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Chapter 8

Net interest component – the change in the deficit/surplus due to the
passage of time. It is calculated by applying the discount rate at the
start of the year to the opening deficit/surplus. It is recorded in profit or
loss.

Service cost component – the change in the deficit/surplus relating to:

 employee service in the current period

 plan amendments

 settlements

 curtailments.

The service cost is recorded in profit or loss.

Contributions to the pension scheme are the cash payments into the
plan made by the entity in the current period. This has no impact on
profit or loss.

Benefits paid are the amounts paid out to retired employees during the
period. The payments reduce the plan obligation and plan assets by
equal amounts so have no net impact on the deficit/surplus.

The remeasurement component arises due to changes in actuarial
assumptions year-on-year. It is calculated as a balancing figure and is
recorded in other comprehensive income.

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