Years | Years | Years | Years |
Life expectancy future retirees | ||||
Male of age 65 (born 1967) | 24.4 | 24.3 | 24.4 | 24.3 |
Female of age 65 (born 1967) | 26.4 | 26.3 | 26.4 | 26.3 |
Life expectancy existing pensioners | ||||
Male of age 65 (Born 1957) | 23.6 | 23.5 | 23.6 | 23.5 |
Female of age 65 (Born 1957) | 25.5 | 25.4 | 25.5 | 25.4 |
At 31 December 2021, the weighted average duration of the defined benefit obligations were:
RTÉ Superannuation Scheme: 12.6 years
RTÉ “50/50” Risk-Sharing Pension Scheme: 31.2 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 | |||
Assumption | Benefit obligation €000s | Assumption | Benefit obligation €000s | |
Discount rate | ||||
Current rate | 1.1% | 1,047,186 | 1.7% | 31,860 |
-0.25% | 0.85% | 1,082,013 | 1.45% | 34,347 |
+0.25% | 1.35% | 1,014,088 | 1.95% | 29,463 |
Salary & pension increases | ||||
Current assumption (long term) | 2.5% | 1,047,186 | 2.0% | 31,860 |
0.25% lower increases | 2.25% | 1,016,295 | 1.75% | 29,535 |
0.25% higher increases | 2.75% | 1,079,021 | 2.25% | 34,361 |
Mortality | ||||
Current assumption (offset from standard table) | -1 year | 1,047,186 | -1 year | 31,860 |
No offset | 0 years | 1,000,389 | 0 years | 30,965 |
Two years offset | -2 years | 1,094,978 | -2 years | 32,758 |