Net Defined Benefit Liabilities (Assets)

12 Months Ended

Dec. 31, 2023

Net Defined Benefit Liabilities (Assets)

17.	Net Defined Benefit Liabilities (Assets)

(1)

The amounts recognized in the statements of financial position as of December 31, 2022 and 2023, are determined as follows:


(in millions of Korean won)	December 31, 2022			December 31, 2023
Present value of defined benefit obligations	￦	2,218,655		￦	2,365,793
Fair value of plan assets		(2,478,143	)		(2,462,925	)

Liabilities	￦	51,654		￦	63,616

Assets	￦	311,142		￦	160,748

(2)

Changes in the defined benefit obligations for the years ended December 31, 2022 and 2023, are as follows:


(in millions of Korean won)	2022			2023
Beginning	￦	2,494,930		￦	2,218,655
Current service cost		238,068			213,489
Interest expense		59,041			103,874
Benefit paid		(316,047	)		(358,298	)
Changes due to settlements of plan & Past Service Cost		(701	)		1
Remeasurements:
Actuarial gains ( losses ) arising from changes in demographic assumptions		(13,048	)		1,903
Actuarial gains ( losses ) arising from changes in financial assumptions		(323,501	)		138,462
Actuarial gains arising from experience adjustments		80,845			48,174
Acquisition and disposition of businesses, etc.		(932	)		(467	)

Ending	￦	2,218,655		￦	2,365,793

(3)

Changes in the fair value of plan assets for the years ended December 31, 2022 and 2023, are as follows:


(in millions of Korean won)	2022			2023
Beginning	￦	2,314,632		￦	2,478,143
Interest income		55,902			121,336
Remeasurements:
Return on plan assets (excluding amounts included in interest income)		(8,542	)		9,410
Benefits paid		(287,419	)		(307,762	)
Employer contributions		401,358			165,128
Acquisition and disposition of businesses, etc.		2,212			(3,330	)

Ending	￦	2,478,143		￦	2,462,925

(4)

Amounts recognized in the consolidated statements of profit or loss for the years ended December 31, 2021, 2022 and 2023, are as follows:


(in millions of Korean won)	2021			2022			2023
Current service cost	￦	249,125		￦	238,068		￦	213,922
Net Interest cost		5,047			3,139			(17,462	)
Changes due to settlements of plan & Past Service Cost		(681	)		(701	)		1
Transfer out		(16,660	)		(15,102	)		(13,435	)

Total expenses	￦	236,831		￦	225,404		￦	183,026

(5)

Principal actuarial assumptions used are as follows:

December 31,
2021

December 31,
2022

December 31,
2023

Discount rate

2.1%~3.70%

2.4%~6.29%

3.67%~5.51%

Salary growth rate

1%~6.97%

1.82%~8.9%

1.7%~8.96%

(6)

The sensitivity of the defined benefit obligations as of December 31, 2023, to changes in the principal assumptions is:


(In percentage, in millions of Korean won )	Effect on defined benefit obligation
	Changes in assumption	Increase in assumption		Decrease in assumption
Discount rate	0.5% point		￦ (139,461)	￦	150,568
Salary growth rate	0.5% point		145,687		(135,431	)

A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

The above sensitivity analysis is based on 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. The sensitivity of the defined benefit obligation to changes in principal actuarial assumptions is calculated using the projected unit credit method, the same method applied when calculating the defined benefit obligations recognized on the statement of financial position.

(7)

Effect of defined benefit plan on future cash flows

The Group actively monitors how the duration and the expected yield of the investments match the expected cash outflows arising from the pension obligations. Expected contributions to post-employment benefit plans for the year ending December 31, 2023, are

￦

273,503 million.

The expected maturity analysis of undiscounted pension benefits as

f December 31, 2023, is as follows:

(in millions of Korean won)

Less than

1 year

Between 1-
2 years

Between 2-
5 years

Over 5 years

Total

Pension benefits

￦

257,315

￦

376,352

￦

910,076

￦

2,013,167

￦

3,556,910

The weighted average duration of the defined benefit obligations is 6.2 years.