Median discount rate has decreased

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1 Survey of Assumptions and Results for Actuarial Valuations of Defined Benefit Schemes in accordance with Hong Kong Accounting Standard 19 - Employee Benefits 2015/16

2 Survey of Assumptions and Results for Actuarial Valuations of Defined Benefit Schemes in accordance with Hong Kong Accounting Standard 19 Employee Benefits Table of Contents Executive Summary Introduction Discount Rate Salary Increases Impact of HKAS 19 Figures on Company Financial Statements Assets and Investment Returns Appendix A: Summary of Survey Statistics Appendix B: Background to HKAS Appendix C: Methodology Employed to Set Financial Assumptions Appendix D: HKAS 19 Terminology Appendix E: About Willis Towers Watson... 23

3 Executive Summary Median discount rate has decreased The median discount rate has decreased by 0.2% from 1.7% p.a. in 2014/15 to 1.5% p.a. in 2015/16, reflecting a drop in bond yields. Median salary increase awarded over the year was 4.8% while the long-term salary increase assumption remained unchanged at 4.0% The median salary increase over the past year was 4.8%, compared to 5.0% in the previous year. On the other hand, the median long-term salary increases assumption remains unchanged at 4% p.a. This assumed long-term rate has been used for many years. Net discount rate over long-term salary growth rate has decreased The key factor for determining the liabilities is the net discount rate over the assumed rate of future salary increases. The median net discount rate has decreased from -2.4% p.a. in 2014/15 to -2.6% p.a. in 2015/16, leading to higher liabilities by around 1% to 3% in broad terms. Median Annual Expense to be booked to Profit or Loss has increased The median Annual P&L Expense to be booked in 2016/17 has increased from 15.3% of salary last year to 15.7% of salary this year. This is mainly due to the lower net discount rate used in 2015/16 compared to the previous year. Median investment returns have been poorer for riskier investment portfolios The median investment return achieved over the year ending 31 December 2015 for investment portfolios with a higher allocation to equities was lower than for those holding safer assets. The median return was 3.1% for a 100% cash/bonds/guaranteed fund portfolio compared to -2.6% for an 80% equities 20% cash/bonds portfolio. 1

4 1. Introduction Willis Towers Watson has been surveying the financial parameters used by employers in complying with the requirements of Hong Kong Accounting Standard 19 Employee Benefits (HKAS 19) since its introduction on 1 January This report covers the following areas in the context of HKAS 19: Companies selection of financial assumptions; and Impact of HKAS 19 on Profit or Loss Account and Balance Sheet. This survey focuses on defined benefit retirement schemes which are established under the Occupational Retirement Schemes Ordinance ( ORSO ), the legislation governing the operation of voluntary retirement schemes in Hong Kong. It covers companies with accounting years ended within the survey period of 30 June 2015 and 29 June defined benefit schemes with around 45,000 members and a total scheme asset value of HK$42 billion are included in the survey. The survey covers about half of ORSO registered defined benefit schemes (as at 30 June 2015) in Hong Kong. A summary of the surveyed schemes statistics is set out in Appendix A. Most surveyed companies (about 70%) have financial years ending on 31 December, with the remainder typically having year-ends of either 31 March or 30 June. Given this, the survey results in this report primarily reflect data as at 31 December Measurement of HKAS 19 liabilities Hong Kong defined benefit schemes typically provide lump sum benefits payable on retirement, death or earlier termination of employment. HKAS 19 requires that the costs of providing such benefits are recognized on a regular basis as and when the benefits are accrued over the employees active service, even though the benefits will only be paid sometime in the future. In determining the annual cost of providing such benefits, actuarial assumptions are used to calculate the present value of such benefits to reflect the time value of money and the probability of payment. HKAS 19 requires the actuarial assumptions to be: best estimates; unbiased and mutually compatible; and based on market expectations at the balance sheet date. The assumptions adopted are ultimately the responsibility of the employer. For most of the surveyed schemes, the key financial assumptions are the discount rate and the longterm salary increase rate. These are reviewed in the next 2 sections. Section 4 has the analysis of impact to the financial statements and Section 5 has the analysis for investment returns. Appendix A has a summary of the data for this survey. 2 willistowerswatson.com

5 Appendices B to D of this report set out the following references: Background to HKAS 19 Methodology employed to set financial assumptions HKAS 19 terminology Limitation of Reliance The purpose of this report is to document the assumptions used and results under HKAS 19 reporting for 110 defined benefit schemes in Hong Kong between 30 June 2015 and 29 June This report should not be used or relied upon for the purposes of determining assumptions to be adopted for HKAS 19 valuations. Assumptions are unique to each company and will depend on economic conditions prevailing at the time of reporting. This report is not intended for, and may not be suitable for use in any other context. Willis Towers Watson does not accept any responsibility or liability to any party for any use of this report. 3

6 2. Discount Rate The median discount rate has reduced by 0.2%. Figure 1 shows the discount rates which were adopted by the surveyed companies, compared to the yields of Hong Kong Exchange Fund Notes ( EFNs ) and Government Bonds ( GBs ) as at 31 December The dots represent the discount rates that the surveyed companies have adopted, reflecting also the durations of the defined benefit liabilities. The purple line denotes the actual EFNs and GBs yield curve as at 31 December The line extending beyond the duration of 13 years is extrapolated from the derived yield curve. The majority of surveyed companies have adopted discount rates which are within 0.1% of the EFN and GB yields on their respective financial year-end dates. Some dots are slightly further away from the purple line as their valuation date is not as of 31 December Isolated dots further away from the derived yield curve are outliers, representing companies setting discount rates using methods which are not directly referencing the relevant EFN and GB yields. 4 willistowerswatson.com

7 Figure 1: Discount rates versus EFN yields 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Duration (years) Figure 2 illustrates the distribution of discount rates adopted and the yields of 10-year EFNs and GBs for the last five years. Figure 2: Distribution of discount rates by year Median 1.5% 0.7% 2.1% 1.7% 1.5% 5% 4th Quartile 4% 3rd Quartile 3% 2nd Quartile 2% 1st Quartile 1% 0% 2011/ / / / /16 Median Yield of 10-Year EFN as at 31 December The median discount rate used by companies in 2015/16 was 1.5% p.a. compared to 1.7% p.a. for 2014/15. This reduction is consistent with the decrease in EFN and GB yields, coupled with a reduction of 0.2 years in the average duration across the surveyed schemes (see next page for details). In isolation, this change would have increased companies HKAS 19 liabilities by around 1% to 3% and hence resulted in an actuarial loss on liabilities. 5

8 % of total schemes As most defined benefit schemes in Hong Kong are closed to new entrants, the average age of scheme members increases over time. This will lead to a reduction in the duration of liabilities. Figure 3 illustrates the distribution of duration of liabilities for the past three years. Over the past year, the average duration of schemes decreased from 7.9 years to 7.7 years. As expected, the change from 2014/15 to 2015/16 is similar to last year. The median duration decreased by 0.3 year compared to a reduction of 0.4 year in the previous year. Note that there are isolated schemes which experienced larger increases or decreases in duration due to the size of the scheme, demographic changes or assumption changes. The graph below shows the distribution of the duration of all schemes. The most common duration of schemes remains to between 8 to less than 10 years. Figure 3: Distribution of DBO durations 40% 2013/ / /16 30% 20% 10% 0% < 2 2 -< 4 4 -< 6 6 -< 8 8 -< < < 14 >= 14 Duration (years) 6 willistowerswatson.com

9 3. Salary Increases The median long-term salary increase assumption stays at 4% per annum. The median long-term salary increase expectation has remained unchanged at 4.0% p.a. for the past few years. The long-term salary increase assumption, unlike the discount rate, is not expected to change materially from one measurement date to the next. The distribution of the long-term rates of salary increases adopted by the surveyed companies is illustrated in Figure 4. Figure 4: Distribution of the long-term rates of salary increases by year Median 4% 4% 4% 4% 4% 6% 5% 4% 3% 2% 1% 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Median 0% 2011/ / / / /16 7

10 10.0% 8.0% 6.0% 4.0% Net discount rate over long-term rates of salary increases Although the individual financial assumptions are important, for the purposes of determining the liabilities of defined benefit retirement schemes, the net discount rate over salary increase assumption is more important than the individual rates alone. The higher the net discount rate, the lower the calculated liabilities, and vice versa. Figure 5 shows the distribution of the net discount rate of the surveyed companies. Figure 5: Net discount rate over long-term rate of salary increases by year Median -2.5% -3.1% -1.9% -2.4% -2.6% 0% -2% -4% 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Median -6% 2011/ / / / /16 The net discount rate has decreased from -2.4% p.a. in 2014/15 to -2.6% p.a. in 2015/16, mostly due to the decrease in EFN and GB yields over the year. In isolation, this has increased this year s liabilities. For a typical scheme with a duration of 10 years, the increase in the total liability, based on a reduction in discount rate of 0.2%, is about 2%. 8 willistowerswatson.com

11 % of scheme Actual salary increases The distribution of actual salary increases over the past year for the surveyed companies is shown in Figure 6. The median salary increase in 2015/16 was 4.8% and the median salary increase in 2014/15 was 5.0%. Figure 6: Distribution of actual rate of salary increases in 2015/16 60% 50% 40% 30% 20% 10% 0% < 0% 0 -< 2% 2 -< 4% 4 -< 6% 6 -< 8% 8 -< 10% >= 10% Actual salary increase Additionally, we have compared past-year salary increases against short-term salary increase assumptions set at the start of the year over the past three years. Our results show that short-term salary increase assumptions tend to underestimate actual experience. Note that almost 90% of the surveyed companies adopt the same assumptions for both short-term and long-term salary increase. The results are shown in Figure 7. Figure 7: Distribution of actual rate of salary increases over short-term salary increase assumptions by year Median 0.5% 0.6% 0.8% 12% 9% 6% 3% 0% 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Median -3% -6% 2013/ / /16 9

12 We have also investigated recent actual salary increases against the assumed salary increases over a one-year, three-year and five-year period. The results shown in Figure 8 represents the difference between the average salary increase experience against the assumed long-term rate of salary increases. The statistics shown in Figure 8 capture only the companies where we have sufficient historical salary increase data (about 80% of surveyed schemes over the past year). Figure 8: Average rate of salary increases over long-term salary increase assumptions Median 0.6% 0.6% 0.7% 8% 6% 4% 2% 0% -2% 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Median -4% 1-year average 3-year average 5-year average Sample size: 88 schemes 77 schemes 54 schemes Figure 8 shows that although the spread of actual salary increases against long-term salary increase assumptions was quite large, the deviation for the majority of schemes is minor (i.e. 2 nd and 3 rd quartile are narrow). It also shows that slightly more than 50% of companies experience higher salary increases than the adopted long-term salary increase assumption. As time horizons increase, the variance reduces meaning that the actual increases more closely match the expected increase rate. In Figure 8, we have used data for 88 schemes for the past-year increase, 77 schemes for the 3-year average and 54 schemes for the 5-year average. 10 willistowerswatson.com

13 4. Impact of HKAS 19 Figures on Company Financial Statements In this section, we look at the following HKAS 19 statistics: Annual P&L Expense as a percentage of companies annual scheme salaries; Annual P&L Expense compared to the actual contributions paid by companies; and Net Asset / Net Liability (i.e. scheme surplus or deficit) as a multiple of monthly scheme salary. 11

14 % of schemes Annual P&L expense as a percentage of annual scheme salaries Figure 9 illustrates the Annual Expense of the surveyed schemes as a percentage of their respective employees scheme salaries for fiscal years 2014/15 and 2015/16, as well as the preliminary expense for 2016/17. Figure 9: Annual expense as a percentage of annual scheme salaries 2014/15 Expense 40% 2015/16 Expense 2016/17 Expense 30% 20% 10% 0% < 0% 0 -< 5% 5 -< 10% 10 -< 15% 15 -< 20% 20 -< 25% 25 -< 30% >=30% Expense as % of scheme salaries The median Annual P&L Expense as a percentage of the employees scheme salaries in 2015/16 is 15.3%, which is slightly higher than that in 2014/15 of 14.7%. This is mainly due to the decrease in discount rates in 2014/15 compared to 2013/14. For the same reason, the preliminary Annual P&L Expense for the next year is expected to increase to 15.9% due to lower discount rates used in 2015/16. Annual expense compared to employer contributions In Hong Kong, companies fund their retirement schemes based on actuarial recommendations following periodic funding valuations carried out under the provisions of ORSO. For around 90% of the surveyed companies, in 2014/15 and 2015/16, annual cash contributions are lower than the respective year s Annual Expense. One key reason is that the discount rates used for ORSO purposes are much higher than those adopted for HKAS 19, which in isolation leads to lower assessed liabilities. 12 willistowerswatson.com

15 % of Companies Furthermore, 29% of surveyed companies made no cash contributions in the past year. These companies have assets sufficiently high enough to exempt them from contributing to their ORSO scheme. This is broadly consistent with the prior year. Figure 10 illustrates the actual cash contributions paid as a percentage of the corresponding Annual Expense during 2013/14, 2014/15 and 2015/16 by the surveyed companies. The median for the past three years are very close to 40%. Companies reporting an Annual Income for the year have percentages less than zero. Figure 10: Employer contributions versus P&L charges 40% 2013/ / /16 30% 20% 10% 0% < 0% 0% 0 < 20% 20 -< 40% 40 -< 60% 60 -< 80% 80 -< 100% > 100% Contributions as a % of Annual Expense Net Asset (Surplus) / Net Liability (Deficit) (i.e. scheme surplus or deficit) as multiple of monthly scheme salary The Net Asset or Net Liability reflects the market value of scheme assets minus total scheme liability. Figure 11 shows the distribution of Net Liability (positive figure) or Net Asset (negative figure) disclosed in the companies balance sheets expressed as a multiple of employees monthly scheme salaries. At 2015/16 year-end, more than 50% of the surveyed companies had a Net Liability on their balance sheets. The median multiple changed from a Net Liability of 1.1 in 2014/15 to a Net Liability of 3.4 in 2015/16. 13

16 Asset Multiple of Monthly Salaries Liability The main factors affecting the Net Asset / Liability position are: Decrease in EFN yields leading to a lower discount rate and hence higher DBO. This has had a reduction of the Net Asset figures; and Overall asset returns over the last year have been lower than the discount rate. This has also had a negative effect on the Net Asset figures. Figure 11: Distribution of net liability / (asset) as a multiple of monthly salaries Median (1.4) (1.1) (10) (20) (30) 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile Median (40) (50) 2011/ / / / /16 14 willistowerswatson.com

17 5. Assets and Investment Returns The median asset return was -1.5% in 2015/16. In this section, the nature of assets underlying defined benefit schemes in Hong Kong is investigated. We look at the following statistics: Distribution of asset allocation of surveyed schemes; and Distribution of asset returns on schemes with selected asset allocation strategies. Asset Allocation We have categorized the asset allocation of schemes according to the ratio of assets invested in equities to cash/bonds. Note that investment other assets, such as hedge funds, are grouped with cash and bonds as they are relatively small. For illustration, the notation 70/30 represents schemes with 70% of asset invested in equity and 30% in cash & bonds. Figure 12 illustrates the distribution of schemes investing in different equities versus cash and bonds allocations. Note that the proportion of assets in each fund is rounded to the nearest 10-percentage point. It is observed that trustees have a preference to equities compared to cash & bonds. There are more schemes with a higher weighting to equities than schemes with a higher weighting to cash & bonds. The most popular allocation class is 70/30. 15

18 There are also a number of schemes with assets invested in guaranteed funds, which we have separated due to the unique nature of the investment class. Figure 12: Distribution of schemes by asset allocation (i.e. equities / cash & bonds) Guaranteed Fund 16% 9% 4% 6% 8% 0/100 0 < Equities <= 30 40/60 50/50 28% 19% 60/40 70/30 12% Equities >=80 Asset Return Scheme returns can vary significantly when measured at different times. As most companies have a financial year ending 31 December, only schemes with financial years ending 31 December 2015 are taken into consideration for the below analysis. Among selected schemes, we narrowed down to the four most popular asset allocation classes which include 53 schemes. The four asset allocation classes are guaranteed funds, 50/50, 70/30 and 80/20. Due to the poor economic conditions in 2015, funds with a higher allocation to equities generally underperformed compared to their more conservative peers. Schemes invested in guaranteed funds on the other hand had a median return of 3.4% in The distribution of asset returns for selected asset allocation classes are illustrated in Figure 13. Figure 13: Scheme returns by asset allocation Median 3.4% -0.7% -2.1% -2.6% 15% 10% 5% 0% -5% 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Median -10% Guaranteed Fund 50/50 70/30 80/20 Sample size: 53 surveyed schemes 16 willistowerswatson.com

19 Figure 14 illustrates the distribution of asset classes weighted by no of surveyed schemes. Most schemes have a high asset allocation in equities with the next highest asset allocation being in bonds. Asset allocations in cash and other investments make up a small portion of scheme assets whilst (as noted above), a number of schemes are invested in guaranteed funds. Figure 14: Asset allocation across all surveyed schemes 30.0% Equities 7.6% 8.7% 0.2% Bonds Cash Others Guaranteed Fund 53.6% 17

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21 Appendix A: Summary of Survey Statistics A summary of the survey statistics is set out in Table 1: Table 1: Survey statistics 2011/ / / / /16 Number of Schemes Number of Employers Number of Members 54,000 51,000 49,000 45,000 45,000 Average Monthly Scheme Salary (HK$) 20,300 21,400 22,100 23,900 24,600 Average Assets per Scheme (HK$ million) Most companies have a financial accounting year-end of 31 December. measurement dates adopted is illustrated in Figure 15. The distribution of the Figure 15: Measurement date distribution 7% 12% 10% 31 March 30 June 1% 30 September 31 December Others 70% 19

22 Appendix B: Background to HKAS 19 HKAS 19 (previously known as SSAP 34) was issued by the Hong Kong Institute of Certified Public Accountants in December 2001 and became effective on 1 January HKAS 19 is essentially the same as the IAS 19 accounting standard issued by the International Accounting Standards Board and was adopted by the Hong Kong Institute of Certified Public Accountants. In essence, HKAS 19 requires companies to account for the costs of providing employee benefits in their Profit or Loss Account and Balance Sheet, and prescribes the methods and assumptions to be used to obtain these costs. HKAS 19 classifies the benefits provided by companies to their employees into various categories, and prescribes the specific treatment to account for the cost of these separate categories of benefits. Like many other accounting standards that deal with employee benefits issued by other accounting bodies worldwide, HKAS 19 is designed to: provide greater consistency in the treatment of liabilities in respect of employee benefits and consequently enable better comparability of benefit costs; and provide disclosures that improve reporting so that users of financial statements can have a better understanding of the commitment undertaken by companies regarding employee benefits. Since its inception, some amendments have been made to HKAS 19. The major changes include: A one-off option was introduced whereby actuarial gains and losses may be recognized immediately and fully on a company s balance sheet through Other Comprehensive Income ( OCI ), previously Statement of Recognized Income and Expenses ( SORIE ), rather than through the Profit or Loss Account. Companies had up to 31 December 2006 to decide whether to adopt the OCI option for recognizing actuarial gains and losses. For a group defined benefit scheme with a number of associated participating employers, HKAS 19 requires that the aggregate group HKAS 19 cost should be determined on a defined benefit basis and shared amongst the participating employers according to the group s agreed policy of sharing costs. If such policy does not exist, the individual participating employers HKAS 19 cost will be its actual cash contributions with the representative employer absorbing the differences between the group scheme s HKAS 19 cost and the employers aggregate cash contributions. Major amendments were made in 2011 (see Section 6 on page 13 for further details). The two most significant changes that have most impact to the schemes in Hong Kong are the requirement to recognize all actuarial gains and losses immediately in the year they arise in Other Comprehensive Income, and the removal of expected return on scheme assets from the calculation of Annual Expense. Such amendments have been effective since 1 January willistowerswatson.com

23 21 Appendix C: Methodology Employed to Set Financial Assumptions Discount rate The discount rate is used to calculate the present value of benefit obligations at each financial year end, and the service cost and interest cost components of the Annual Expense for the following financial year. For example, the discount rate as at 31 December 2015 will be used to assess the present value of the benefit obligation as at that date, and also the Annual Expense items for the financial year Currently, HKAS 19 stipulates that the discount rate is determined by reference to market yields of high quality corporate bonds at the balance sheet date, with the currency and term of the bonds being similar to the estimated term of the benefit obligations. In countries with no deep market in such bonds, the yields on government bonds should be used. Since Hong Kong only has limited issues of high-quality Hong Kong dollar corporate bonds, companies have typically used the yields of Hong Kong Government s Exchange Fund Notes ( EFN ) as the reference benchmark to set the discount rate. Starting from January 2015, the Hong Kong Monetary Authority has ceased to issue new EFNs with maturities of three years or above and has replaced these with Government Bonds ( GBs ). At the same time, issues of GBs with maturities of less than three years have ceased and has been replaced with EFNs. In light of this, discount rates have largely been set with reference to EFNs and GBs as they are both government securities and inclusion of all outstanding EFNs and GBs allows a larger pool of government bonds to be included for constructing a benchmark yield curve. In isolation, the discount rate has an inverse relationship with the HKAS 19 costs; the lower the discount rate, the higher the HKAS 19 liabilities and service costs, and vice versa. As the discount rate is set as at the balance sheet date (i.e. a snapshot in time), companies HKAS 19 costs can be subject to a high degree of volatility, reflecting the yields on EFNs which are, in turn, driven by fluctuations in the interest rate landscape. Salary increases The salary increase assumption is used to project current salaries into the future to determine the amount of the salary related benefit payable at a future date. A higher salary increase assumption will lead to a higher expected amount of benefits to be paid, and consequently, a higher Defined Benefit Obligation and Annual Expense. Year-to-year salary growth may be a function of: productivity improvement; inflation; and merit or promotional increases. 21

24 Appendix D: HKAS 19 Terminology Current service cost Increase in the present value of the Defined Benefit Obligation resulting from employee service in the current accounting period. Fair value The amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm s length transaction. Net defined benefit liability / (asset) The deficit or surplus, adjusted for any effect of limiting a net defined benefit asset due to the asset ceiling. A Net Defined Benefit Liability arises if there is a deficit (i.e. the present value of the Defined Benefit Obligation is greater than the Fair Value of scheme assets) and vice versa. Net interest on net defined benefit liability / (asset) Change in the Net Defined Benefit Liability / (Asset) during the period, arising from the passage of time. Past service cost Change in the present value of the Defined Benefit Obligation for employee service in prior periods, resulting from a scheme amendment (the introduction of, or changes to, scheme benefits) or a curtailment (a significant reduction by the entity in the number of employees covered by the scheme). Past Service Cost can be positive or negative. Present value of defined benefit obligation (DBO) Present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods. As required by HKAS 19, it is calculated using the Projected Unit Credit method, and assumptions that are individual best estimates as well as mutually compatible. Service cost Service cost comprises of the Current Service Cost, the Past Service Cost and any gain or loss on settlement. 22 willistowerswatson.com

25 23 Appendix E: About Willis Towers Watson Willis Towers Watson Willis Towers Watson is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our distinct, connected perspective across talent, assets and ideas unlocks potential for our clients. While many just look at mitigating the downside, we see how a unified approach to people and risk is a path to growth. Powered by market analytics and behavioral insight, our integrated teams reveal hidden value within the critical intersections of our clients organizations. We design and deliver solutions that manage risk, optimize benefits, cultivate talent and expand the power of capital to protect and strengthen institutions and individuals. Together, we unlock potential. Retirement in Hong Kong Willis Towers Watson s Retirement business in Hong Kong provides retirement scheme consulting advice, actuarial services, insured benefits advice and administration services, and accounts for more than 50 staff. Willis Towers Watson assists a variety of clients with sizes ranging from less than 10 employees to over 150,000 employees. In Hong Kong, Willis Towers Watson has been established for over 40 years and is by far the largest actuarial consulting practice in the Special Administrative Region. Willis Towers Watson has worked with many of Hong Kong s leading employers, both locally listed and multinational companies, in all aspects of retirement schemes. As a result, we have unparalleled knowledge of current practice in employee benefits and retirement schemes, new trends and legislative requirements. HKAS 19 services Our integrated range of services includes: Actuarial accounting valuations to help determine scheme expense and for purposes of meeting disclosure requirements for corporate reporting; Sensitivity assessment of adopting different assumption parameters, including impact to company Profit or Loss and Balance Sheet; Advice in relation to cash versus accounting issues; Application to other related benefits such as the Long Service Payment (LSP) benefit; and Training seminars for clients and auditors covering key concepts of HKAS 19, including updates on topical matters. 23

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27 Contact Terence Chiu, FIAA, CERA Senior Analyst Retirement, Hong Kong Elaine Hwang, FSA Director Retirement, Hong Kong