The assumptions used including discount rates are shown below:
|
EOFY2016 |
EOFY2017 |
EOFY2018 |
Discount Rate (10yr govt bond rate) |
2.34% |
2.97% |
2.85% |
Inflation |
2.0% |
2.0% |
2.0% |
Future Salary Increases |
3.0% |
3.0% |
3.0% |
Future Pension Increases |
2.0% |
2.0% |
2.0% |
It looks like only the discount rate is moving. The lower the discount rate, that means the more money is required 'now' to fund future obligations. So if the government ten year bond rate halves (from 2.85%), that means the present day obligations of the pension scheme could double? That would be another $10m of 'hidden debt' on the books or more poignantly another $10m of 'shareholder cash' to remove that hidden debt needed?
Perhaps they changed the assumptions to
assume more people will die sooner, and so relieve the pension scheme of its future cashflow problem? (of course if the people don't die sooner as assumed, that might be a problem in itself!)