The Company operates two defined benefit schemes and a defined contribution scheme.
(a) Uisce Éireann defined benefit pension schemes
The Company operates a contributory defined benefit scheme (“Uisce Éireann Defined Benefit Superannuation Fund”) as required under sections 19 and 27 of the Water Services (No. 2) Act 2013 in relation to employees of the Company, who were previously employed by either the Local Authorities or by the Department of Housing, Local Government and Heritage. This Scheme was established on 27 January 2017. The Company also operates a contributory defined benefit scheme (“Uisce Éireann (ex-Ervia) Superannuation Scheme”) in respect of employees who participated in the Ervia defined benefit pension scheme until legal separation from Ervia. On 1 January 2023, Uisce Éireann assumed the retirement benefit obligation in respect of the future service cost of relevant employees who transferred to Uisce Éireann from Ervia on legal separation. This scheme was established on 1 January 2023. Both schemes provide retirement benefits based on final pensionable salary and net pensionable salary in respect of future pensionable service, together with a “wrap around element” which maintains the final salary linkage in respect of prior pensionable service completed before joining Uisce Éireann.
The defined benefit schemes are administered by a Board of Trustees which comprises member and employer representatives. The respective Board of Trustees are responsible for the management and governance of the schemes including compliance with all relevant laws and regulations. The assets of the schemes are held separately from those of the Company in trustee administered funds. The latest valuation of the Uisce Éireann Defined Benefit Superannuation Fund was carried out as at 1 April 2022 by a qualified actuary. The next actuarial valuation is due with an effective date of 1 April 2025. The latest valuation of the Uisce Éireann (ex-Ervia) Superannuation Scheme was carried out as at 1 April 2023 by a qualified actuary. The next actuarial valuation is due with an effective date of 1 April 2026.
The schemes expose the Company to a number of risks, the most significant of which are as follows:
Asset volatility
The liabilities are calculated using a discount rate set with reference to corporate bond yields. If assets underperform this yield, this could create a larger deficit. The schemes hold a significant proportion of growth assets (equities) which, though expected to outperform corporate bonds in the long-term, create additional volatility and risk in the short-term.
Changes in bond yields
A decrease in corporate bond yields will increase the value placed on the liabilities for accounting purposes, although this will be partially offset by an increase in the value of any bond holdings held by the schemes.
Salary inflation
As a final salary scheme there is an exposure to increased benefits arising as a result of higher salary increases than allowed for in the assumptions. The assumptions used to project final salary incorporate an age-related component in addition to a flat basic rate as an allowance for the effect of increments and promotions. The wraparound component of the benefit design (i.e. the linkage of pensionable service completed with a prior body) means that the accrued liabilities are particularly sensitive to higher than assumed salary growth.
Inflation
The schemes’ defined benefit obligations are linked to inflation (for active members, benefits are linked to salary increases while for deferred members, preserved benefits are linked on a discretionary basis to post retirement pension increases awarded or to statutory revaluation). Higher than assumed inflation will lead to higher liabilities. About a quarter of the fund is invested in inflation linked bonds as a match to such real liabilities.
Life expectancy risk
The majority of the schemes’ obligations are to provide benefits for the life of the member (and their dependants), so increases in life expectancy will result in an increase in the liabilities.
Uisce Éireann Defined Benefit Superannuation Fund |
Uisce Éireann (ex-Ervia) Superannuation Scheme |
Total Combined |
||||
31-Dec-24 |
31-Dec-23 |
31-Dec-24 |
31-Dec-23 |
31-Dec-24 €’000 |
31-Dec-23 |
|
Investments quoted in active markets: |
||||||
Equities |
35,559 |
24,448 |
16,246 |
11,929 |
51,805 |
36,377 |
- developed markets |
35,559 |
24,448 |
16,246 |
11,929 |
51,805 |
36,377 |
Bonds |
9,187 |
9,212 |
4,256 |
3,354 |
13,443 |
12,566 |
- inflation linked |
9,187 |
9,212 |
4,256 |
3,354 |
13,443 |
12,566 |
Cash |
2,587 |
794 |
917 |
385 |
3,504 |
1,179 |
Unquoted investments: |
||||||
Property/forestry |
2,431 |
1,550 |
1,118 |
706 |
3,549 |
2,256 |
Fair value of plan assets |
49,764 |
36,004 |
22,537 |
16,374 |
72,301 |
52,378 |
Defined benefit obligation |
(74,333) |
(64,658) |
(23,031) |
(20,068) |
(97,364) |
(84,726) |
Net defined benefit obligation |
(24,569) |
(28,654) |
(494) |
(3,694) |
(25,063) |
(32,348) |
Investment strategy
The Company and Trustees have agreed an initial investment strategy that is growth orientated (Uisce Éireann Defined Benefit Superannuation Fund: 75% growth / 25% liability matching; Uisce Éireann (ex-Ervia) Superannuation Scheme: 80% growth / 20% liability matching).
Uisce Éireann Defined Benefit Superannuation Fund
Movement in net defined benefit liability
Defined benefit liability |
Fair value of plan assets |
Net defined benefit obligation |
||||
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
|
At 1 January |
(64,658) |
(46,908) |
36,004 |
26,266 |
(28,654) |
(20,642) |
Income Statement: |
||||||
Current service cost |
(6,754) |
(4,248) |
- |
- |
(6,754) |
(4,248) |
Interest on liabilities and assets |
(2,121) |
(1,703) |
1,333 |
1,060 |
(788) |
(643) |
Administration Expenses |
- |
- |
(2) |
- |
(2) |
- |
(8,875) |
(5,951) |
1,331 |
1,060 |
(7,544) |
(4,891) |
|
Other Comprehensive Income: |
||||||
Return on plan assets excl. interest income |
- |
- |
3,631 |
3,117 |
3,631 |
3,117 |
Experience losses on liabilities |
(4,595) |
(8,091) |
- |
- |
(4,595) |
(8,091) |
Changes in actuarial assumptions |
4,709 |
(3,102) |
- |
- |
4,709 |
(3,102) |
Changes in demographic assumptions |
- |
- |
- |
- |
- |
|
114 |
(11,193) |
3,631 |
3,117 |
3,745 |
(8,076) |
|
Contributions by employer |
- |
- |
7,884 |
4,954 |
7,884 |
4,954 |
Contributions by members |
(1,298) |
(860) |
1,298 |
860 |
- |
- |
Benefits paid |
384 |
254 |
(384) |
(253) |
- |
1 |
(914) |
(606) |
8,798 |
5,561 |
7,884 |
4,955 |
|
At 31 December |
(74,333) |
(64,658) |
49,764 |
36,004 |
(24,569) |
(28,654) |
The weighted average duration of the Uisce Éireann Defined Benefit Superannuation Fund defined benefit obligation at 31 December 2024 was approximately 25 years (2023: 26 years). The Company expects to contribute €10.0 million to its pension plan in 2025.
Uisce Éireann (ex-Ervia) Superannuation Scheme
Movement in net defined benefit liability
Defined benefit liability |
Fair value of plan assets |
Net defined benefit obligation |
|||||
2024 |
2023 |
2024 |
2023 |
2024 |
2023 |
||
Retirement benefit obligation assumed |
25 |
(20,068) |
(13,045) |
16,374 |
12,202 |
(3,694) |
(843) |
Income Statement: |
|||||||
Current service cost |
(3,447) |
(3,368) |
- |
- |
(3,447) |
(3,368) |
|
Interest on liabilities and assets |
(661) |
(476) |
600 |
284 |
(61) |
(192) |
|
Administration Expenses |
- |
(2) |
(2) |
- |
|||
(4,108) |
(3,844) |
598 |
284 |
(3,510) |
(3,560) |
||
Other Comprehensive Income: |
|||||||
Return on plan assets excl. interest income |
- |
- |
1,959 |
511 |
1,959 |
511 |
|
Experience losses on liabilities |
606 |
(529) |
- |
- |
606 |
(529) |
|
Changes in actuarial assumptions |
1,628 |
(1,688) |
- |
- |
1,628 |
(1,688) |
|
Changes in demographic assumptions |
- |
99 |
- |
- |
- |
99 |
|
2,234 |
(2,118) |
1,959 |
511 |
4,193 |
(1,607) |
||
Contributions by employer |
- |
- |
2,518 |
2,316 |
2,518 |
2,316 |
|
Contributions by members |
(1,125) |
(1,065) |
1,125 |
1,065 |
- |
- |
|
Benefits paid |
36 |
4 |
(36) |
(4) |
- |
- |
|
(1,089) |
(1,061) |
3,607 |
3,377 |
2,518 |
2,316 |
||
At 31 December |
(23,031) |
(20,068) |
22,538 |
16,374 |
(493) |
(3,694) |
|
The weighted average duration of the Uisce Éireann (ex-Ervia) Superannuation Scheme defined benefit obligation at 31 December 2024 was approximately 26 years (2023: 27 years). The Company expects to contribute €2.4 million to its pension plan in 2025.
The principal actuarial assumptions used for the Uisce Éireann Defined Benefit Superannuation Fund (for 2023 and 2024) and Uisce Éireann (ex-Ervia) Superannuation Scheme (for 2023 and 2024) were as follows:
2024 |
2023 |
|
Discount rate |
3.45% |
3.30% |
Inflation assumption |
2.25% |
2.35% |
Rate of increase in salaries* |
2.75% |
2.85% |
Rate of increase in pensions payment |
2.25% |
2.35% |
*Plus salary scale to allow for promotional increases
The average future life expectancy factored into the valuation, based on retirement at 65 years of age, for current and future retirees is as follows:
Mortality
Uisce Éireann Defined Benefit Superannuation Fund |
Uisce Éireann (ex-Ervia) |
||||
Life expectancy future retirees |
2024 |
2023 |
2024 |
2023 |
|
Retiring today |
Females |
25.0 |
24.9 |
24.9 |
24.8 |
Males |
23.2 |
23.1 |
23.0 |
22.9 |
|
Retiring in 25 years |
Females |
27.2 |
27.1 |
27.0 |
26.9 |
Males |
25.3 |
25.2 |
25.1 |
25.0 |
|
Sensitivity analysis for principal assumptions used to measure scheme liabilities
There are inherent uncertainties surrounding the financial and demographic assumptions adopted in calculating the actuarial value of the Company’s defined benefit obligations. The following table analyses the estimated impact on scheme liabilities resulting from changes to key actuarial assumptions.
Assumption |
Change in assumption |
Impact on Uisce Éireann Defined Benefit Superannuation Fund liabilities |
Impact on Uisce Éireann (ex-Ervia) Superannuation Scheme liabilities |
Discount rate |
Increase/decrease by 0.25% |
Decrease by 5.8%/increase by 6.3% |
Decrease by 5.9%/increase by 6.4% |
Price inflation |
Increase/decrease by 0.25% |
Increase by 6.4%/decrease by 5.9% |
Increase by 6.4%/decrease by 5.9% |
Salary |
Increase/decrease by 0.25% |
Increase by 7.4%/decrease by 7.1% |
Increase by 12.2%/decrease by 11.8% |
Mortality |
Increase/decrease by one year |
Increase by 2.3%/decrease by 2.3% |
Increase by 2.2%/decrease by 2.2% |
(b) Defined contribution pension scheme
The Company makes contributions to the Uisce Éireann Defined Contribution Scheme on behalf of its employees. These costs are charged to the income statement and are disclosed in note 4.