17. Defined benefit plans

There are individual contractual pension obligations, individual contractual bridge payments, and pension allowances in accordance with association recommendations.

The calculation of defined benefit obligations is carried out annually using the projected unit credit (PUC) method. If the calculation results in a potential asset, the asset recognised is limited to the present value of any economic benefit available in the form of future refunds from the plan or reductions in future contributions to the plan. Any valid minimum funding requirements are included in the calculation of the present value of the economic benefit.

Revaluations of net liabilities from defined benefit plans are recognised directly in other comprehensive income. The revaluation includes the actuarial gains and losses, the income from plan assets (not including projected interest income) and the effect of any asset ceiling. Net interest expenses (income) on net liabilities (assets) from defined benefit plans are calculated for the reporting period by applying the discount rate. The discount rate was used to measure the defined benefit obligation at the start of the annual reporting period. This discount rate is applied to net liabilities (assets) from defined benefit plans on this date. Any changes in net liabilities (assets) from defined benefit plans resulting from contribution and benefit payments over the course of the reporting period are taken into account. Net interest expenses and other expenses for defined benefit plans are recognised through profit or loss in profit/(loss) for the period.

If a plan’s defined benefits are changed or a plan is curtailed, the resulting change in the benefit relating to past service or the gain or loss on the curtailment is recognised directly in profit/(loss) for the period. Gains and losses from the settlement of a defined benefit plan are recognised at the date of the settlement. The defined benefit obligations are stated under the balance sheet item “Other provisions”.

Pension entitlements

Individuals who hold an individual contractual agreement can generally claim a pension when they reach the age of 60 or 65, subject to certain conditions. The amount of the pension generally depends on the number of their years of service and their last salary before leaving their active employment. In the event of death, the spouse of the individual entitled to the claim receives a pension at 60, 50 or 40 per cent depending on the policy. The pensions are suspended for any period in which a termination benefit is paid and their value is generally guaranteed. The pensions that are based on individual policies or on association recommendations are financed through provisions. The final pension contribution which guarantees a fixed cash value for when the beneficiary begins their retirement is set aside during the contribution phase and transferred to the pension fund at the time of retirement. The financing is specified in the pension fund’s business plan, in the works council agreement and in the pension fund contract.

Termination benefit entitlements

In the case of employees of Austrian companies whose employment began prior to 31 December 2002 and lasted three years without interruption, the employee is entitled to termination benefits when the employment is terminated, unless the employee resigns, leaves without an important reason or is dismissed.

Defined benefit obligations

In € thousand

Defined benefit obli­gations for pensions

Plan assets
at fair value

Net defined benefit obli­gations for pensions

Termi­nation benefits

Total defined benefit
obli­gations

At 1 January 2018

503,814

–84,175

419,639

167,998

587,637

Current service costs

16,466

0

16,466

4,661

21,126

Interest expense/income

7,489

–1,203

6,285

1,378

7,663

Past service costs

–9,267

0

–9,267

0

–9,267

Components of defined benefit obligations recognised in the income statement

14,687

–1,203

13,483

6,038

19,522

 

 

 

 

 

 

Return on plan assets recognised in other comprehensive income

0

6,612

6,612

78

6,689

Actuarial gains and losses that arise from changes in demographic assumptions

24,532

0

24,532

220

24,752

Actuarial gains and losses that arise from changes in financial assumptions

–11,473

0

–11,473

–3,352

–14,825

Actuarial gains and losses that arise from experience adjustments

4,052

0

4,052

–506

3,546

Other comprehensive income

17,110

6,612

23,722

–3,561

20,161

 

 

 

 

 

 

Changes from currency translation

–14

0

–14

0

–14

Payments

–88,160

0

–88,160

–26,659

–114,819

Contribution to plan assets

0

–19,429

–19,429

–135

–19,563

Transfer in

2,446

0

2,446

5

2,452

Transfer out

–9,900

8,093

–1,807

0

–1,807

At 31 December 2018

439,983

–90,102

349,881

143,687

493,568

Defined benefit obligations

In € thousand

Defined benefit obli­gations for pensions

Plan assets
at fair value

Net defined benefit obli­gations for pensions

Termi­nation benefits

Total defined benefit
obli­gations

At 1 January 2017

501,397

–75,612

425,785

173,856

599,641

Current service costs

16,502

0

16,502

6,758

23,259

Interest expense/income

7,969

0

7,969

1,489

9,458

Past service costs

1,559

0

1,559

4

1,563

Components of defined benefit obligations recognised in the income statement

26,030

0

26,030

8,250

34,280

 

 

 

 

 

 

Return on plan assets recognised in other comprehensive income

0

–5,066

–5,066

0

–5,066

Actuarial gains and losses that arise from changes in demographic assumptions

408

0

408

473

882

Actuarial gains and losses that arise from changes in financial assumptions

6,451

0

6,451

–329

6,122

Actuarial gains and losses that arise from experience adjustments

–4,169

0

–4,169

–1,458

–5,627

Other comprehensive income

2,690

–5,066

–2,376

–1,314

–3,690

 

 

 

 

 

 

Changes from currency translation

26

0

26

6

32

Payments

–20,629

0

–20,629

–12,875

–33,504

Contribution to plan assets

0

–7,124

–7,124

0

–7,124

Transfer in

5

0

5

76

80

Transfer out

–5,705

3,627

–2,078

0

–2,078

At 31 December 2017

503,814

–84,175

419,639

167,998

587,637

Expenses for defined benefit obligations attributable to members of the Management Board and executives amounted to €3,259 thousand (2017: €4,123 thousand).

The plan assets for the defined benefit obligations are comprised as follows:

In per cent

31/12/2018

31/12/2017

Listed

Unlisted

Listed

Unlisted

Bonds – euro

13.4

0.0

16.7

0.1

Bonds – euro high yield

0.6

0.0

5.1

0.0

Corporate bonds – euro

20.2

0.0

13.6

0.1

Equities – euro

4.6

0.0

9.6

0.0

Equities – non-euro

4.0

0.0

8.7

0.0

Equities – emerging markets

4.0

0.0

7.9

0.0

Alternative investment instruments

0.5

2.7

1.0

2.1

Land and buildings

0.0

5.2

0.0

4.5

Cash

0.0

42.1

0.0

27.9

HTM bonds/term deposits

2.6

0.0

0.0

2.8

Total

49.9

50.1

62.6

37.4

The measurement of the defined benefit obligations is based on the following actuarial calculation parameters:

Calculation factors applied

 

2018

2017

Discount rate

 

 

Termination benefits

1.2

0.9

Pensions

1.7

1.5

Valorisation of remuneration

3.0

3.0

Valorisation of pensions

2.0

2.0

Employee turnover rate

dependent on years of service

dependent on years of service

Calculation principles

AVÖ 2018 P – salaried  employees

AVÖ 2008 P – Pagler & Pagler/ salaried  employees

Weighted average duration in years

 

Pensions

Termination benefits

31 December 2018

12.9

7.6

31 December 2017

13.5

7.7

Contributions to plan assets are expected for the coming year in the amount of €6,303 thousand.

The essential risks from the benefit plan are limited to the investment risk, the interest rate risk, life expectancy as well as salary risk.

The sensitivity of the defined benefit obligations on changes in the weighted actuarial calculation parameters is:

Sensitivity analysis

 

Pensions

Termination benefits

In per cent

2018

2017

2018

2017

Remaining life expectancy

 

 

 

 

Change in DBO (+ 1 year)

3.4

2.5

 

 

Change in DBO (–1 year)

–3.5

–2.7

 

 

Discount rate

 

 

 

 

Change in DBO (+ 1 percentage point)

–11.3

–11.2

–7.2

–7.4

Change in DBO (–1 percentage point)

13.9

13.8

8.2

8.4

Future salary increase rate

 

 

 

 

Change in DBO (+ 0.75%)

1.5

2.2

5.9

6.0

Change in DBO (–0.75%)

–1.5

–2.1

–5.4

–5.6

Future pension increase rate

 

 

 

 

Change in DBO (+ 0.25%)

3.3

3.3

 

 

Change in DBO (–0.25%)

–3.2

–3.1