Page 245 - Tata_Chemicals_yearly-reports-2017-18

(v) Risk Exposure :
Through its defined benefit plans, the Group is exposed to a number of risks, the most significant of which are detailed below :
Investment risk If future investment returns on assets are lower than assumed in valuation, the scheme’s assets will be lower, and the
funding level higher, than expected.
Changes in bond yields A decrease in yields will increase plan liabilities, although this will be partially offset by an increase in the value of the
plans’ bond holdings.
Longevity risk If improvements in life expectancy are greater than assumed, the cost of benefits will increase because pensions are
paid for longer than expected. This will mean that the funding level will be higher than expected.
Inflation risk If inflation is greater than assumed, the cost of benefits will increase as pension increases and deferred revaluations
are linked to inflation.
(vi) (a) Assumptions used to determine net periodic benefit costs:
Particulars India USA Plans UK Plans
Funded Unfunded Funded Unfunded Funded Integrated Report
Discount rate As at 31 March, 2018 7.75% to 7.78% p.a. 7.75% to 7.78% p.a. 4.11% p.a. 4.05% p.a. 2.65% p.a.
As at 31 March, 2017 6.85% to 7.29% p.a. 6.85% to 7.29% p.a. 4.29% p.a. 4.23% p.a. 2.5% p.a.
Increase in As at 31 March, 2018 7.50% to 8.00% p.a. 7.50% to 8.00% p.a. 4.50% to 9.00% p.a. NA NA
Compensation cost
As at 31 March, 2017 7.50% to 8.00% p.a. 7.50% to 8.00% p.a. 4.50% to 9.00% p.a. NA NA
Healthcare cost As at 31 March, 2018 NA 8.00% to 10.00% p.a. NA 7.25% p.a. NA
increase rate As at 31 March, 2017 NA 10.00% p.a NA 7.50% p.a. NA
Pension increase rate As at 31 March, 2018 NA 6.00% p.a. NA NA 2.90% p.a.
As at 31 March, 2017 NA 6.00% p.a. NA NA 2.20% to 3.05% p.a.
(a) Discount rate for the domestic plans is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated
term of the obligations. Discount rate for USA Subsidiaries is based on high quality bonds and for UK subsidiaries is based on corporate bonds.
(b) The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. Statutory Reports
(c) The details of post-retirement and other benefit plans for its employees given above, are certified by the actuaries and relied upon by the Auditors.

vi (b) Average longevity at retirement age for current beneficiaries of the plan (years)
Particulars India UK USA India UK USA
As at As at As at As at As at As at
31 March, 2018 31 March, 2018 31 March, 2018 31 March, 2017 31 March, 2017 31 March, 2017
Males 8 to 18 years 22 to 25 years 24 to 25 years 8 to 18 years 20 to 21 years 24 to 25 years
Females 8 to 22 years 25 to 28 years 26 to 27 years 8 to 22 years 25 to 26 years 26 to 27 years
(vii) Sensitivity Analysis
Impact on defined benefit obligation due to change in assumptions as at March, 2018
` in crore
Assumptions TCL Rallis USA UK Financial Statements
Increase Decrease Increase Decrease Increase Decrease Increase Decrease
Discount rate
0.25% change - - - - - - (123.20) 131.09
0.5% change (10.77) 11.90 - - (115.74) 135.46 - -
1% change - - (3.24) 3.37 - - - -
Compensation rate
0.5% change 2.90 (2.72) - - 34.06 (35.11) - -
1% change - - 2.48 (2.24) - - - -
Pension rate
1% change 3.29 (2.86) - - - - # #
Healthcare costs
1% change 13.41 (10.65) - - 0.33 (0.31) - -
# Not material

Consolidated Financial Statements 243