22. Employee benefits

The amount of actuarial provisions recognised in the financial statements results from the valuation prepared by an independent actuary.

The actuary made the following assumptions as at the reporting date to calculate the amount of the obligations:

	As at December 31, 2019	As at December 31, 2018
Expected inflation rate (%)	2.85 in 2020, 2.58 in 2021, 2.5 in 2022 and in subsequent years	2.3 in 2019, 2.5 in 2020, and in subsequent years
Discount rate (%)	2.0	3.0
Expected salary growth rate (%)	2.1 – 5.0	2.1 – 4.46
Employee turnover ratio (%)	0.2 – 12.5	0.0 – 8.4
Expected medical care costs growth rate (%)	0.0 – 2.5	0.0 – 1.8
Expected Social Fund (ZFŚS) contribution growth rate (%)	4.0 – 13.0	3.6

The employee attrition probability is based on the historical data on employee turnover at the Group and statistical data on employee attrition in the industry.
The mortality and life expectancy ratios are based on the Life Expectancy Tables of Poland , published by the Polish Central Statistics Office (GUS), and assume that the Group’s employee population is representative of the average Polish population in terms of mortality.
It was assumed that employees would retire in accordance with the statutory procedure, as prescribed by the Pensions Act, with the exception of employees who meet the conditions for early retirement entitlement.
The discount rate on future benefits was assumed at 2.0% (December 31, 2018: 3.0%), i.e. at the level of the yield on long-term Treasury bonds listed on the Polish capital market.

The carrying amount of provisions for post-employment benefits and length-of-service awards:

	As at December 31, 2019		As at December 31, 2018
	Non-current	Current	Non-current	Current
Retirement, pension and death benefits	553	107	498	90
Coal allowance	139	9	131	9
Energy tariff	806	26	702	25
Company Social Benefits Fund	428	14	316	14
Medical benefits	64	3	58	2
TOTAL POST-EMPLOYMENT BENEFITS	1,990	159	1,705	140
Length-of-service awards	806	111	755	105
TOTAL ACTUARIAL PROVISIONS	2,796	270	2,460	245

Changes in provisions for employee benefits

xls

	Retirement, pension and death benefits	Coal allowance	Energy tariff	Company Social Benefits Fund	Medical benefits	Length-of-service awards	Total
AS AT JANUARY 1, 2019	588	140	727	330	605	860	2,705
Actuarial gains and losses	14	–	(37)	50	(1)	39	65
Discount rate adjustment	49	12	116	57	2	60	300
Current service costs	30	2	20	10	–	46	110
Past service costs	–	(1)	7	(1)	2	–	5
Interest cost	18	4	22	9	2	26	81
Benefits paid / Provisions used	(39)	(9)	(23)	(13)	(2)	(114)	(200)
AS AT DECEMBER 31, 2019	660	148	832	442	67	917	3,066
Change recognised in operating expenses	(30)	(1)	(27)	(9)	(2)	(145)	(214)
Change recognised in finance income/(costs)	(18)	(4)	(22)	(9)	(2)	(26)	(81)
Change recognised in other comprehensive income	(63)	(12)	(79)	(107)	(5)	–	(266)

	Retirement, pension and death benefits	Coal allowance	Energy tariff	Company Social Benefits Fund	Medical benefits	Length-of-service awards	Total
AS AT JANUARY 1, 2018	522	147	648	322	65	825	2,529
Actuarial gains and losses	40	(11)	37	32	9	50	179
Discount rate adjustment	17	5	39	16	2	21	100
Current service costs	26	1	17	7	1	42	94
Past service costs	(4)	(21)	(12)	(48)	(16)	(4)	(105)
Interest cost	18	5	22	11	2	28	86
Benefits paid / Provisions used	(33)	(8)	(24)	(10)	(3)	(103)	(181)
Purchase of new subsidiaries	–	–	–	–	–	1	1
Other changes	2	–	–	–	–	–	2
AS AT DECEMBER 31, 2018	588	140	727	330	60	860	2,705
Change recognised in operating expenses	(23)	20	(5)	41	15	(109)	(61)
Change recognised in other finance income/(costs)	(18)	(5)	(22)	(11)	(2)	(28)	(86)
Change recognised in other comprehensive income	(56)	(16)	(76)	(48)	(11)	–	(207)

Analysis of sensitivity of actuarial provisions to changes in key assumptions as at December 31, 2019

	Carrying amount	Discount rate		Expected average growth rate of the basis of calculation
		-1 p.p.	+ 1 p.p.	-1 p.p.	+ 1 p.p.
Retirement, pension and death benefits	660	56	(48)	(49)	55
Coal allowance	148	9	(17)	(17)	9
Energy tariff	832	149	(108)	(110)	149
Company Social Benefits Fund	442	71	(56)	(57)	70
Medical benefits	67	8	(7)	(7)	8
Length-of-service awards	917	66	(58)	(59)	65
TOTAL	3,066	359	(294)	(299)	356

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