Lendlease Annual Report 2024

154 Lendlease Annual Report 2024 Notes to Consolidated Financial Statements continued The plan assets can be categorised as Level 1, where the fair value is determined using an unadjusted quoted price for an identical asset, or Level 2, where the fair value is derived either directly or indirectly from observable inputs, or Level 3, where inputs are unobservable (i.e. for which market data is unavailable). At year end, $8 million (June 2023: $nil), $76 million (June 2023: $966 million) and $804 million (June 2023: $nil) of total plan assets were categorised as Level 1, Level 2 and Level 3, respectively. Level 3 assets include the buy-in asset, the value of which has been calculated as the present value of the related obligations covered by the policy and represents about 90% of the total plan assets. June 2024 June 2023 vi. Principal Actuarial Assumptions Discount rate (%) 5.1 5.2 RPI inflation (%) 3.5 3.6 Average pension increase in payments (%) 2.6 3.1 Future mortality (years): Male 24.9 25.5 Female 26.4 26.8 The liabilities are calculated using a discount rate set with reference to corporate bond yields. A decrease in corporate bond yields will increase the value placed on the Scheme’s liabilities. However, this will be largely matched by an increase in the value of the Scheme’s buy-in asset. Similarly, most of the Scheme’s benefit obligations are linked to inflation and higher inflation will lead to higher liabilities, matched by an increase in the buy-in asset value. The majority of the Scheme’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the liabilities which would again be matched by an increase in the buy-in asset. The mortality assumptions are based on standard mortality tables which allow for expected future mortality improvements. The assumption is that a member aged 63 will live for a further 24.9 years (June 2023: 25.5 years) if they are male and 26.4 years if they are female (June 2023: 26.8 years). At 30 June 2024, the weighted average duration of the defined benefit obligation was 13 years (June 2023: 14 years). vii. Sensitivity Analysis Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligations by the amounts shown below: 0.1% Increase in Discount Rate $m 0.1% Decrease in Discount Rate $m 0.1% Increase RPI Inflation and Pension Payment $m 0.1% Decrease RPI Inflation and Pension Payment $m 1 Year Increase in Future Mortality $m 1 Year Decrease in Future Mortality $m June 2024 Defined benefit obligations (10) 10 6 (8) 23 (23) June 2023 Defined benefit obligations (11) 12 7 (7) 27 (22) The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. As noted above, there would be a corresponding change in value of the buy-in asset and therefore little change in the overall net defined benefit plan asset. Non pensioner benefits are linked to RPI in the period up to retirement. Once in payment, pension increases are linked to RPI but with a zero per cent floor and different caps applying to different periods of pensionable service. The inflation sensitivity reflects a change in RPI inflation and the associated increases in payment. 35. Employee Benefits Detailed information regarding the Group’s Executive Reward strategy is provided in the Remuneration Report within the Directors’ Report. The key incentive plans are as follows: • Short Term Incentive (STI) • Short Term Award (STA) • Long Term Incentive (LTI) • Long Term Award (LTA) • Restricted Securities Award (RSA) • Google Development Ventures (GDV) Incentive. Section F. Other Notes continued 34. Defined Benefit Plan continued