31. Post-employment benefits

The Company operates four defined benefit pension schemes and a defined contribution pension scheme. On 1 January 2005 the defined benefit schemes were closed to new entrants.

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 €300k (2016: €239k) 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.

Defined Benefit Schemes

a) The Company operates four 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.

Under the provisions of the Harbours Act, 1996 the Company is responsible for funding the payment of pension entitlements (including the entitlements relating to pre-Vesting Day service with Dublin Port & Docks Board) of:

i. all eligible current employees of the Company;

ii. all eligible current and deferred pensioners of Dublin Port & Docks Board;

iii. former eligible employees of the Company who since Vesting Day have or may become current or deferred pensioners of the Company;

iv. eligible spouses and children of eligible employees or former employees.

Separate trustee administered schemes have been established for this purpose and these schemes are “The Dublin Port Superannuation Fund 1996” and “The Dublin Port Company Pilots Superannuation Fund”.

In 2012 a formal scheme was established in respect of the Chief Executive and the name of this scheme is “The Dublin Port Company Chief Executive Retirement Benefits Scheme”.

A formal trustee administered scheme was established during 2013 in respect of eligible former employees of Dundalk Port Company and the name of this scheme is “The Dublin Port Company Pension Scheme for Former Employees of Dundalk Port Company”.

Irish Pensions Trust Limited, an independent professional trustee Company, is the sole trustee of the Pilots Superannuation Fund, the Dublin Port Company Chief Executive Retirement Benefits Scheme and the Dublin Port Company Pension Scheme for Former Employees of Dundalk Port Company.

The Company and scheme members appoint the trustees of the Dublin Port Superannuation Fund 1996. The most recent member-nominated trustee selection process for the Dublin Port Superannuation fund 1996 was held in 2017 and the appointment of four candidates was ratified by the Board at its meeting on 8 December 2017. In addition to the four member trustees, the Company also appointed a further four trustees.

There are no unfunded schemes in place as at 31 December 2017.

b) Actuarial Valuation

The funding position of the main defined benefit schemes is assessed in accordance with the advice of independent actuaries. The funding position is formally assessed at three yearly intervals. The most recent applicable triennial actuarial valuations for the main schemes were prepared at 1 January 2018 and were completed by Mercer, who are neither officers nor employees of the Company. The actuarial valuation reports are available for inspection by scheme members but not for public inspection.

The Company intends to make regular contributions to the schemes in accordance with the recommendations set out by the actuaries in their reports at 1 January 2018. The next triennial actuarial valuations for the main schemses are due to be prepared as at 1 January 2021.

Minimum Funding Standard valuation basis (unaudited information):

The funded schemes are required to meet the Minimum Funding Standard (MFS) in accordance with Section 44 of the Pensions Act, 1990 (as amended). The MFS, in general terms, measures whether accumulated assets cover liabilities accrued to members, assuming the schemes were wound up at the valuation date. The assumptions on which the MFS liability is determined are prescribed in legislation and actuarial guidance. The most recently completed actuarial funding certificates, where applicable, will be submitted to the Pensions Authority with an effective date of 31 December 2017 and confirm that the schemes satisfied the MFS at that date.

Following the actuarial review at 1 January 2018, it was found that the applicable schemes would have met the MFS as at 1 January 2018. Overall assets of the schemes were €281.8m and overall liabilities under the MFS were €206.7m, resulting in an aggregate surplus of €75.1m on the MFS basis.

Long-term valuation basis (unaudited information):

The Company’s intention is to continue to provide funding in accordance with the actuary’s recommendation to ensure that the schemes continue to operate and provide for pension payments in the long term future.

The valuation at 1 January 2018 for such funding purposes was prepared using an actuarial valuation method known as the “attained age” method. The principal actuarial assumptions adopted in the valuation were that the annual rate of return on investments before retirement would be 1.00% per annum for all funds, the annual rate of return on investments after retirement would be 1.00% per annum for all funds, the increase in salaries would be 2.50% for 2018-2022 and 3.0% per annum thereafter. The increase in pensions in payment would be 1.75% per annum. Under this valuation method at 1 January 2018, overall assets were €281.8m and overall accrued liabilities were €264.9m. This resulted in an aggregate surplus of €16.9m and a funding ratio (assets: liabilities) as at 1 January 2018 of 106%. This valuation was carried out in respect of the Dublin Port Superannuation Fund 1996, the Dublin Port Company Pilots Superannuation Fund, the Dublin Port Company Chief Executive Retirement Benefits Scheme and the Dublin Port Company Pension Scheme for Former Employees of Dundalk Port Company.

The next formal valuation will be prepared at 1 January 2021.

c) FRS 102 – Section 28 – “Employee Benefits”

The defined benefit obligations of the Company have been valued by independent actuaries for the purposes of section 28 of FRS 102 based on data provided for an actuarial valuation of the schemes as at 31 December 2017. As required by section 28 of FRS 102 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) under section 28 of FRS 102 at the Balance Sheet date were:

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 1.90% was adopted at 31 December 2017.

Demographic Assumptions:

The assumptions relating to the life expectancy at retirement for members is set out below:

Scheme Assets:

The investment allocations of assets at the Balance Sheet date were:

Asset Class

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:

The amounts recognised in the statement of financial position are as follows:

Analysis of the amounts included in the Profit and Loss Account:

The Profit and Loss charge includes the following cost/credit due to changes in plan provisions:

Past Service Cost: A past service cost arises in 2017 in respect of the additional benefits arising during the year. A past service credit arises 2016 in respect of the permanent reduction in the benefits of active and deferred members of the Dublin Port Superannuation Fund 1996 and the Dublin Port Company Pilots’ Superannuation Fund due to the application of the pension levies for the years 2011 to 2015 inclusive. The reduction in benefits was agreed by the trustees of both plans. The gain is the present value of the reduction in pension benefits and calculated as at 31 December 2016 using financial assumptions appropriate at that date.

Analysis of the re-measurements amounts recognised in other Comprehensive Income:

Movement in scheme assets and benefit obligations

Movement in scheme assets and benefit obligations

The employer expects to contribute €0.5 million to the pension schemes in 2018.

Sensitivity Analysis of Scheme Benefit obligations:

The sensitivity of the defined benefit obligation to changes in the mortality assumptions is set out below:

The sensitivity of the defined benefit obligation to changes in the discount rate is set out below: