20 | pension-related liabilities

The group contributes to a number of defined benefit pension schemes which provide for pensions for employees when they leave the company or reach the age of retirement. These schemes apply to a limited part of the workforce. Defined contribution schemes and/or retirement provisions apply to the other employees in accordance with applicable regulations.

The insured fully-financed obligations have a limited contractual term. The main contract expired on 31 December 2015 and is disclosed below. The only risk remaining pertains to value transfers.

20.1. Movement in pension liabilities and investments

PENSION-RELATED LIABILITIES

2015

2014

Present value of fully financed obligations

18,532

222,746

Minus: fair value of plan assets

17,996

-220,390

Net liability of fully financed obligations

536

2,356

Present value of non-fully financed obligations

3,482

3,572

NET LIABILITY

4,018

5,928

The following schemes applied at end-2015.

  • In France a scheme was qualified as a defined benefit pension scheme with limited payment entitlement after termination of the employment contract. A provision for this has been taken for € 3,482
  • The pension schemes set up in Belgium as defined contribution pension schemes qualify as defined benefit pension schemes. The Supplementary Pensions Act (Wet Aanvullende Pensioenen) requires employers to guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions over the entire term of the contract. In the past the pension schemes were not recognised as such because results achieved in the past exceeded the minimum return required. The ongoing low interest rates achievable on European financial markets increase the risk for employers. As from 2014 this pension scheme has been recognised in liabilities and investments for an amount of € 3,368. The provision amounted to € 0 at the end of 2015.
  • In Germany a frozen scheme was qualified as a defined benefit pension scheme for an amount of € 372.
  • In the Netherlands a pension scheme is qualified as a defined benefit pension scheme carrying solely the risks of indexation costs and value transfers. A provision of € 164 has been taken for these indexation costs; the risk of value transfers is assumed to be € 0.


LIABILITIES

PLAN ASSETS

TOTAL BALANCE

TOTAL CHANGE INCOME STATEMENT

TOTAL CHANGE COMPREHENSIVE INCOME

Balance as at 1 January 2014

169,388

-163,187

6,201

Service costs

1,502

85

1,587

1,587

Interest expenses

5,673

-5,387

286

286

Adjustment relating to restructuring and change to scheme

-997

-

-997

-997

Remeasurement:

- Return on investments, excluding interest expenses

-

-49,509

-49,509

-49,509

- Actuarial gains/losses as a result of changes in financial assumptions

44,939

-

44,939

44,939

- Actuarial gains/losses as a result of changes in demographic assumptions

846

-

846

846

- Actuarial gains/losses as a result of experiences

4,170

-

4,170

4,170

49,955

-49,509

446

446

Employers' contribution

-

-1,595

-1,595

Participants' contribution

51

-51

-

Benefits paid

-2,622

2,622

-

Initial recognition

3,368

-3,368

-

Balance as at 31 December 2014

226,318

-220,390

5,928

876

446

Balance as at 1 January 2015

226,318

-220,390

5,928

Service costs

2,200

80

2,280

2,280

Interest expenses

5,009

-4,879

130

130

Adjustment relating to change to scheme

-1,876

-

-1,876

-1,876

Remeasurement:

- Return on investments, excluding interest expenses

-

8,701

8,701

8,701

- Actuarial gains/losses as a result of changes in financial assumptions

-9,215

-

-9,215

-9,215

- Actuarial gains/losses as a result of experiences

56

-

56

56

-9,159

8,701

-458

-458

Employers' contribution

-

-1,986

-1,986

Participants' contribution

40

-40

-

Benefits paid

-2,795

2,795

-

Last recognition due to scheme change

-197,723

197,723

-

BALANCE AS AT 31 DECEMBER 2015

22,014

-17,996

4,018

534

-458

The adjustment relating to change to scheme in 2015 relates to the termination of the main Dutch scheme as from 31 December 2015. The participants are transferring to a defined contribution scheme. The only risk remaining pertains to value transfers, which is assumed to be € 0. Therefore the liabilities and plan assets of this pension scheme are no longer included in the above overviews. The adjustment relating to restructuring and change to scheme in 2014 mainly pertains to an adaptation of the Dutch scheme to legislation as from 1 January 2015.
The costs of € 534 (2014: € 876) are included in the income statement as personnel expenses.
Actuarial gains/losses of € -458 (2014: € 446), € -411 (2014: € 566) net of income tax, are recognised in comprehensive income.

20.2. Principal actuarial assumptions

Because the commitments of the pension insurer are virtually the same with respect to the amount and term as the payment commitments ensuing from the defined benefit pension plan, fair value of the investments is defined as the present value of the relevant commitment as set out in IAS 19.115. This accounting policy is known as the ‘fair value principle’ and both methods fit in this principle.

The principal actuarial assumptions at the balance sheet date expressed as a margin spread are as disclosed below:

2015

2014

Discount rate as at 31 December

2.0%-2.5%

1.65%-2.5%

Expected return on assets as at 31 December

2.0%-2.5%

1.65%-2.5%

Future salary increases

0.6%-4.0%

0.6%-4.0%

Future pension increases

0.5%-1.0%

0.5%-1.0%

Future inflation

1.75%-2.0%

1.75%-2.0%

Calculations of the mortality rate at year-end 2015 for the Netherlands are based on the AG prognosis tables 2014 (-1/-1) (2014: AG 2014 (-1/-1)) and calculations for France are based on INSEE 2011-2013 (2014: 2010-2012).

The size and remaining risks of the liabilities outstanding at the balance sheet date is limited, accordingly the explanation below is also limited.

The employers’ contribution is estimated at € 200 in 2016.

The sensitivity of the present value at year end of the fully-financed obligations to the main assumptions applied is as disclosed below:

2015

CHANGE IN ASSUMPTION

IMPACT OF INCREASE OF ASSUMPTION

IMPACT OF DECREASE OF ASSUMPTION

Discount rate

0.5%

-8%

+9%

2014

CHANGE IN ASSUMPTION

IMPACT OF INCREASE OF ASSUMPTION

IMPACT OF DECREASE OF ASSUMPTION

Discount rate

0.5%

-10%

+11%

Future salary increases

0.5%

0%

0%

Future pension increases

0.5%

+11%

-10%

Life expectancy

1 year

+3%

-3%

The sensitivity of the liabilities and plan assets is calculated in the event of a change in the respective assumption whereby the other assumptions remain unchanged. The method of sensitivity analysis of the discount rate was the same as in the previous year.