Proximidad y atención a la ciudadanía. Participación
A. Articulación de la gestión del Plan 1 Estructura organizativa
Employee benefits can be broken down as follows:
31 December 2014 31 December 2013
Post-employment benefits pensions (chapter 6.17.1) 3,087 2,405 Post-employment benefits other than pensions (chapter 6.17.1) 29 15
Post-employment benefit obligation 3,116 2,420
Other long-term employee benefits (chapter 6.17.2) 7 6
Total 3,123 2,426
ASR Levensverzekering N.V., an insurance company and a group entity, is the insurer of the post- employment benefit plan. As this company holds the separated investments that are meant to cover the employee benefit obligation, they do not qualify as plan assets in accordance with IAS 19 and are therefore included in financial assets.
2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
The costs of post-employment and other long-term employee benefits are as follows:
2014 2013
Post-employment benefits pensions -48 -108
Post-employment benefits other than pensions -18 -1
Total -66 -109
Other long-term employee benefits -1 3
Costs of post-employment benefits -67 -106
The costs relate to all members of the a.s.r. post-employment benefit plan and included the other income as a result of the amendments to the post-employment benefit plans amounting to € 78 million (2013: € 27 million).
6.17.1 Pension and other post-employment benefits
A number of defined benefit post-employment benefit plans for its employees and former employees exist. All employees are formally employed by ASR Nederland N.V. The a.s.r. post-employment benefit plans are based on an average-salary pension. All employees who commenced service after 1 January 2006 are included in one post-employment benefit plan (‘Basic plan’). All other employees remain active within the existing plan at the date of first employment. Previous plans for former employees are also still active. The methods and techniques used to calculate the defined benefit obligations are based on IAS 19 requirements and calculated by an independent actuary.
Changes in 2014
a.s.r. has harmonized the (inflation) indexation in its post-employment benefit plan for both employees and former employees in 2014. This has resulted in the foundation of a separate account to fund future inflation indexation based on the consumer price index, maximized to 3%, by investing € 285 million in a dedicated separate account administrated by ASR Levensverzekering N.V. The sole purpose of the separate account is to provide indexation when the proceeds of the existing investments backing the pension plan are insufficient to meet the indexation.
Furthermore, the following changes will also take place, 1 January 2015, for employees primarily in order to comply with pension and tax legislation:
• the accrual rate for old age pensions was changed to 1.875% (2013: 1.9%); • retirement age changed to 67 years (2013: 65 years or 62 years);
• maximum pensionable salary capped at € 100,000; • minimum franchise has changed.
As a result of the above mentioned amendments a past service cost is accounted for in 2014 amounting to € 78 million which has been recognized in the Other income in 2014 (see chapter 6.26).
Changes in 2013
As of 1 January 2014, the accrual rate for old age pensions was changed to 1.9% (2013: 2.25% or 2.0%). As a result of this amendment a past service cost is accounted for in 2014 amounting to € 27 million which has been recognized in the Other income in 2014 (see chapter 6.26).
The pension contributions are paid by a.s.r. and employees also pay an own contribution of 6% of their pensionable salary.
The benefits under these plans are dependent on factors such as years of service and compensation. Pension obligations are determined using mortality tables, the rate of employee turnover, wage drift and economic assumptions for factors such as inflation, and the discount rate.
The post-employment benefit plans for a.s.r.’s employees have been insured by ASR Levensverzekering N.V. since 2008.
Besides pension benefits, the defined benefits plans include personnel arrangements for financial products (such as mortgages and health insurance), which remain in place after retirement.
2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
The table below shows movements in the defined benefit obligation:
Pension plans Other post-employment benefits 2014 2013 2014 2013
Defined benefit obligation at 1 January 2,405 2,517 15 21
Included in income statement
Current service cost, contributions by employer 34 39 - 1
Interest cost 92 96 - -
Past service cost -78 -27 18 -
Total 48 108 18 1
Remeasurement of liabilities included in OCI
Discount rate change 904 -41 1 -1
Other assumptions change -185 -97 -3 -3
Experience adjustments -13 -14 - -
Total 706 -152 -2 -4
Current service cost, contributions by employee 9 9 - -
Benefits -81 -77 -2 -3
Defined benefit obligation at 31 December 3,087 2,405 29 15
Employees account for 25% (2013: 23%) of the DBO and 38% (2013: 41%) of the DBO relates to former employees currently receiving pension benefits.
The discount rate has decreased by 1.9% point to 2.0% at 31 December 2014 (2013: 3.9%), resulting in an € 904 million increase in the DBO.
The change in other assumptions amounts to € 163 million (2013: € 107 million) due to a change in indexation percentage former employees.
Experience adjustments are actuarial gains and losses that have arisen due to differences between actuarial assumptions. The following table provides information about experience adjustments with respect to qualifying plan assets and the defined benefit obligation:
Pension plans Other post-employment benefits 2014 2013 2014 2013
Experience adjustments to qualifying investments, gain (loss) - - - -
As % of qualifying investments as at 31 December - - - -
Experienced adjustments to defined benefit obligation, loss (gain) 13 14 3 3
2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
The principal actuarial assumptions and parameters at year end were as follows:
Pension plans Other post-employment benefits 2014 2013 2014 2013
Discount rate 2.0% 3.9% 0.7% 2.1%
Expected return on plan assets - - - -
Future salary increases (including price inflation and merit) 1.2% 1.5% 1.2% 1.5%
Future pension increases (including price inflation) 1.5% 1.8% - -
Indexation % employees1 1.2% 0.6% - 0.6%
Indexation % former employees2 1.3% 1.7% - 1.7%
Accrual rate 1.9% 1.9% - -
Mortality (years) 20.5 22.0 - -
Future mortgage interest (in connection with grantable discounts) - - 2.8% 3.5% In the calculation of the defined benefit obligation the:
• discount rate is determined based on the return (zero coupon rate) of high-quality corporate bonds (AA rating) and the duration of the pension obligation;
• most recent mortality table ‘AG Prognosetafel 2014’ is used.
• The period of indexation is based on the expected duration of the separate account to fund the future inflation indexation.
In 2014, the discount rate methodology has changes and is based on the IBoxx € Corporates AA 10+ curve. All other methods used for determining the DBO and assumptions are consistent with those applied in 2013.
The sensitivity of the above actuarial assumptions to feasible possible changes at the reporting date to one of the relevant actuarial assumptions whilst other assumption remain constant, would have affected the defined benefit obligation by the amounts shown below:
Pension plans Other post-employment benefits Increase Decrease Increase Decrease
Discount rate (1% movement) -520 690 -3 3
Indexation employees (1% movement) 20 -10 - -
Indexation former employees (1% movement) 465 -334 - -
Future salary growth (1% movement) 4 -4 - -
Future pension growth (1% movement) 471 -363 - -
Future mortality (1 year movement) -117 115 - -
The portfolio of global investments (non-qualifying assets) held by ASR Levensverzekering N.V. to cover the employee benefit expense can be broken down as follows:
Asset category 31 December 2014 31 December 2013
Equities 14% 15%
Fixed-interest securities 80% 79%
Real estate 5% 5%
Cash 1% 1%
The non-qualifying assets managed by a group company are not taken into account in measuring the net defined benefit obligation. At year-end 2014, the fair value of these assets amounted to € 2,409 million (2013: € 1,915 million), which includes the separate account to fund future inflation indexation amounting to € 292 million (31 December 2013: nil).
1 For 2014 after 10 years 0.0% 2 For 2014 after 10 years partially 0.0%
2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
For the non-qualifying assets backing the post-employment benefit plans, a.s.r. has drawn up general guidelines for asset mix based on criteria such as geographical location and ratings. To ensure the investment guidelines remains in line with the conditions of post-employment benefit obligations, a.s.r. regularly performs Asset Liability Management (ALM) studies. Transactions in the non-qualifying assets are done within the guidelines. As the post-employment benefit plans are a liability on group level, the underlying insurance and market risks are in scope of a.s.r.’s risk policies. (see chapter 6.3). The overall interest-rate risk of the group is managed using interest-rate swaps and swaptions (see chapter 6.3.4.1). These swaps and swaptions have not been allocated directly to the post-employment benefit obligations; neither are they included as part of the fair value of the non-qualifying assets managed by the group company.
Under IFRS, assets managed by insurance companies that form part of the group do not qualify as qualifying assets. Investment income from these assets has therefore not been included in the above figures. Actual investment returns for 2014 amounted to € 101 million (2013: € 100 million). These returns have been recognized in investment income (chapter 6.24).
As an employer, a.s.r. is expected to pay contributions for pension plans and other post-employment benefits in the coming financial year amounting to € 103 million (excluding the positive effect of the investment income) and € 0.2 million respectively.
As 31 December 2014 the duration of the defined benefit obligation was 19 years (2013: 17 years).
6.17.2 Other long-term employee benefits
Other long-term employee benefits consist of the employer’s share of liabilities arising from long- service benefits. The table below shows the changes in these liabilities
31 December 2014 31 December 2013
Net liability as at 1 January 6 10
Total expenses 1 -3
Other - -1
Net liability as at 31 December 7 6
The underlying assumptions are as follows:
Actuarial year-end assumptions 31 December 2014 31 December 2013
Discount rate 0.7% 2.4%
Salary increases 1.2% 1.5%
Expected remaining service years 8.9 8.7
6.18 Provisions
The table below shows movements in provisions:
31 December 2014 31 December 2013
At 1 January 36 31
Additional foreseen amounts 48 45
Reversal of unused amounts -4 -
Usages in course of year -41 -40
Other changes -1 -
2014 annual report 2014 consolidated financial statements ASR Nederland N.V.
The provisions were created for: • tax and legal issues; • staff restructuring expenses;
• retention of disability risk instead of insuring it with UWV (Employed Persons Insurance Administration Agency).
The provision for legal issues is based on best estimates available at year end, making allowance for expert legal opinions.
The timing of the outflow of resources related to these provisions is uncertain because of the unpredictability of the outcome and the time required for the settlement of disputes.
The provisions for staff restructuring are based on arrangements agreed in the Collective Bargaining Agreement, restructuring plans, and on decisions made by a.s.r.’s management.
An amount of € 18 million of the provisions falls due within one year (2013: € 15 million).
6.19 Borrowings
As at year-end 2014, borrowings comprised loans having the following terms to maturity:
31 December 2014 31 December 2013
Falling due within 1 year 27 50
Falling due between 1 and 5 years 65 21
Falling due after 5 years 25 27
Total borrowings 117 98
At year-end 2014, the fair value of borrowings was € 117 million (2013: € 98 million). See chapter 6.6.2. The average interest-rate payable on other borrowings was 2.60 % (2013: 3.30%).
These borrowings are used for investment purposes (property, group pension contracts), for balance sheet management, and for short-term cash flow management.