Page 85 - Statement of Intent 2015/16

Defined benefit plan
The net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any planned assets is deducted. The discount rate is the yield at the balance date on New Zealand government bonds that have maturity dates approximating to the terms of the obligations. The calculation is performed by a qualified actuary using the projected unit credit method. All actuarial gains and losses are recognised in the statement of comprehensive income.
Where the defined benefit scheme is a multi-employer scheme with insufficient information to use defined benefit accounting then defined contribution accounting will be used.
Long service leave, sabbatical leave and retirement gratuities
The net obligation in respect of long service leave, sabbatical leave and retirement gratuities is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value. The discount rate is the market yield on relevant New Zealand government bonds at the balance date.
Annual leave, sick leave and continuing medical education leave
Annual leave, sick leave and continuing medical education leave are short-term obligations and are calculated on an actual basis at the amount expected to pay. The obligation is accrued for paid absences when the obligation relates to employees’ past services and accumulates.
Other Liabilities
Provisions
A provision is recognised when there is a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market rates and, where appropriate, the risks specific to the liability.
ACC Partnership Programme
The DHB belongs to the ACC Partnership Programme whereby it accepts the management and financial responsibility for employee work-related illnesses and accidents. Under the program, it is liable for all its claims costs for a period of two years and up to a specified maximum amount. At the end of the two year period, the DHB pays a premium to ACC for
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