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Survey Report

Employee benefits accounting and risks study 2018 – Sri Lanka

A study by Willis Towers Watson

Retirement
N/A

November 20, 2018

The latest edition of the “Employee Benefits Accounting and Risks Study 2018”, analyses the disclosed financials of the defined benefit (DB) employee benefit programmes of the top 50 companies as per market capitalisation in the Colombo Stock Exchange as on 31st March 2017 and 31st March 2018.

In 2016, Willis Towers Watson started publishing an annual report on the accounting for defined employee benefits in Sri Lanka for 50 companies listed on the Colombo Stock Exchange (CSE). The latest edition of the “Employee Benefits Accounting and Risks Study 2018”, analyses the disclosed financials of the defined benefit (DB) employee benefit programmes of the top 50 companies as per market capitalisation in the Colombo Stock Exchange as on 31st March 2017 and 31st March 2018.

Given that the study focuses on the same basket of companies at the year start and year end, it is able to draw accurate comparisons on how the disclosures have evolved over the course of the year.

At a Glance:

  • In 2018, all the sample companies disclosed Gratuity as their sole defined benefit plan. Last year’s study reported details about pension plans which were not disclosed in this year’s sample of March year end companies.
  • The sum of defined benefit obligation (DBO) for Gratuity Schemes in FY2018 was LKR 36,302 million, registering 19% increase from LKR 30,559 million in FY2017. The increase in DBO, was due to the demographic movement of the employees and the financial assumptions.
  • The sum of fair value of assets for the Gratuity Schemes was LKR 507 million in FY2018 increasing by about 20% from LKR 424 million in FY2017.
  • In FY2018, 8% of the plans were funded whereas in FY2017, out of the 50 plans, only 6% were funded. This means that the gratuity benefit largely continues to be a ‘pay as you go’ arrangement for the employers and no ring fenced assets exist in order to back the obligation.

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