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PENSION AND OTHER POST-EMPLOYMENT BENEFITS | 12 Months Ended
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Dec. 31, 2019
PENSION AND OTHER POST-EMPLOYMENT BENEFITS |
PENSION AND OTHER POST-EMPLOYMENT BENEFITS | 30. PENSION AND OTHER POST-EMPLOYMENT BENEFITS The details of pension and other post-employment benefit liabilities are as follows:
|  | Notes |  | 2018 |  | 2019
Pension benefit and other post-employment benefit obligations |  |  |  |  |  |
Pension benefit |  |  |  |  |  |
The Company - funded |  | 30a.i.a |  |  |  |
Defined pension benefit obligation |  | 30a.i.a.i |  | 1,057 |  | 2,338
Additional pension benefit obligation |  | 30a.i.a.ii |  | 6 |  | —
The Company - unfunded |  | 30a.i.b |  | 1,830 |  | 1,479
Telkomsel |  | 30a.ii |  | 1,541 |  | 2,209
Telkomsat |  |  |  | 0 |  | 0
MD Media |  |  |  | 0 |  | 0
Infomedia |  |  |  | — |  | 0
Projected pension benefit obligations |  |  |  | 4,434 |  | 6,026
Net periodic post-employment health care benefit |  | 30b |  | 195 |  | 996
Other post-employment benefit |  | 30c |  | 419 |  | 366
Obligation under the Labor Law |  | 30d |  | 507 |  | 690
Total |  |  |  | 5,555 |  | 8,078
The details of net pension benefit expense recognized in the consolidated statements of profit or loss and other comprehensive income is as follows:
|  | Notes |  | 2017 |  | 2018 |  | 2019
Pension benefit cost |  |  |  |  |  |  |  |
The Company - funded |  | 30a.i.a |  |  |  |  |  |
Defined pension benefit obligation |  | 30a.i.a.i |  | 557 |  | 511 |  | 362
Additional pension benefit obligation |  | 30a.i.a.ii |  | 657 |  | 69 |  | 1
The Company - unfunded |  | 30a.i.b |  | 239 |  | 198 |  | 163
Telkomsel |  | 30a.ii |  | 247 |  | 342 |  | 314
MD Media |  |  |  | 0 |  | 0 |  | 0
Infomedia |  |  |  | 0 |  | 0 |  | 0
Telkomsat |  |  |  | 0 |  | 0 |  | 0
Total periodic pension benefit cost |  | 26 |  | 1,700 |  | 1,120 |  | 840
Net periodic post-employment health care benefit cost |  | 26,30b |  | 276 |  | 335 |  | 167
Other post-employment benefit cost |  | 26,30c |  | 42 |  | 32 |  | 33
Obligation under the Labor Law |  | 26,30d |  | 62 |  | 113 |  | 136
Total |  |  |  | 2,080 |  | 1,600 |  | 1,176
The amounts recognized in OCI are as follows:
|  | Notes |  | 2017 |  | 2018 |  | 2019
Defined benefit plan actuarial gain (losses) |  |  |  |  |  |  |  |
The Company - funded |  | 30a.i.a |  |  |  |  |  |
Defined pension benefit obligation |  | 30a.i.a.i |  | (1,154) |  | 1,236 |  | (1,116)
Additional pension benefit obligation |  | 30a.i.a.ii |  | (419) |  | 934 |  | 7
The Company - unfunded |  | 30a.i.b |  | (100) |  | 137 |  | (94)
Telkomsel |  | 30a.ii |  | (530) |  | 514 |  | (561)
MD Media |  |  |  | (2) |  | 0 |  | 0
Infomedia |  |  |  | (1) |  | 0 |  | 0
Telkomsat |  |  |  | 0 |  | 0 |  | 0
Post-employment health care benefit cost |  | 30b |  | (551) |  | 2,559 |  | (634)
Other post-employment benefit |  | 30c |  | (40) |  | 24 |  | (15)
Obligation under the Labor Law |  | 30d |  | (72) |  | 14 |  | (107)
Sub-total |  |  |  | (2,869) |  | 5,418 |  | (2,520)
Deferred tax effect at the applicable tax rates |  | 29i |  | 494 |  | (598) |  | 411
Defined benefit plan actuarial (losses) gain - net of tax |  |  |  | (2,375) |  | 4,820 |  | (2,109)
a. Pension benefit cost i. The Company a. Funded pension plan i. Defined pension benefit obligation The Company sponsors a defined benefit pension plan for employees with permanent status prior to July 1, 2002. The plan is governed by the pension laws in Indonesia and managed by Telkom Pension Fund (“Dana Pensiun Telkom” or “Dapen”). Pension Fund Management in accordance with the Pension Fund and Investment Directives Regulations determined by the Founder is carried out by the Board of Management. The Board of Mangement is monitored by the Oversight Board consisting of representatives of the Company and participants. The pension benefits are paid based on the participating employees’ latest basic salary at retirement and the number of years of their service. The participating employees contribute 18% (before March 2003: 8.4%) of their basic salaries to the pension fund. The Company made contributions to the pension fund amounting to Rp233 billion for year period ended December 31, 2019. The Company did not make contributions to the pension fund for the year ended December 31, 2018. Risks exposed to defined benefit programs are risks such as asset volatility and changes in bond yields. The project liabilities are calculated using a discount rate that refers to the level of government bond yields, if the return on program assets is lower, it will result in a program deficit. A decrease in the yield of government bonds will increase the program liabilities, although this will be offset in part by an increase in the value of the program bonds held. The Company ensures that the investment position is set within the framework of asset-liability matching ("ALM") that has been formed to achieve long-term results that are in line with the liabilities in the defined benefit pension plan. Within the ALM framework, the Company's objective is to adjust its pension assets and liabilities by investing in a well diversified portfolio to produce an optimal rate of return, taking into account the level of risk. Investment in the program has been well diversified, so that one investment's poor performance will not have a material impact on all asset groups. The following table presents the changes in projected pension benefit obligations, changes in pension benefit plan assets, funded status of the pension plan, and net amount recognized in the consolidated statements of financial position as of December 31, 2018 and 2019, under the defined benefit pension plan:
|  | 2018 |  | 2019
Changes in projected pension benefit obligations |  |  |  |
Projected pension benefit obligations at beginning of year |  | 22,354 |  | 20,121
Charged to profit or loss: |  |  |  |
Service costs |  | 384 |  | 259
Interest costs |  | 1,459 |  | 1,599
Pension plan participants’ contributions |  | 38 |  | 33
Actuarial (gain) losses recognized in OCI |  | (2,691) |  | 1,514
Pension benefits paid |  | (1,423) |  | (1,465)
Projected pension benefit obligations at end of year |  | 20,121 |  | 22,061
|  | 2018 |  | 2019
Changes in pension benefit plan assets |  |  |  |
Fair value of pension plan assets at beginning of year |  | 20,814 |  | 19,064
Interest income |  | 1,357 |  | 1,524
Return on plan assets (excluding amount included in net interest expense) |  | (1,455) |  | 398
Employer's contributions |  | — |  | 233
Pension plan participants’ contributions |  | 38 |  | 32
Pension benefits paid |  | (1,423) |  | (1,465)
Provision of additional benefit |  | (205) |  | —
Plan administration cost |  | (62) |  | (63)
Fair value of pension plan assets at end of year |  | 19,064 |  | 19,723
Projected pension benefit obligations at end of year |  | 1,057 |  | 2,338
As of December 31, 2018 and 2019, plan assets consist of:
|  | 2018 |  | 2019
|  | Quoted in |  |  |  | Quoted in |  |
|  | active market |  | Unquoted |  | active market |  | Unquoted
Cash and cash equivalents |  | 873 |  | — |  | 521 |  | —
Equity instruments: |  |  |  |  |  |  |  |
Finance |  | 1,456 |  | — |  | 1,735 |  | —
Consumer goods |  | 1,336 |  | — |  | 1,085 |  | —
Infrastructure, utilities and transportation |  | 530 |  | — |  | 540 |  | —
Construction, property and real estate |  | 199 |  | — |  | 210 |  | —
Basic industry and chemical |  | 124 |  | — |  | 135 |  | —
Trading, service and investment |  | 420 |  | — |  | 395 |  | —
Mining |  | 112 |  | — |  | 159 |  | —
Agriculture |  | 55 |  | — |  | 70 |  | —
Miscellaneous industries |  | 362 |  | — |  | 292 |  | —
Equity-based mutual fund |  | 1,336 |  | — |  | 1,027 |  | —
Fixed income instruments: |  |  |  |  |  |  |  |
Corporate bonds |  | — |  | 5,267 |  | — |  | 6,077
Government bonds |  | 6,166 |  | — |  | 6,493 |  | —
Mutual funds |  | 54 |  | — |  | 85 |  | —
Non-public equity: |  |  |  |  |  |  |  |
Direct placement |  | — |  | 288 |  | — |  | 374
Property |  | — |  | 178 |  | — |  | 186
Others |  | — |  | 308 |  | — |  | 339
Total |  | 13,023 |  | 6,041 |  | 12,747 |  | 6,976
Pension plan assets include Series B shares issued by the Company with fair values totalling Rp372 billion and Rp346 billion, representing 1.95% and 1.75% of total plan assets as of December 31, 2018 and 2019, respectively, and bonds issued by the Company with fair value totalling Rp314 billion and Rp341 billion, representing 1.65% and 1.73% of total plan assets as of December 31, 2018 and 2019, respectively. The expected return is determined based on market expectation for returns over the entire life of the obligation by considering the portfolio mix of the plan assets. The actual return on plan assets was Rp(158) billion and Rp1,858 billion for the years ended December 31, 2018 and 2019, respectively. Based on the Company’s policy issued on January 14, 2014 regarding Dapen’s Funding Policy, the Company will not contribute to Dapen when Dapen’s Funding Sufficiency Ratio ("FSR") is above 105%. Based on Dapen’s financial statement as of December 31, 2019, Dapen's FSR is below 105%. Therefore, the Company will contribute to the defined benefit pension plan in 2020. Based on the Company's policy issued on June 7, 2017 regarding Pension Regulation by Dapen, the Company provided other benefits in the form of additional benefit in 2017 amounted to Rp4.5 million to monthly pension beneficiaries who retired before end of June 2002 and Rp2.25 million to monthly pension beneficiaries who retired starting from the end of June 2002 until the end of April 2017. The movement of the projected pension benefit obligations for the years ended December 31, 2018 and 2019 are as follows:
|  | 2018 |  | 2019
Projected pension benefit obligations (prepaid pension benefit cost) at beginning of year |  | 1,540 |  | 1,057
Net periodic pension benefit cost |  | 548 |  | 398
Provision of additional pension benefit |  | 205 |  | —
Employer Contribution |  | — |  | (233)
Actuarial (gain) losses recognized in OCI |  | (2,691) |  | 1,514
Return on plan assets (excluding amount included in net interest expense) |  | 1,455 |  | (398)
Projected pension benefit obligations at end of year |  | 1,057 |  | 2,338
The components of net periodic pension benefit cost for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Service costs |  | 366 |  | 384 |  | 259
Past service cost - plan amendments |  | 94 |  | — |  | —
Plan administration cost |  | 57 |  | 62 |  | 63
Net interest cost |  | 66 |  | 102 |  | 76
Net periodic pension benefit cost |  | 583 |  | 548 |  | 398
Amount charged to subsidiaries under contractual agreements |  | (26) |  | (37) |  | (36)
Net periodic pension benefit cost less cost charged to subsidiaries |  | 557 |  | 511 |  | 362
Amounts recognized in OCI for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Actuarial (gain) losses recognized during the year due to: |  |  |  |  |  |
Experience adjustments |  | 163 |  | 329 |  | (677)
Changes in financial assumptions |  | 2,699 |  | (3,020) |  | 1,952
Changes in demographic assumptions |  | — |  | — |  | 239
Return on plan assets (excluding amount included in net interest expense) |  | (1,708) |  | 1,455 |  | (398)
Net |  | 1,154 |  | (1,236) |  | 1,116
The actuarial valuation for the defined benefit pension plan was performed based on the measurement date as of December 31, 2017, 2018, and 2019, with reports dated February 27, 2018, April 1, 2019 and April 20, 2020, respectively, by PT Towers Watson Purbajaga (“TWP”), an independent actuary in association with Willis Towers Watson (“WTW”) (formerly Towers Watson). The principal actuarial assumptions used by the independent actuary as of December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019 |
Discount rate |  | 6.75 | % | 8.25 | % | 7.25 | %
Rate of compensation increases |  | 8.00 | % | 8.00 | % | 8.00 | %
Indonesian mortality table |  | 2011 |  | 2011 |  | 2011 |
ii. Additional pension benefit obligation Based on the Company’s policy issued on June 7, 2017 regarding Pension Regulation by Dapen, the Company established additional benefit fund at maximum 10% of surplus of defined benefit plan, when FSR is above 105% and return on investment is above actuarial discount rate of pension fund. The additional pension benefit obligation for the year ended December 31, 2019 is as follows:
|  | 2018 |  | 2019
Changes in projected pension benefit obligations |  |  |  |
Projected pension benefit obligations at beginning of year |  | 1,076 |  | 104
Charged to profit or loss: |  |  |  |
Interest costs |  | 69 |  | 9
Actuarial gain recognized in OCI |  | (948) |  | (17)
Pension benefits paid |  | (93) |  | (96)
Projected pension benefit obligations at end of year |  | 104 |  | —
Changes in pension benefit plan assets |  |  |  |
Fair value of pension plan assets at beginning of year |  | — |  | 98
Interest income from assets |  | — |  | 8
Provision of additional benefit |  | 205 |  | —
Return of benefit plan assets |  | (14) |  | (5)
Pension benefits paid |  | (93) |  | (96)
Fair value of pension plan assets at end of year |  | 98 |  | 5
(Surplus) deficit in the program |  | 6 |  | (5)
Changes in asset ceiling excluding amount in net interest |  | — |  | 5
Projected pension benefit obligations at end of year |  | 6 |  | —
Program assets for Additional Benefits have been set aside since 2018 according to the Oversight Board’s approval. As of December 31, 2019, the program assets had been fully paid to the pension beneficiaries. Changes in additional pension benefit obligation for the years ended December 31, 2018 and 2019 are as follows:
|  | 2018 |  | 2019
Additional pension benefit obligation at beginning of year |  | 1,076 |  | 6
Net periodic pension benefit cost |  | 69 |  | 1
Provision of additional benefit |  | (205) |  | —
Actuarial gain recognized in OCI |  | (948) |  | (12)
Return on plan asset |  | 14 |  | 5
Projected additional pension benefit obligation at end of year |  | 6 |  | —
The components of additional pension benefit cost for the years ended December 31, 2017, 2018 and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Past service costs |  | 657 |  | — |  | —
Net interest costs |  | — |  | 69 |  | 1
Pension benefit costs |  | 657 |  | 69 |  | 1
Amounts recognized in OCI for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Actuarial gain recognized during the year due to: |  |  |  |  |  |
Experience adjustment |  | — |  | (773) |  | (17)
Changes in financial assumption |  | 419 |  | (175) |  | —
Return on plan assets (excluding amount included in net interest expense) |  | — |  | 14 |  | 5
Changes in asset ceiling excluding amount in net interest |  | — |  | — |  | 5
Total |  | 419 |  | (934) |  | (7)
The actuarial valuation for the additional pension benefit plan was performed based on the measurement date as of December 31, 2017, 2018 and 2019, with report dated February 27, 2018, April 1, 2019 and April 20, 2020, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary for the years ended December 31, 2017, 2018, and 2019 is as follows:
|  | 2017 |  | 2018 |  | 2019 |
Rate of return on investment |  | 9.50% - 10.25 | % | 9.30% - 10.00 | % | 9.00% - 9.50 | %
Discount rate |  | 6.75 | % | 8.25 | % | 7.25 | %
Actuarial discount rate of pension fund |  | 9.25% - 9.50 | % | 9.25% - 9.50 | % | 9.25% - 9.50 | %
Rate of compensation increases |  | 8.00 | % | 8.00 | % | 8.00 | %
Indonesian mortality table |  | 2011 |  | 2011 |  | 2011 |
b. Unfunded pension plan The Company sponsors unfunded defined benefit pension plans and a defined contribution pension plan for its employees. The defined contribution pension plan is provided to employees with permanent status hired on or after July 1, 2002. The plan is managed by Financial Institutions Pension Fund (Dana Pensiun Lembaga Keuangan or “DPLK”). The Company’s contribution to DPLK is determined based on a certain percentage of the participants’ salaries and amounted to Rp13 billion and Rp55 billion for the years ended December 31, 2018 and 2019, respectively. Since 2007, the Company has provided pension benefit based on uniformization for both participants prior to and from April 20, 1992 effective for employees retiring beginning February 1, 2009. In 2010, the Company replaced the uniformization with Manfaat Pensiun Sekaligus (“MPS”). MPS is given to those employees reaching retirement age, upon death or upon becoming disabled starting from February 1, 2009. The Company also provides benefits to employees during a pre-retirement period in which they are inactive for 6 months prior to their normal retirement age of 56 years, known as pre-retirement benefits (Masa Persiapan Pensiun or “MPP”). During the pre-retirement period, the employees still receive benefits provided to active employees, which include, but are not limited to, regular salary, health care, annual leave, bonus, and other benefits. Since 2012, the Company has issued a new requirement for MPP effective for employees retiring since April 1, 2012, whereby the employee is required to file a request for MPP and if the employee does not file the request, such employee is required to work until the retirement date. The following table presents the changes in the unfunded projected pension benefit obligations for MPS and MPP for the years ended December 31, 2018 and 2019:
|  | 2018 |  | 2019
Unfunded projected pension benefit obligations at beginning of year |  | 2,384 |  | 1,830
Charged to profit or loss: |  |  |  |
Service costs |  | 54 |  | 29
Net interest costs |  | 144 |  | 134
Actuarial (gain) losses recognized in OCI |  | (137) |  | 94
Benefits paid by employer |  | (615) |  | (608)
Unfunded projected pension benefit obligations at end of year |  | 1,830 |  | 1,479
The components of total periodic pension benefit cost for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Service costs |  | 51 |  | 54 |  | 29
Net interest costs |  | 188 |  | 144 |  | 134
Total periodic pension benefit cost |  | 239 |  | 198 |  | 163
Amounts recognized in OCI for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Actuarial (gain) losses recognized during the year due to: |  |  |  |  |  |
Experience adjustments |  | 19 |  | 27 |  | 12
Changes in demographic assumptions |  | — |  | (21) |  | 37
Changes in financial assumptions |  | 81 |  | (143) |  | 45
Net |  | 100 |  | (137) |  | 94
The actuarial valuation for the defined benefit pension plan was performed, based on the measurement date as of December 31, 2017, 2018, and 2019, with reports dated February 27, 2018, April 1, 2019, and April 20, 2020 respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019 |
Discount rate |  | 6.00% - 6.75 | % | 8.00% - 8.25 | % | 6.50% - 7.25% |
Rate of compensation increases |  | 6.10% - 8.00 | % | 6.10% - 8.00 | % | 6.10% - 8.00% |
Indonesian mortality table |  | 2011 |  | 2011 |  | 2011 |
ii. Telkomsel Telkomsel sponsors a defined benefit pension plan to its employees. Under this plan, employees are entitled to pension benefits based on their latest basic salary or take-home pay (excluding functional allowance) and number of years of their service. PT Asuransi Jiwasraya (“Jiwasraya”), a state-owned life insurance company, manages the plan under an annuity insurance contract. Until 2004, the employees contributed 5% of their monthly salaries to the plan and Telkomsel contributed any remaining amount required to fund the plan. Starting 2005, the entire contributions have been fully made by Telkomsel. Telkomsel’s contributions to Jiwasraya amounted to Rp125 billion and Rp207 billion for the years ended December 31, 2018 and 2019, respectively. The following table presents the changes in projected pension benefit obligation, changes in pension benefit plan assets, funded status of the pension plan and net amount recognized in the consolidated statements of financial position for the years ended December 31, 2018 and 2019, under Telkomsel’s defined benefit pension plan:
|  | 2018 |  | 2019
Changes in projected pension benefit obligation |  |  |  |
Projected pension benefit obligation at beginning of year |  | 2,928 |  | 2,734
Charged to profit or loss: |  |  |  |
Service costs |  | 213 |  | 187
Net Interest costs |  | 203 |  | 224
Actuarial (gain) losses recognized in OCI |  | (583) |  | 614
Benefit paid |  | (27) |  | (21)
Projected pension benefit obligation at end of year |  | 2,734 |  | 3,738
Changes in pension benefit plan assets |  |  |  |
Fair value of plan assets at beginning of year |  | 1,089 |  | 1,193
Interest income |  | 74 |  | 97
Return on plan assets (excluding amount included in net interest expense) |  | (68) |  | 53
Employer’s contributions |  | 125 |  | 207
Benefit paid |  | (27) |  | (21)
Fair value of pension plan assets at end of year |  | 1,193 |  | 1,529
Pension benefit obligation at end of year |  | 1,541 |  | 2,209
Movements of the pension benefit obligation during the years ended December 31, 2018 and 2019:
|  | 2018 |  | 2019
Pension benefit obligation at beginning of year |  | 1,839 |  | 1,541
Periodic pension benefit cost |  | 342 |  | 314
Actuarial (gain) losses recognized in OCI |  | (583) |  | 614
Return on plan assets (excluding amount included in net interest expense) |  | 68 |  | (53)
Employer’s contributions |  | (125) |  | (207)
Pension benefit obligation at end of year |  | 1,541 |  | 2,209
The components of the periodic pension benefit cost for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Service costs |  | 149 |  | 213 |  | 187
Net interest costs |  | 98 |  | 129 |  | 127
Total |  | 247 |  | 342 |  | 314
Amounts recognized in OCI for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Actuarial (gain) losses recognized during the year due to: |  |  |  |  |  |
Experience adjustments |  | (77) |  | 192 |  | 115
Changes in financial assumptions |  | 661 |  | (774) |  | 499
Return on plan assets (excluding amount included in net interest expense) |  | (54) |  | 68 |  | (53)
Net |  | 530 |  | (514) |  | 561
The actuarial valuation for the defined benefit pension plan was performed based on the measurement date as of December 31, 2017, 2018, and 2019, with reports dated February 8, 2018, February 14, 2019, and February 28, 2020 respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary as of December 31, 2017, 2018, and 2019, are as follows:
|  | 2017 |  | 2018 |  | 2019 |
Discount rate |  | 7.00 | % | 8.25 | % | 7.50 | %
Rate of compensation increases |  | 8.00 | % | 8.00 | % | 8.00 | %
Indonesian mortality table |  | 2011 |  | 2011 |  | 2011 |
b. Post-employment health care benefit cost The Company provides post-employment health care benefits to all of its employees hired before November 1, 1995 who have worked for the Company for 20 years or more when they retire, and to their eligible dependents. The requirement to work for 20 years does not apply to employees who retired prior to June 3, 1995. The employees hired by the Company starting from November 1, 1995 are no longer entitled to this plan. The plan is managed by Yayasan Kesehatan Telkom (“Yakes Telkom”). The defined contribution post-employment health care benefit plan is provided to employees with permanent status hired on or after November 1, 1995 or employees with terms of service less than 20 years at the time of retirement. The Company did not make contributions to Yakes Telkom for the years ended December 31, 2018 and 2019. The following table presents the changes in projected post-employment health care benefit obligation, changes in post-employment health care benefit plan assets, funded status of the post-employment health care benefit plan, and net amount recognized in the Company’s consolidated statements of financial position as of December 31, 2018 and 2019:
|  | 2018 |  | 2019
Changes in projected post-employment health care benefit obligation |  |  |  |
Projected post-employment health care benefit obligation at beginning of year |  | 15,448 |  | 12,423
Charged to profit or loss: |  |  |  |
Interest costs |  | 1,102 |  | 1,062
Actuarial (gain) losses recognized in OCI |  | (3,641) |  | 905
Post-employment health care benefits paid |  | (486) |  | (567)
Projected post-employment health care benefit obligation at end of year |  | 12,423 |  | 13,823
Changes in post-employment health care benefit plan assets |  |  |  |
Fair value of plan assets at beginning of year |  | 13,029 |  | 12,228
Interest income |  | 927 |  | 1,045
Return on plan assets (excluding amount included in net interest expense) |  | (1,082) |  | 271
Post-employment health care benefits paid |  | (486) |  | (567)
Plan administration costs |  | (160) |  | (150)
Fair value of pension plan assets at end of year |  | 12,228 |  | 12,827
Projected for post-employment health care benefit obligation - net |  | 195 |  | 996
As of December 31, 2018 and 2019, plan assets consist of:
|  | 2018 |  | 2019
|  | Quoted in |  |  |  | Quoted in |  |
|  | active market |  | Unquoted |  | active market |  | Unquoted
Cash and cash equivalents |  | 1,115 |  | — |  | 563 |  | —
Equity instruments: |  |  |  |  |  |  |  |
Finance industries |  | 799 |  | — |  | 954 |  | —
Manufacturing and consumer |  | 799 |  | — |  | 706 |  | —
Infrastructure and telecommunication |  | 332 |  | — |  | 317 |  | —
Construction |  | 190 |  | — |  | 181 |  | —
Wholesale |  | 177 |  | — |  | 159 |  | —
Mining |  | 77 |  | — |  | 117 |  | —
Other Industries: |  |  |  |  |  |  |  |
Biotechnology and pharma industry |  | 85 |  | — |  | 96 |  | —
Services |  | 60 |  | — |  | 75 |  | —
Agriculture |  | 32 |  | — |  | 49 |  | —
Others |  | 3 |  | — |  | 3 |  | —
Equity-based mutual funds |  | 1,204 |  | — |  | 1,202 |  | —
Fixed income instruments: |  |  |  |  |  |  |  |
Fixed income mutual funds |  | 7,020 |  | — |  | 8,071 |  | —
Unlisted shares: |  |  |  |  |  | — |  | —
Private placement |  | — |  | 335 |  | — |  | 334
Total |  | 11,893 |  | 335 |  | 12,493 |  | 334
Yakes Telkom plan assets also include Series B shares issued by the Company with fair value totalling Rp249 billion and Rp222 billion, representing 2.03% and 1.73% of total plan assets as of December 31, 2018 and 2019, respectively. The expected return is determined based on market expectation for the returns over the entire life of the obligation by considering the portfolio mix of the plan assets. The actual return on plan assets was Rp(315) billion and Rp1,166 billion for the years ended December 31, 2018 and 2019, respectively. The movements of the projected post-employment health care benefit obligation for the years ended December 31, 2018 and 2019 are as follows:
|  | 2018 |  | 2019
Projected post-employment health care benefit obligation at beginning of year |  | 2,419 |  | 195
Net periodic post-employment health care benefit costs |  | 335 |  | 167
Actuarial (gain) losses recognized in OCI |  | (3,641) |  | 905
Return on plan assets (excluding amount included in net interest expense) |  | 1,082 |  | (271)
Projected post-employment health care benefit obligation at end of year |  | 195 |  | 996
The components of net periodic post-employment health care benefit cost for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Plan administration costs |  | 140 |  | 160 |  | 150
Net interest costs |  | 136 |  | 175 |  | 17
Net periodic post-employment health care benefit cost |  | 276 |  | 335 |  | 167
Amounts recognized in OCI for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Actuarial (gain) losses recognized during the year due to: |  |  |  |  |  |
Experience adjustments |  | (1,198) |  | (1,100) |  | 810
Changes in financial assumptions |  | 2,658 |  | (2,541) |  | 1,190
Changes in demographic assumptions |  | — |  | — |  | (1,095)
Return on plan assets (excluding amount included in net interest expense) |  | (909) |  | 1,082 |  | (271)
Net |  | 551 |  | (2,559) |  | 634
The actuarial valuation for the post-employment health care benefits plan was performed based on the measurement date as of December 31, 2017, 2018, and 2019, with reports dated February 27, 2018, April 1, 2019, and April 20, 2020 respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary as of December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019 |
Discount rate |  | 7.25 | % | 8.75 | % | 8.00 | %
Health care costs trend rate assumed for next year |  | 7.00 | % | 7.00 | % | 7.00 | %
Ultimate health care costs trend rate |  | 7.00 | % | 7.00 | % | 7.00 | %
Year that the rate reaches the ultimate trend rate |  | 2018 |  | 2018 |  | 2019 |
Indonesian mortality table |  | 2011 |  | 2011 |  | 2011 |
c. Other post-employment benefits cost The Company provides other post-employment benefits in the form of cash paid to employees on their retirement or termination. These benefits consist of final housing allowance (Biaya Fasilitas Perumahan Terakhir or “BFPT”) and home passage leave (Biaya Perjalanan Pensiun dan Purnabhakti or “BPP”). The movements of the unfunded projected other post-employment benefit obligations for the years ended December 31, 2018 and 2019 are as follows:
|  | 2018 |  | 2019
Projected other post-employment benefit obligations at beginning of year |  | 510 |  | 419
Charged to profit or loss: |  |  |  |
Service costs |  | 6 |  | 4
Net interest costs |  | 26 |  | 29
Actuarial (gain) losses recognized in OCI |  | (24) |  | 15
Benefits paid by employer |  | (99) |  | (101)
Projected other post-employment benefits obligations at the end of year |  | 419 |  | 366
The components of the projected other post-employment benefit cost for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Current Service costs |  | 6 |  | 6 |  | 4
Net interest costs |  | 36 |  | 26 |  | 29
Total |  | 42 |  | 32 |  | 33
Amounts recognized in OCI for the years ended December 31, 2017, 2018, and 2019 are as follows:
|  | 2017 |  | 2018 |  | 2019
Actuarial (gain) losses recognized during the year due to: |  |  |  |  |  |
Experience adjustments |  | 10 |  | 40 |  | (25)
Changes in demographic assumptions |  | — |  | (34) |  | 20
Changes in financial assumptions |  | 30 |  | (30) |  | 20
Total |  | 40 |  | (24) |  | 15
The actuarial valuation for the other post-employment benefits plan was performed based on measurement date as of December 31, 2017, 2018 and 2019, with reports dated February 27, 2018 , April 1, 2019, and April 20, 2020 respectively, by TWP, an independent actuary in association with WTW. The principal actuarial assumptions used by the independent actuary as of December 31, 2017, 2018, and 2019, are as follows:
|  | 2017 |  | 2018 |  | 2019 |
Discount rate |  | 5.75 | % | 8.00 | % | 6.25 | %
Indonesian mortality table |  | 2011 |  | 2011 |  | 2011 |
d. Obligation under the Labor Law Under Law No. 13 Year 2003, the Group is required to provide minimum pension benefits, if not covered yet by the sponsored pension plans, to its employees upon retirement. Total obligation recognized as of December 31, 2018 and 2019 amounted to Rp507 billion and Rp690 billion, respectively. The related employee benefits cost charged to expense amounted to Rp62 billion, Rp113 billion and Rp136 billion for the years ended December 31, 2017, 2018 and 2019, respectively (Note 26). The actuarial losses recognized in OCI amounted to Rp72 billion, Rp(14) billion and Rp107 billion for the years ended December 31, 2017, 2018 and 2019, respectively. e. Maturity Profile of Defined Benefit Obligation (“DBO”) The timing of benefits payments and weighted average duration of DBO for 2018 and 2019 are as follows:
|  | Expected Benefits Payment
|  | The Company |  |  |  |  |  |
|  | Funded |  |  |  |  |  | Post-employment |  | Other post-
|  | Defined pension |  | Additional pension |  |  |  |  |  | health care |  | employment
Time Period |  | benefit obligation |  | benefit obligation |  | Unfunded |  | Telkomsel |  | benefits |  | benefits
December 31, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Within next 10 years |  | 16,370 |  | — |  | 948 |  | 2,498 |  | 5,620 |  | 485
Within 10-20 years |  | 20,349 |  | — |  | 160 |  | 7,880 |  | 6,913 |  | 91
Within 20-30 years |  | 16,207 |  | 20 |  | 29 |  | 6,680 |  | 6,217 |  | 39
Within 30-40 years |  | 9,400 |  | 38 |  | 9 |  | 1,580 |  | 3,193 |  | 3
Within 40-50 years |  | 3,383 |  | 30 |  | — |  | — |  | 661 |  | —
Within 50-60 years |  | 644 |  | 50 |  | — |  | — |  | 22 |  | —
Within 60-70 years |  | 62 |  | 101 |  | — |  | — |  | 0 |  | —
Within 70-80 years |  | 2 |  | — |  | — |  | — |  | — |  | —
Weighted average duration of DBO |  | 9.11 years |  | 9.11 years |  | 3.97 years |  | 10.58 years |  | 17.41 years |  | 3.13 years
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Within next 10 years |  | 18,392 |  | — |  | 1,587 |  | 3,486 |  | 6,064 |  | 418
Within 10-20 years |  | 21,855 |  | — |  | 125 |  | 9,420 |  | 8,001 |  | 68
Within 20-30 years |  | 20,154 |  | — |  | 52 |  | 7,150 |  | 7,501 |  | 38
Within 30-40 years |  | 15,351 |  | — |  | 18 |  | 1,267 |  | 4,123 |  | 3
Within 40-50 years |  | 4,265 |  | — |  | — |  | — |  | 958 |  | —
Within 50-60 years |  | 468 |  | — |  | — |  | — |  | 42 |  | —
Within 60-70 years |  | 32 |  | — |  | — |  | — |  | — |  | —
Within 70-80 years |  | — |  | — |  | — |  | — |  | — |  | —
Weighted average duration of DBO |  | 10.16 years |  | 10.16 years |  | 4.69 years |  | 10.44 years |  | 13.34 years |  | 3.65 years
f. Sensitivity Analysis As of December 31, 2019, and 2018, 1% change in discount rate and rate of compensation would have effect on DBO, as follow:
|  | Discount Rate |  | Rate of Compensation
|  | 1% Increase |  | 1% Decrease |  | 1% Increase |  | 1% Decrease
|  | Increase (decrease) in amounts |  | Increase (decrease) in amounts
Sensitivity |  |  |  |  |  |  |  |
December 31, 2018 |  |  |  |  |  |  |  |
Funded: |  |  |  |  |  |  |  |
Defined pension benefit obligation |  | (1,568) |  | 1,832 |  | 275 |  | (286)
Additional pension benefit obligation |  | (2) |  | (1) |  | — |  | —
Unfunded |  | (41) |  | 38 |  | 42 |  | (45)
Telkomsel |  | (497) |  | 562 |  | 294 |  | (276)
Post-employment health care benefits |  | (1,428) |  | 1,815 |  | 1,783 |  | (1,508)
Other post-employment benefits |  | (12) |  | 13 |  | — |  | —
December 31, 2019 |  |  |  |  |  |  |  |
Funded: |  |  |  |  |  |  |  |
Defined pension benefit obligation |  | (1,952) |  | 2,416 |  | 257 |  | (275)
Additional pension benefit obligation |  | — |  | — |  | — |  | —
Unfunded |  | (40) |  | 33 |  | 34 |  | (43)
Telkomsel |  | (686) |  | 777 |  | 390 |  | (366)
Post-employment health care benefits |  | (1,551) |  | 1,888 |  | 2,030 |  | (1,689)
Other post-employment benefits |  | (12) |  | 13 |  | — |  | —
The sensitivity analysis has been determined based on a method that extrapolates the impact on DBO as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity results above determine the individual impact on the Plan’s DBO at the end of the year. In reality, the Plan is subject to multiple external experience items which may move the DBO in similar or opposite directions, and the Plan’s sensitivity to such changes can vary over time. There are no changes in the methods and assumptions used in preparing the sensitivity analysis from the previous period.

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