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Survey Report

Survey of assumptions and results for defined benefit schemes under HKAS 19 in 2017/18

Strong investment returns and higher bond yields result in a favourable outcome both for the balance sheet liability and annual pension cost


September 6, 2018

We are pleased to issue the Survey of Assumptions and Results for Defined Benefit Schemes in accordance with Hong Kong Accounting Standard 19 – Employee Benefits 2017/18.

The survey covers the majority of defined benefit schemes in Hong Kong and for valuations conducted by Willis Towers Watson between 30 June 2017 and 29 June 2018.

The 2017/18 survey reveals that schemes with a financial year in 2017/18 experienced:

  • A median one-year investment return of 13.9%, compared to 3.0% in 2016/17. This was mainly due to stronger investment returns across global equities.
  • A median salary increase in 2017/18 of 3.6%, compared to long term expectations of 4.0% p.a.
  • An increase in the median discount rate by 0.1% p.a., from 1.6% p.a., in 2016/17 to 1.7% p.a. in 2017/18.

All of the above factors contributed to an improvement of pension reserve but annual pension cost remains relatively stable, decreasing slightly from 13.7% of salaries in 2017/18 to an expected 13.3% of salaries in 2018/19.

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 company in Hong Kong for retirement scheme benefits with in-depth knowledge of market practices and dominant market share.

All our consultants 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.

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