The Group and the Bank have a defined contribution (DC) scheme which is a funded obligation administered by Swan Life Ltd. The liability relates to retirement gratuities payable under The Workers’ Right Act 2019 which is unfunded. The actuarial valuation was carried out at 30 June 2020 by Swan Life Ltd.

The plan expose the Group and the Bank to normal risks associated with defined benefit pension plans such as interest risk and salary risk. Interest risk: If the bond/bill yields decrease, the liabilities would be calculated using a lower discount rate, and would therefore increase. Salary risk: If salary increases are higher than assumed in our basis, the liabilities would increase giving rise to actuarial losses.

Retirement gratuities

Future cash flows:
The funding policy is to pay benefits out of the reporting entity’s cash flow as and when due.
The weighted average duration of the defined benefit obligation is 14 years for the Bank and 21 years for the subsidiary.

The sensitivity analyses above have been determined based on sensibly possible changes of the discount rate or salary increase rate occurring at the end of the reporting period if all other assumptions remained unchanged.

The rate per annum of withdrawal from service before retirement for the Bank is between 10% and 15% for age upto 30, reducing to 0% after 50 years. The rate per annum of withdrawal from service for the subsidiary is 15% up to age 20, reducing to 0% after 45.

The discount rate is determined by reference to the yield on government bonds of duration equivalent to the duration of liabilities.