You are here

Print page

21. Employee benefit obligations

 31 December 201631 December 2015
 LiabilitiesAssetsNetLiabilitiesAssetsNet
Severance pay provision340-340360-360
Defined-benefit plans338367(29)38835137
Defined contribution plans24-2425-25
 702367335773351422

The net liabilities for defined-benefit retirement plans are broken down below:

 31 December 201631 December 2015
GBP area(168)(114)
Euro area65
USD area114124
Other1922
 (29)37

Below is a breakdown of defined-benefit plans and statistical information regarding the excess (deficit) of the plans:

 31 December 201631 December 2015
Present value of obligations(2,802)(2,613)
Fair value of plan assets2,8312,576
Plan deficit29(37)
of which, related to:  
- net liabilities(338)(388)
- net assets367351

Changes in the defined-benefit plans are shown below:

31 December 2016

Present value of obligationsFair value of plan assetsNet liability defined benefit plans
Opening balance2,6132,57637
Transportation Liabilities  -
Costs of benefits paid57 57
Net interest expense86851
Remeasurement561623(62)
- Actuarial losses (gains) through equity - demographic assumption(15) (15)
- Actuarial losses (gains) through equity - financial assumptions600 600
- Actuarial losses (gains) through equity resulting from adjustments based on the experience(23)10(33)
- Expected return on plan assets (no interest)(1)613(614)
Curtailments(122)(106)(16)
Contributions paid 68(68)
Contributions from other plan participants1313-
Exchange rate differences(344)(367)23
Benefits paid(62)(61)(1)
Other changes  -
Closing balance2,8022,831(29)
of which, related to:   
- net liabilities2,1041,766338
- net assets6981,065(367)

31 December 2015

Present value of obligationsFair value of plan assetsNet liability defined benefit plans
Opening balance2,4922,43161
Transportation Liabilities(15) (15)
Costs of benefits paid30-30
Net interest expense95941
Remeasurement(31)(78)47
- Actuarial losses (gains) through equity - demographic assumption(2)-(2)
- Actuarial losses (gains) through equity - financial assumptions(34)-(34)
- Actuarial losses (gains) through equity resulting from adjustments based on the experience5 5
Expected return on plan assets (no interest)-(78)78
Curtailments(68)(57)(11)
Increase for business combination---
Contributions paid 78(78)
Contributions from other plan participants1616-
Exchange rate differences1641604
Benefits paid(70)(68)(2)
Other changes  -
Closing balance2,6132,57637
of which, related to:   
- net liabilities2,0451,657388
- net assets568919(351)

The amount recognised in the income statement for defined-benefit plans (including severance pay) was calculated as follows:

 20162015
Current service costs5878
Past service costs-(47)
Curtailments and settlements(16)(11)
Costs booked as “personnel expenses ”4220
   
Net interest expense56
Costs booked as “financial expenses ”56
   
 4726

Changes in severance pay provision are shown below:

 31 December 201631 December 2015
Opening balance360437
Transportation Liabilities (35)
Costs of benefits paid11
Net interest expense45
Remeasurement8(12)
Actuarial losses (gains) through equity - demographic assumption -
Actuarial losses (gains) through equity - financial assumptions8(12)
Actuarial losses (gains) through equity resulting from adjustments based on the experience  
Benefits paid(32)(39)
Other changes(1)3
Closing balance340360

The main actuarial assumptions used in the valuation of defined-benefit plans and of the portion of severance pay provision that has maintained the nature of defined-benefit plan are as follows:

 Severance pay provisionDefined-benefit plans
 31 December 201631 December 201531 December 201631 December 2015
Discount rate (annual)1.1%1.5%2,7%-3,2%3,4%-4,1%
Rate of salary increasen.a.n.a.3.55%-4.3%3.5%-4.1%
Inflation rate1.5%1.6%2,2%-5%2,1%-4,9%

The discount rate utilised to discount the defined benefits plans is determined with reference to expected returns of the AA-rated bonds.

The sensitivity analysis for each significant actuarial assumption, which shows the effects on bonds in absolute value, is as follows:

 Severance pay provisionDefined-benefit plans
 31 December 201631 December 201531 December 201631 December 2015
 -0.25%+0.25%-0.25%+0.25%-0.25%+0.25%-0.25%+0.25%
Discount rate (annual)6(6)7(7)109(109)125(122)
Inflation rate(3)3(5)5(79)79(76)77

The average duration of the severance pay is 10 years while that of the other defined-benefit plans is 19 years.

The estimate of the contributions to be paid in 2017 related to defined-benefit plans is about €mil. 75.

As regards the strategies of correlation of assets and liabilities in defined-benefit plans, there is the prevalence of investing in diversified assets in order to limit the negative impact, if any, on the total return on the plan assets. In particular, there is the tendency to invest in bonds and investment funds.

Assets of defined-benefit plans include:

 31 December 201631 December 2015
Cash and cash equivalents11867
Shares483570
Debt instrument1,115923
Real properties3034
Derivatives67118
Investment funds1,018864
 2,8312,576