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21. Employee benefit obligations

 31 December 201631 December 2015
Severance pay provision3263
Defined contribution plans20-

The entire amount of the costs related to employee benefit obligations, equal to €mil.3 (0 in 2015) was recognised under financial expenses.

 31 December 201631 December 2015
Opening balance34
Costs of benefits paid- -
Net interest expense4-
  - Actuarial losses/(gains) through equity - financial assumptions 8-
Effect from mergers/demergers358-
Benefits paid(27)(1)
Closing balance3463

The severance pay provision, amounting to €mil. 346, increased as a result of the new company’s structure. It should be noted that the portion of cost for the year relating to amounts transferred to pension funds or to a treasury fund managed by INPS is recognised according to the rules for defined-contribution plans, without any actuarial assessment.

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

 31 December 201631 December 2015
Discount rate (annual)0.9%1.4%
Inflation rate1.5%1.8%

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

 (€ thousands)31 December 201631 December 2015
Discount rate (annual)6(6)--
Inflation rate(3)3--

The average duration of the severance pay is 9 years.