Employee Benefits

Publicly listed company

We were asked to implement an IAS19 valuation of End of Service benefits for a client.

This is usually a relatively straightforward exercise but for this client, being publicly listed, they needed to produce audited reports every quarter – and not just every year-end.

We adapted our usual IAS19 process and report, to give not just year-end results and annual cost for accrual of benefits, but rather actuarial liabilities at each quarter-end and also the actuarial cost for each quarter.  This included projections for budgeting and reporting purposes for the year following the valuation date.

This allows our client to report accurate figures at each quarter-end, without the need for quarterly actuarial referrals.

Not Funded? Oh dear!

A client asked us to consider the liabilities they were required to disclose in their balance sheet, under IAS19. They had, to date, not accounted for any liability.

Considering their circumstances, employee demographic and the particulars of their scheme, we were able to establish what rate of basic salary was necessary as a contribution, to ensure that the entire liability would be funded to the balance sheet over a period of ten years.

They are not required to report their financials to any overseeing body, but we are happy to report that they are on their way to properly account for their costs and liabilities under IAS19.

Multi-Jurisdiction / Multiple Employee Benefits / Multiple Actuarial & Accounting Standards

One of our Foreign-owned clients asked us to perform an actuarial valuation of its End of Service benefits for four of its entities; UAE, KSA, Qatar and Pakistan. The company is running a different End of Service benefit scheme for each of its entities, so as to comply with the respective local labour law.

We reported our results in the local currency for each entity and also provided consolidated results by aggregating and converting them into United Arab Emirates Dirham (AED). The client is now considering valuing its long-term savings plan.

For another client, we were appointed to value not only its End of Service Gratuities but also other long-term benefits, including Leave Encashment. The salary definition for each type of benefit was different, requiring us to collate multiple allowances and reconcile the various benefits paid against each set of scheme rules. This exercise identified a number of anomalies which resulted in an improvement in the quality of the client’s Payroll data.

Another Middle East client was asked by its Corporate Office in the US to report year-end financials under two different actuarial and accounting standards; US GAAP and Indian GAAP. Lux was commissioned to carry out the valuation work for its entities in Oman and Dubai for both End of Service Gratuities and Annual Leave Accrual. This effectively required us to conduct six separate valuations.

The client was under a great deal of pressure from the States to deliver the finalized reports within just a few days of the scope of work being clearly defined. Our team of actuaries worked relentlessly over a full week-end and, in their efforts, were able to deliver six comprehensive actuarial reports in just two days.