ANNUAL REPORT 2025 175 NOTES TO THE FINANCIAL STATEMENTS 23 Pension assets (Continued) (a) Defi ned benefi t plans (Continued) The fair value of the above equity instruments and debt instruments is determined based on quoted market prices. Contributions to fund the obligations are based upon the recommendations of independent qualifi ed actuaries for each of the pension plans of the Group to fully fund the relevant schemes on an ongoing basis. The realisation of the defi cit is contingent upon the realisation of the actuarial assumptions made which is dependent upon a number of factors including the market performance of plan assets. Funding requirements of the major defi ned benefi t plans of the Group are detailed below. The Group operates two principal pension plans in Hong Kong. One plan, which has been closed to new entrants since 1994, provides pension benefi ts based on the greater of the aggregate of the employee and employer vested contributions plus a minimum interest thereon of 6% per annum, and pension benefi ts derived by a formula based on the fi nal salary and years of service. An independent actuarial valuation, undertaken for funding purposes under the provision of Hong Kong’s Occupational Retirement Schemes Ordinance (“ORSO”), at 30 June 2024 reported a funding level of 169% of the accrued actuarial liabilities on an ongoing basis. The valuation used the attained age valuation method and the main assumptions in the valuation are an investment return of 5% per annum, salary increases of 3.5% per annum and interest credited to balances of 6% per annum. The valuation was prepared by Tian Keat Aun - Director, Retirement Hong Kong (a Fellow of The Institute and Faculty of Actuaries), and Michael Lee - Consultant, Retirement Hong Kong of Towers Watson Hong Kong Limited. The second plan provides benefi ts equal to the employer vested contributions plus a minimum interest thereon of 5% per annum. As at 31 December 2025, vested benefi ts under this plan are fully funded in accordance with the ORSO funding requirements. During the year ended 31 December 2025, forfeited contributions totalling HK$949,000 (2024: HK$777,000) were used to reduce the level of contributions of the year ended 31 December 2025 and no forfeited contribution was available at 31 December 2025 (2024: nil) to reduce future year’s contributions. The sensitivity of the defi ned benefi t obligation to changes in the signifi cant principal assumptions is: Impact on defi ned benefi t obligation Change in assumption Increase in assumption Decrease in assumption Discount rate 0.25% Decrease by 0.9% Increase by 0.9% Salary increase 0.25% Increase by 0.1% Decrease by 0.1% The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defi ned benefi t obligation to signifi cant actuarial assumptions, the same method (present value of the defi ned benefi t obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of fi nancial position. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to previous year. The Group expects to make contributions of HK$17,375,000 (2024: HK$17,778,000) to the defi ned benefi t plans during the next year. The weighted average duration of the defi ned benefi t obligation is 3.6 years as at 31 December 2025 (2024: 3.9 years). (b) Defi ned contribution plans The Group’s cost in respect of defi ned contribution plans for the year amounted to HK$90,037,000 (2024: HK$77,003,000).
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