NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

For the Year Ended 31 December 2021

9. PROVISIONS

Recognition and measurement

The valuation of the mortality fund liability was performed by Professional Financial Solutions Pty Ltd as at 31 December 2020. The Fund’s liability is calculated for the death benefit of an average of 15 years discounted at 2%. The Fund is a closed fund. Per the charter, a valuation is required every 5 years. The current portion of the liability relates to estimated payouts within 12 months from the balance date.

Significant judgements

i. Mortality fund provision

A mortality fund provision is recognised based on the estimated future cash outflows to members of the mortality fund. The provision is based on the maximum amount payable on the death of a member. The maximum amount payable is determined by the company’s constitution. In determining the present value of the liability estimates are used to determine investment returns, estimates of mortality rates and lapse rates.