40.2 Actuarial assumptions
The majority of the Group’s defined benefit obligations relate to plans in Germany and the UK. In addition, significant pension plans are provided in other euro zone countries, Switzerland and the US. The actuarial measurement of the main benefit plans was based on the following assumptions:
|
|
| |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
% |
Germany |
UK |
Other euro zone |
Switzer- |
US | |||||
|
|
|
|
|
|
| |||||
|
2007 |
|
|
|
|
| |||||
|
Discount rate |
5.50 |
5.75 |
5.50 |
3.25 |
6.00 | |||||
|
Future salary increase |
2.50 |
3.00–4.75 |
2.00–4.00 |
3.00 |
3.75 | |||||
|
Future inflation rate |
2.00 |
3.25 |
2.00 |
1.50 |
2.50 | |||||
|
|
|
|
|
|
| |||||
|
2006 |
|
|
|
|
| |||||
|
Discount rate |
4.50 |
5.00 |
4.50 |
3.00 |
5.75 | |||||
|
Future salary increase |
2.50–3.00 |
3.75–4.50 |
2.00–4.00 |
3.00 |
4.00 | |||||
|
Future inflation rate |
2.00 |
3.00 |
2.00 |
1.50 |
2.75 | |||||
For the German Group companies, longevity was calculated using the mortality tables Richttafeln 2005 G published by Klaus Heubeck. For the British benefit plans longevity was based on the mortality rates used in the last funding valuation. These are based on mortality analyses specific to the plan and include a premium for an expected increase in future life expectancy. Other countries used their own mortality tables.
40.3 Computation of expenses for the period
The following average expected return on plan assets was used to compute the expenses for the period:
|
|
| |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
% |
Germany |
UK |
Other euro zone |
Switzer- |
US | |||||
|
|
|
|
|
|
| |||||
|
31 December 2007 |
|
|
|
|
| |||||
|
Average expected return on plan assets |
3.25–4.25 |
4.50–7.25 |
5.00–7.00 |
4.25 |
7.50 | |||||
|
|
|
|
|
|
| |||||
|
31 December 2006 |
|
|
|
|
| |||||
|
Average expected return on plan assets |
3.00–4.25 |
6.50–7.00 |
4.25–6.50 |
4.25 |
8.00–8.50 | |||||
The expected return on plan assets was determined by taking into account current long-term rates of return on bonds (government and corporate) and then applying to these rates a suitable risk premium for other asset classes based on historical market returns and current market expectations.
