In accordance with labor legislation in the countries in which Grupo Aval operates, and based on labor conventions and collective bargaining agreements signed between Grupo Aval’s subsidiaries and their employees, employees have short term benefits (including but not limited to salaries, holidays, legal and extralegal premiums, interests on severances and defined contribution plans such as severances), long-term benefits (including but not limited to seniority bonuses), post-employment benefits (including but not limited to medical aids) and retirement benefits (including but not limited to severance payments to employees in Colombia who continue with labor regime before Law 50 of 1990 and legal and extralegal retirement pensions). Compensation of key management personnel (see note 34) includes salaries.

Through personnel benefits plans, Grupo Aval is exposed to several risks (interest rates), which are intended to be minimized by applying the risk management policies and procedures defined under Note 4.

The detail of the balance of liabilities for employee benefits as of December 31, 2021, and 2020 is as follows:

In Colombia, when employees retire after completing certain thresholds of years and time of service, retirement pensions are assumed by public or private pension funds based on defined contribution plans,. Entities and employees contribute monthly defined amounts by law to gain entitlement to a pension at the time of retirement.

Unlike in Central America, in Colombia according to prior labor regimes, post-employment benefits for employees hired before (i) 1968 require pensions to be directly assumed the company for those employees that have fulfilled the requirements of age and years of service and (ii) 1990 entitle employees to receive a compensation equivalent to the last month of salary multiplied by each year of service.

Some subsidiaries have labor conventions or pay extra-legal premiums to employees retiring in compliance with the required age and time of service, when they start enjoying the pension granted by the pension funds.

Some retirees of Grupo Aval and its subsidiaries receive benefits including coverage of medical treatments.

As of December 31, 2021 and 2020, the post-employment benefit expense is composed of:

Some Grupo Aval subsidiaries grant their employees extra-legal long-term premiums during their working lives per every five years of service that they complete, calculated as days of salary per year of work.

Grupo Aval has recognized the liabilities corresponding to these benefits, based on the same actuarial calculations and using the same parameters as in retirement benefits.

The following table shows the Post-employment and long-term benefits movements during the years ended on December 31, 2021, 2020 and 2019 are as follows:

(1)	Includes recognition of the business combination on Multi Financial Group, Inc., (see note 35).

(2)

The variation includes the effect of a change in a long-term institutional benefit plan for the year 2021 at Banco de Occidente and Fiduciaria de Occidente, for the year 2020 at Porvenir and Fiduciaria Bogota and for the year 2019 at Banco de Bogotá, which went from being a defined benefit plan to a defined contribution plan, through which the bank makes monthly contributions into a fund created for each employee.

The assumptions used to calculate the obligation projected for different post-employment benefits employees are as follows:


	December 31,		December 31,
Post-employment benefits *	2021		2020
Discount interest rate	7.15	%	5.78	%
Inflation rate	2.91	%	2.94	%
Salary growth rate	3.06	%	3.25	%
Pension growth rate	3.03	%	3.03	%

^{* Entities in Colombia and subsidiaries abroad participate.}


	December 31,		December 31,
Long-term benefits *	2021		2020
Discount interest rate	7.20	%	4.78	%
Inflation rate	3.00	%	3.00	%
Salary growth rate	3.40	%	4.00	%

^{* Only entities from Colombia participate.}

Employee turnover is calculated based on the experience of each entity. For those entities where a sufficiently long statistic history is not yet available to support the actuarial bases, the SoA2003 table is used as a reference. With this table, the probability of permanence of personnel in the entity is established, modified according to the population factor of each benefit. Employee´s life expectancy is calculated based on the mortality tables RV08 (Colombia) and GA83 (Central America).

The sensitivity analysis for post-employment and long-term benefits liabilities due to defined benefits plans to different actuarial and financial variables is shown below, maintaining other variables at constant values (increase or decrease 50 basis points):

-0.50 basic points

+0.50 basic points

At December 31, 2021

Post-employment
benefits

Long-term
benefits

Post-employment
benefits

Long-term
benefits

Discount interest rate

Ps.

17,436

Ps.

3,258

Ps.

(16,970)

Ps.

(3,073)

Salaries growth rate

(5,898)

(3,752)

5,513

3,946

Retirement growth rate

(13,832)

N/A

13,967

N/A

-0.50 basic points

+0.50 basic points

At December 31, 2020

Post-employment
benefits

Long-term
benefits

Post-Employment
Benefits

Long-Term
Benefits

Discount interest rate

Ps.

23,540

Ps.

5,068

Ps.

(22,724)

Ps.

(4,787)

Salaries growth rate

(5,286)

(5,444)

5,596

5,718

Retirement growth rate

(15,429)

N/A

16,475

N/A

Future benefit payments projected, reflecting services, as the case may be, are expected to be paid as follows:


		Payments for post-		Payments for long-
Year		Employment benefits		term benefits
2022	Ps.	70,504	Ps.	20,986
2023		62,396		19,604
2024		61,762		24,039
2025		62,107		23,745
2026		63,917		19,247
Years 2027 – 2031		325,705		97,157