Research

Survey of Assumptions and Results for Defined Benefit Schemes under HKAS 19 in 2016/17

Positive returns underlying defined benefit scheme assets and stable pension expenses to be booked under HKAS 19

August 22, 2017
| Hong Kong

We are pleased to issue the Survey of Assumptions and Results for Actuarial Valuations of Defined Benefit Schemes in accordance with Hong Kong Accounting Standard 19 – Employee Benefits 2016/17. The survey covers the majority of defined benefit schemes in Hong Kong and for valuations conducted between 30 June 2016 and 29 June 2017.

The 2016/17 survey reveals that schemes with a financial year ending 31 December experienced a median investment return of 3.0% in 2016 compared to -1.5% in 2015. This was mainly due to stronger investment returns across global equities and bonds in underlying funds held by defined benefit schemes.

Annual pension expenses to be booked under HKAS 19 remains relatively stable, decreasing slightly from 14.8% of salaries in 2016/17 to 14.6% of salaries in 2017/18. The results of the 2016/17 survey reveal:

  • An increase in the median discount rate by 0.1% p.a. from 1.5% p.a. in 2015/16 to 1.6% p.a. in 2016/17
  • Salary increases in 2016/17 remained high with a median of 4.9% compared to expectations with a median which remains at 4.0% p.a.
  • Net discount rate over long-term salary growth rate has increased by 0.2% p.a.

Willis Towers Watson Actuarial Services

  • Actuarial valuations and Actuarial Certifications of defined benefit schemes to comply with ORSO funding requirements.
  • HKAS 19 actuarial valuations of defined benefit scheme and Long Service Payment obligations to help determine scheme expense and for purposes of meeting disclosure requirements for corporate reporting.
  • Advice in relation to cash funding versus accounting issues, liability projections, sensitivity tests to better understand the long term impact to employers and to establish investment strategy accordingly.

Why Willis Towers Watson

  • We are the leading actuarial and consulting firm in Hong Kong for retirement scheme benefits with in-depth knowledge of market practices and dominant market share.
  • Our consultants all have deep and diverse experience and knowledge with average service with Willis Towers Watson of over 10 years.

Ultimately, at Willis Towers Watson, we focus on understanding our client to ensure we meet their specific needs.

Contact us

If you have any questions please contact your usual Willis Towers Watson consultant or Elaine Hwang by email.


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2015/16 Survey of Assumptions and Results for Defined Benefit Schemes under HKAS 19


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