Fraser & Neave Holdings Bhd Annual Report 2020

196 FRASER & NEAVE HOLDINGS BHD 196101000155 (4205-V) Notes to The Financial Statements (Cont’d.) 18. EMPLOYEE BENEFITS Certain subsidiaries of the Group operate unfunded defined benefit plan for its employees. The plan pays a lump sum amount (instead of a pension) at retirement. The schemes do not hold any physical assets but instead the Group makes provision to cover the estimated retirement benefits liabilities. The provisions are determined and assessed based on actuarial valuations using the Projected Unit Credit Method. The defined benefit plans expose the Group to actuarial risks, such as interest rate risk. MOVEMENT IN THE NET DEFINED BENEFIT LIABILITY The following table shows a reconciliation from the opening balance to the closing balance for net defined benefit liability and its components. Group Note 2020 RM’000 2019 RM’000 Balance at 1 October 2019/2018 49,511 40,176 Included in profit or loss Current service cost 3,251 2,404 Past service (credit)/cost (17) 2,667 Interest cost 1,505 1,496 25 4,739 6,567 Included in other comprehensive income Remeasurement loss/(gain) – Actuarial loss/(gain) arising from: – demographic assumptions – 224 – financial assumptions 2,793 5,667 – experience adjustments (1,173) 1,363 Effect of movements in exchange rates (686) 898 934 8,152 Others Benefits paid (3,880) (5,077) Transfers – (307) (3,880) (5,384) Balance at 30 September 51,304 49,511 Principal actuarial assumptions used Discount rate (%) 1.34-3.50 1.34-4.50 Rate of increase in salaries (%) 4.00-7.00 4.00-7.00 Mortality rate (%) 0.02-0.44 0.03-0.44 Disability rate (%) 0.00-0.04 0.00-0.04 Retirement age (years) – Malaysia 60 60 – Thailand 60 60 The average duration of the defined benefit plan obligation at the end of the financial year is 10 years (2019: 11 years).