Notes to the Financial Statements
31. Post-employment benefits
The Company operates three active defined benefit pension schemes and a defined contribution pension scheme. On 1 January 2005 the defined benefit schemes were closed to new entrants.
I. Defined Contribution Scheme
Employees joining the Company after 1 January 2005 are members of the defined contribution scheme. Contributions are paid by the members and by the Company at fixed rates. During the year the Company contributed €1,322k (2022: €1,103k) to the defined contribution scheme and this amount was charged to the Profit and Loss account. Irish Pensions Trust Limited, an independent professional trustee Company, is the sole trustee of the defined contribution scheme.
II. Defined Benefit Schemes
(a) The Company operates three active defined benefit pension schemes based on final pensionable salaries for eligible employees, including employees and former employees of Dundalk Port Company and the Company’s predecessor entity, Dublin Port & Docks Board.
All defined benefit schemes are administered by trustees. The active schemes are “The Dublin Port Superannuation Fund 1996”, “The Dublin Port Company Pilots Superannuation Fund”, and “The Dublin Port Company Pension Scheme for Former Employees of Dundalk Port Company”.
During 2023, the Company gave notice to the trustees of The Dublin Port Company Chief Executive Retirement Benefits scheme that it was terminating contributions to the scheme effective from 31 July 2023 and no further liability to contribute to the scheme will be accepted after that date. The trustees of the scheme subsequently initiated a wind-up of the scheme. Therefore, as at 31 December 2023, all liabilities were extinguished and all assets have been distributed.
The Company and scheme members appoint the trustees of the Dublin Port Superannuation Fund 1996. The most recent member trustee election for the Dublin Port Superannuation Fund 1996 was held in 2023 and the appointment of four candidates was ratified by the Board at its meeting on 8 December 2023. In addition to the four member trustees, the Company also appointed a further four trustees.
Irish Pensions Trust Limited, an independent professional trustee Company, is the sole trustee of the other two schemes.
There are no unfunded schemes in place as at 31 December 2023 or 31 December 2022.
(b) Actuarial Valuation
The funding position of the three active defined benefit schemes is assessed in accordance with the advice of independent actuaries. The funding position is formally assessed at three yearly intervals.
The Company intends to make recommended contributions to the three active schemes in accordance with the recommendations set out by the actuaries in the relevant actuarial reports for each scheme.
The most recent applicable actuarial valuation reports for the three active defined benefit schemes were prepared at 1 January 2021 and 1 January 2022. The reports were completed by Mercer, who are neither officers nor employees of the Company. The valuation reports are available for inspection by scheme members but not for public inspection. The next valuation reports for the largest schemes are due to be prepared as at 1 January 2024.
(c) FRS 102 – Section 28 – “Employee Benefits”
The defined benefit obligations of the Company have been valued by independent actuaries for the purposes of FRS 102 as at 31 December 2023. The valuation was prepared using an actuarial valuation method known as the “projected unit credit” method. As the schemes are closed to new entrants, the schemes have an age profile that is rising and therefore under the projected unit method the current service cost will increase as members of the scheme approach retirement.
Financial Assumptions:
The main financial assumptions to calculate the benefit obligations (liabilities) FRS 102 at the Balance Sheet date were:
31 December 2023 | 31 December 2022 | |
|---|---|---|
Rate of interest applied to discount benefit obligations | 3.50% |
4.20% |
Projected rate of increase of salaries | 4.0% for 2024, 2.5% for 2025-2028, 3.25% thereafter |
4.0% for 2023, 3.0% for 2024-2026,3.50% thereafter |
Projected rate of increase of pensions in payment | 2.25% |
2.50% |
Rate of increase of pensions in deferment | 2.25% |
2.50% |
CPI/Inflation | 2.25% |
2.50% |
The discount rate used in the calculation of the pension liability is determined by reference to market yields at the Balance Sheet date on high quality corporate bonds. The currency and term of the corporate bonds is consistent with the currency and estimated term of the benefit obligations. Having regard to the duration of the scheme benefit obligations, a discount rate of 3.5% was adopted at 31 December 2023.
Demographic Assumptions:
The assumptions relating to the life expectancy/mortality at retirement for members is set out below:
2023 | 2022 | |||
|---|---|---|---|---|
Male Years | Female Years | Male Years | Female Years | |
Current members age 40 (life expectancy at age 65) | 24.7 | 26.6 | 24.7 | 26.5 |
Current pensioners age 65 (life expectancy at age 65) | 22.6 | 24.3 | 22.6 | 24.3 |
Scheme Assets:
The investment allocations of assets at the Balance Sheet date were:
Asset Class | Proportion of Scheme assets at 31 December 2023 | Proportion of Scheme assets at 31 December 2022 |
|---|---|---|
Bonds | 96.02% | 90.94% |
Equity | 4.96% | 10.11% |
Other | (0.98%) | (1.05%) |
100.0% | 100.0% |
Under FRS102, the expected return on assets is set equal to the discount rate.
The fair value of the assets in the pension schemes at the Balance Sheet date were:
Fair value at 31 December 2023 | Fair value at 31 December 2022 | |
|---|---|---|
€’000 | €’000 | |
Bonds | 222,266 | 207,628 |
Equity | 11,477 | 23,075 |
Other | (2,264) | (2,390) |
Total Fair value of Assets | 231,479 | 228,313 |
The amounts recognised in the statement of financial position are as follows:
31 December 2023 | 31 December 2022 | |
|---|---|---|
€’000 | €’000 | |
Fair value of scheme assets | 231,479 | 228,313 |
Defined benefit obligation | (178,698) | (170,444) |
Net Defined benefit asset | 52,781 | 57,869 |
Presented in financial statements as follows: | ||
Defined benefit pension asset (due after more than one year) (see note 17) | 52,781 | 57,869 |
Analysis of the amounts included in the Profit and Loss Account:
2023 | 2022 | |
|---|---|---|
€’000 | €’000 | |
Cost (excluding interest) | ||
Service cost | (480) | (1,162) |
Net interest income/(cost) | ||
Interest income on scheme assets | 9,413 | 3,778 |
Interest on pension scheme benefit obligations | (6,967) | (3,089) |
Net interest income | 2,446 | 689 |
| Total income/(expense) | 1,966 | (473) |
Analysis of the re-measurements amounts recognised in Other Comprehensive Income:
2023 | 2022 | |
|---|---|---|
€’000 | €’000 | |
Return on plan assets (excluding interest income) | 4,086 | (61,698) |
Effect of experience adjustments | (2,397) | (549) |
Effect of changes in assumptions | (9,211) | 67,432 |
Total re-measurements included in Other Comprehensive Income | (7,522) | 5,185 |
Movement in scheme assets and benefit obligations
Assets €’000 | Benefit obligations €’000 | Net (deficit)/surplus €’000 | |
|---|---|---|---|
At 1 January 2022 | 295,007 | (242,349) | 52,658 |
Current service cost | - | (1,162) | (1,162) |
Past service credit | - | - | - |
Interest on scheme benefit obligations | - | (3,089) | (3,089) |
Interest income on scheme assets | 3,778 | - | 3,778 |
Return on scheme assets (excluding interest income) | (61,698) | - | (61,698) |
Re-measurement due to experience adjustments | - | (549) | (549) |
Re-measurement due to change in assumptions | - | 67,432 | 67,432 |
Members’ contributions | 213 | (213) | - |
Benefits paid from scheme | (9,486) | 9,486 | - |
Employer contributions | 499 | - | 499 |
As at 31 December 2022 | 228,313 | (170,444) | 57,869 |
Movement in scheme assets and benefit obligations
Assets €’000 | Benefit obligations €’000 | Net (deficit)/surplus €’000 | |
|---|---|---|---|
At 1 January 2023 | 228,313 | (170,444) | 57,869 |
Current service cost | - | (480) | (480) |
Past service credit | - | - | - |
Interest on scheme benefit obligations | - | (6,967) | (6,967) |
Interest income on scheme assets | 9,413 | - | 9,413 |
Return on scheme assets (excluding interest income) | 4,086 | - | 4,086 |
Re-measurement due to experience adjustments | - | (2,397) | (2,397) |
Re-measurement due to change in assumptions | - | (9,211) | (9,211) |
Members’ contributions | 190 | (190) | - |
Benefits paid from scheme | (10,991) | 10,991 | - |
Employer contributions | 468 | - | 468 |
As at 31 December 2023 | 231,479 | (178,698) | 52,781 |
The Company expects to contribute €0.5 million to the pension schemes in 2024.
The return on plan assets was:
2023 |
2022 |
|
|---|---|---|
€’000 |
€’000 |
|
Interest Income |
9,413 |
3,778 |
Return on plan assets less interest income |
4,086 |
(61,698) |
Return on Plan Assets |
13,499 |
(57,920) |
Sensitivity Analysis of Scheme Benefit obligations:
The sensitivity of the defined benefit obligation to changes in the life expectancy assumptions is set out below:
2023 Existing Assumption age rating | 2023 Mortality +1 Year age rating | 2023 Mortality -1 Year age rating | |
|---|---|---|---|
Benefit obligations (€’000) | 178,698 | 172,412 | 185,035 |
Change in benefit obligations (€’000) | (6,286) | 6,337 | |
% Change (as % of original) | (3.5%) | 3.5% |
The sensitivity of the defined benefit obligation to changes in the discount rate is set out below:
2023 | 2023 | 2023 | |
|---|---|---|---|
Existing Assumption | -0.25% | +0.25% | |
Discount Rate | 3.50% | 3.25% | 3.75% |
Benefit obligations (€’000) | 178,698 | 184,193 | 173,475 |
Change in benefit obligations (€’000) | 5,495 | (5,223) | |
% Change (as % of original) | 3.1% | (2.9%) |
The sensitivity of the defined benefit obligation to changes in the inflation rate is set out below:
2023 |
2023 |
|
|---|---|---|
Existing Assumption |
+0.25% |
|
Inflation |
2.25% |
2.50% |
Benefit obligations (€’000) |
178,698 |
183,433 |
Change in benefit obligations (€’000) |
4,735 |
|
% Change (as % of original) |
2.6% |
Pension Scheme Recoverability:
Ruling 14 of the International Financial Reporting Standards Interpretations Committee (IFRIC 14) clarifies how the asset ceiling should be applied, particularly how it interacts with local minimum funding rules. In accordance with the requirements of FRS 102, Section 28.22 and IFRIC 14 interpretations an assessment has been carried out to determine the extent to which the Company is able to recover the surplus in the schemes either through reduced future contributions or through refunds from the schemes. Based on this assessment, the Company has the right to reduced contributions in the future to the schemes, or on wind up of the schemes and recognition of the schemes surplus is appropriate.