Notes to the financial statements | Note 10.4

10. Employee benefits
10.4 Medical benefits
 

Telkom makes certain contributions to medical aid funds in respect of current and retired employees. The scheme is a defined benefit plan. The expense in respect of current employees' medical aid is disclosed in note 3.4.3. The amounts due in respect of post-retirement medical benefits to current and retired employees have been actuarially determined and provided for as set out in note 6.5. Telkom has terminated future post-retirement medical benefits in respect of employees joining after 1 July 2000.

There are three major categories of members entitled to the post-retirement medical aid: pensioners who retired before 1994 (Pre-94); those who retired after 2013; and the in-service members. The pensioners retiring post 2013 and the in-service members' laibilities are subject to a rand cap, which increases as per the Board's approval.

Eligible employees must be employed by Telkom until retirement age to qualify for the post-retirement medical aid benefit. The most recent actuarial valuation of the benefit was performed as at 31 March 2023.

The medical aid plan exposes the Group to actuarial risks, such as longevity, currency, interest rate and market risks.

   Group  Company 
Medical aid  31 March 
2023 
Rm 		 31 March 
2022 
Rm 		 31 March 
2023 
Rm 		 31 March 
2022 
Rm 
Benefit obligation:             
At the beginning of the year  1 523  1 657  1 501  1 635 
Interest cost  158  173  158  173 
Service cost  1  1  1  1 
Actuarial gain  (116) (111) (116) (111)
Curtailment loss  5  –  5  – 
Benefits paid from plan assets  (185) (197) (185) (197)
Benefit obligation at the end of the year  1 386  1 523  1 364  1 501 
Plan assets at fair value:             
At the beginning of the year  3 050  2 935  3 050  2 935 
Interest on plan assets  338  324  338  324 
Benefits paid from plan assets  (185) (197) (185) (197)
Employer contributions refund  (543) –  (543) – 
Actuarial loss  (144) (12) (144) (12)
Plan assets at the end of the year  2 516  3 050  2 516  3 050 
Present value of funded obligation  1 386  1 523  1 364  1 501 
Fair value of plan assets  (2 516) (3 050) (2 516) (3 050)
Fund surplus  (1 130) (1 527) (1 152) (1 549)
Liability as disclosed in the statement of financial position (refer to note 6.5) 8  26  –  – 
Asset as disclosed in the statement of financial position  (1 138) (1 553) (1 152) (1 549)
The net periodic other comprehensive income includes the following components:             
Actuarial loss due to financial assumptions changes  (81) (18) (81) (18)
Actuarial loss due to experience adjustments  (3) (8) (3) (8)
Actuarial gain due to demographic assumptions changes  36  125  36  125 
Net periodic pension (expense)/income recognised in other comprehensive income  (48) 99  (48) 99 
Cumulative actuarial loss  (1 604) (1 556) (1 610) (1 562)
Plan assets at fair value:             
Interest on plan assets  338  324  338  324 
Actuarial loss on plan assets  (144) (12) (144) (12)
Actual return on plan assets  194  312  194  312 
Plan asset balance comprises:             
Cash and cash equivalents  63  613  63  613 
Equity securities  1 095  990  1 095  990 
Bonds  1 288  1 383  1 288  1 383 
Foreign investments  70  64  70  64 
Total  2 516  3 050  2 516  3 050 

All equity securities and government bonds have quoted prices in active markets.

Funding arrangements

The general funding arrangements from the plan assets is to maximise long-term capital growth and long-term total return on Telkom's portfolio. The portfolios are managed as a segregated portfolio which includes international investments. The investment objective is to provide an absolute return, measured over a 36-month period, in excess of CPI-X plus 5% per annum. The funding arrangements of the plan assets are driven by designated asset managers to manage Telkom's portfolios by applying a flexible approach, which includes holding equities, property, fixed income or money market assets as part of the investment strategy, in variable weightings, at any point in time.

  Group Company
  31 March
2023
Rm		 31 March
2022
Rm		 31 March
2023
Rm		 31 March
2022
Rm
Included in the fair value of plan assets are:        
Telkom shares 0.7 0.8 0.7 0.8
The fund portfolio consists of the following percentages:        
Cash and money market investments (%) 2 20 2 20
Equities (%) 44 32 44 32
Bonds (%) 51 46 51 46
Foreign investments (%) 3 2 3 2
Total 100 100 100 100

The total estimated contributions to be paid to the post-retirement medical aid by the employer for the year ending 31 March 2024 is Rnil as the liability is currently significantly overfunded.