We are pleased to issue the report of Towers Watson's annual survey of the assumptions and the results of the actuarial valuations of defined benefit schemes under the Hong Kong Accounting Standard 19 – Employee Benefits. The Survey covers the majority of defined benefit schemes in Hong Kong and for valuations conducted between 1 July 2014 and 30 June 2015 ("2014/2015").
The Survey revealed that companies are carrying higher balance sheet liabilities, with a median HKAS 19 scheme deficit (of assets compared to liabilities) of 1.1 times monthly scheme salaries in 2014/15 as compared to 0.5 times in 2013/2014. This increase is mainly due to:
- A reduction in the median discount rate used by about 0.3% ; and
- Salary increases in 2014/15 being slightly higher than assumed.
Median annual pension expense booked in companies' Profit or Loss Statement in 2014/15 were 14.7% of annual scheme salaries, and this is projected to increase to 16.0% in 2015/16.
Full details of the Survey findings can be found in the report.
If you have any questions, please contact your usual Towers Watson consultant or Elaine Hwang for more details:
Ms. Elaine Hwang
Director of Benefits, Hong Kong
Tel: 852 2820-9923
Towers Watson Actuarial Services
Our services include:
- Actuarial valuations and Actuarial Certifications of defined benefit schemes to comply with ORSO funding requirements
- HKAS 19 actuarial valuations of the defined benefit scheme and Long Service Payment obligations to help determine scheme expense and for purposes of meeting disclosure requirements for corporate reporting; and
- 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 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 Towers Watson of over 10 years
- We are actuaries to more than 100 defined benefit schemes in Hong Kong
Ultimately, at Towers Watson, we focus on understanding our client to ensure we meet their specific needs.