Post‑employment benefits are paid under defined contribution and defined benefit plans. The Group’s only obligation under defined contribution plans is to pay fixed contributions into the funding vehicle. The payments are recognised when incurred in the income statement. Defined benefit plans are mainly in the United Kingdom, Switzerland, Germany and in the United States of America.
The specific characteristics (benefit formulas, funding policies and types of assets held) of the plans vary according to the regulations and laws in the country where the employees are located.
For most plans, the split of defined benefit obligations between continuing and discontinued activities is based on the proportion of beneficiaries which belong to the current Thermal Power, Renewable Power and Grid activities out of the total population.
In the United Kingdom, there are three defined benefit pension plans covering different populations.
The largest plan, which accounts for 89% of the defined benefit obligations in the country, is part of the discontinued activities. It provides an indexed pension annuity based on the employee’s final pensionable earnings, as well as benefits payable upon death and serious ill‑health. This plan was closed to new members in 2006. In accordance with British regulation, the Company and the Trustee Board of the scheme perform an actuarial valuation every three years, and agree on a recovery plan to correct any deficit arising. The current agreement was signed in April 2012, and the Company paid £36 million of recovery contributions over the year ended 31 March 2015. The next valuation has been initiated as of 6 April 2015.
The two other plans are part of the continuing activities. They also provide a pension in the form of an indexed annuity and were closed to new members as of 1 July 2013.
New hires are ordinarily offered the opportunity to participate in a defined contribution group pension plan (“GPP”), a group life insurance plan and an income replacement scheme.
In Switzerland, the pension plans concern mainly people of discontinued activities. They allow members to accumulate retirement funds with interests in a dedicated account during their employment life. The account value is converted into a pension, in the form of an annuity or a lump sum payment, at retirement. The plans also include benefits payable upon death and disability.
In Germany, the plans cover both populations of continuing and discontinued activities. They provide coverage for pension, death and disability. In the past, the pension was accrued in the form of an annuity. The plans were deeply modified for future accruals in 2003 for the employees of the Grid Sector, in 2009 for the employees of the Thermal and Renewable Sectors and in 2010 for the employees of the Transport Sector to remove most defined benefit pension risks. The plans now continue to be accounted for as defined benefit plans under IAS 19R but with much lower risks for the Company. With respect to employee contributions, there are remitted into defined contributions plans. In the United States of America, Alstom sponsors four qualified defined benefit pension plans and two post‑retirement medical plans. Two of the qualified pension plans, namely a cash balance plan and a final average earnings plan, which represent 65% of the defined benefit obligations in the country, were closed to all service accruals in 2010. Employees now participate in a defined contribution 401(k) plan. The employer subsidies toward post‑retirement medical plans were removed to new hires in 2002 and 2003 with the exception of a small number of unionized employees. All plans are part of discontinued activities except a pension plan and a post‑employment medical plan whose beneficiaries belong to the Transport sector.
In France and Italy, defined benefit pension plans are mainly end‑of‑service benefits provided for under the terms of collective bargaining agreements and Group agreements.
In some countries, these commitments are covered in whole or in part by insurance contracts or pension funds. In this case, the commitments and assets are measured independently.
The fair value of plan assets is deducted from the Group’s defined benefit obligation, as estimated using the projected unit credit method, in order to calculate the unfunded obligation to be covered by a provision, or the overfunded right to be recognized as an asset under specific requirements.
3
FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated financial statements
In the following tables, the “Other” zone represents mainly the United States of America.
25.2. Defined benefit obligations
(in € million) At 31 March 2015 KingdomUnited Switzerland Euro zone Other
Defined benefit obligations at beginning of year (5,974) (2,505) (1,518) (1,140) (811)
Service cost (116) (14) (56) (29) (17)
Plan participant contributions (42) (3) (38) ‑ (1)
Interest cost (238) (123) (38) (37) (40)
Plan amendments (26) ‑ 9 (8) (27)
Business combinations/disposals 52 ‑ ‑ 17 35
Curtailments 3 ‑ ‑ ‑ 3
Settlements 4 ‑ ‑ ‑ 4
Actuarial gains (losses) – due to experience 24 8 4 14 (2)
Actuarial gains (losses) – due to changes
in assumptions (1,038) (504) (257) (211) (66)
Benefits paid 359 132 80 71 76
DBO related to assets held for sale 6,871 3,009 2,060 892 910
Foreign currency translation and others (831) (388) (279) ‑ (164)
DEFINED BENEFIT OBLIGATIONS AT END OF YEAR (952) (388) (33) (431) (100)
Of which:
Funded schemes (643) (388) (33) (155) (67)
Unfunded schemes (309) ‑ ‑ (276) (33)
(in € million) At 31 March 2014 (1)
United
Kingdom Switzerland Euro zone Other Defined benefit obligations at beginning of year (6,039) (2,481) (1,497) (1,128) (933)
Service cost (99) (13) (44) (25) (17)
Plan participant contributions (39) (3) (35) ‑ (1)
Interest cost (222) (113) (36) (37) (36)
Plan amendments 6 ‑ 11 (4) (1)
Business combinations/disposals ‑ ‑ ‑ ‑ ‑
Curtailments 2 ‑ ‑ 1 1
Settlements ‑ ‑ ‑ ‑ ‑
Actuarial gains (losses) – due to experience (4) (2) 31 (21) (12) Actuarial gains (losses) – due to changes
in assumptions 82 37 (2) 3 44
Benefits paid 308 121 55 71 61
DBO related to assets held for sale ‑ ‑ ‑ ‑ ‑
Foreign currency translation and others 31 (51) (1) ‑ 83
DEFINED BENEFIT OBLIGATIONS AT END OF YEAR (5,974) (2,505) (1,518) (1,140) (811)
Of which:
Funded schemes (5,171) (2,505) (1,505) (545) (616)
Unfunded schemes (803) ‑ (13) (595) (195)
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FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated financial statements