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Reconciliation of the present value of the obligations, the fair value of plan assets and the pension provision

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40.4 Reconciliation of the present value of the obligations, the fair value of plan assets and the pension provision
40.5 Changes in the present value of the defined benefit obligations
40.6 Changes in the fair value of plan assets
40.7 Funded status
40.8 Gains and losses
40.9 Changes in net pension provisions
40.10 Pension expense

40.4 Reconciliation of the present value of the obligations, the fair value of plan assets and the pension provision


€m		Germany		UK		Other		Deutsche Postbank Group		Total

2007
Present value of defined benefit obligations at 31 December for wholly or partly funded benefits		3,686		3,743		1,250		698		9,377
Present value of defined benefit obligations at 31 December for unfunded benefits		3,237		9		177		729		4,152
Present value of total defined benefit obligations at 31 December		6,923		3,752		1,427		1,427		13,529
Fair value of plan assets at 31 December		–1,914		–4,048		–1,418		–392		–7,772
Unrecognised net gains (+)/losses (–)		–622		435		26		108		–53
Unrecognised past service cost		–4		0		0		0		–4
Asset adjustment for asset limit		0		1		41		0		42
Net pension provisions at 31 December		4,383		140		76		1,143		5,742
Pension assets at 31 December		0		–127		–120		0		–247
Provisions for pensions and other employee benefits at 31 December		4,383		267		196		1,143		5,989

2006
Present value of defined benefit obligations at 31 December for wholly or partly funded benefits		4,150		4,198		1,340		773		10,461
Present value of defined benefit obligations at 31 December for unfunded benefits		3,749		0		171		824		4,744
Present value of total defined benefit obligations at 31 December		7,899		4,198		1,511		1,597		15,205
Fair value of plan assets at 31 December		–1,852		–4,177		–1,374		–381		–7,784
Unrecognised net gains (+)/losses (–)		–1,518		152		–48		–101		–1,515
Unrecognised past service cost		–5		0		0		0		–5
Asset adjustment for asset limit		0		1		36		0		37
Net pension provisions at 31 December		4,524		174		125		1,115		5,938
Pension assets at 31 December		0		–122		–74		0		–196
Provisions for pensions and other employee benefits at 31 December		4,524		296		199		1,115		6,134

The most significant changes to pension obligations during 2007 relate to the acquisition of TSO (net pension provisions of €11 million, defined benefit obligations of €37 million, fair value of plan assets of €26 million).

40.5 Changes in the present value of the defined benefit obligations


€m		Germany		UK		Other		Deutsche Postbank Group		Total

2007
Present value of total defined benefit obligations at 1 January		7,899		4,198		1,511		1,597		15,205
Current service cost, excluding employee contributions		105		102		58		34		299
Employee contributions		0		22		13		0		35
Interest cost		339		206		59		72		676
Benefit payments		–490		–194		–69		–71		–824
Past service cost		–40		1		4		–14		–49
Curtailments		–26		0		–43		0		–69
Settlements		0		0		–19		0		–19
Transfers		5		0		23		4		32
Acquisitions		2		37		6		16		61
Actuarial gains (–)/losses (+)		–871		–257		–76		–210		–1,414
Currency translation effects		0		–363		–40		–1		–404
Present value of total defined benefit obligations at 31 December		6,923		3,752		1,427		1,427		13,529

2006
Present value of total defined benefit obligations at 1 January		8,051		4,096		1,520		834		14,501
Current service cost, excluding employee contributions		110		110		84		38		342
Employee contributions		0		24		15		0		39
Interest cost		326		197		58		68		649
Benefit payments		–499		–189		–63		–69		–820
Past service cost		22		–31		–5		1		–13
Curtailments		–20		–10		–16		0		–46
Settlements		0		0		–6		0		–6
Transfers		–52		0		–5		79		22
Acquisitions		0		19		0		726		745
Actuarial gains (–)/losses (+)		–39		–112		–31		–80		–262
Currency translation effects		0		94		–40		0		54
Present value of total defined benefit obligations at 31 December		7,899		4,198		1,511		1,597		15,205

40.6 Changes in the fair value of plan assets


€m		Germany		UK		Other		Deutsche Postbank Group		Total

2007
Fair value of plan assets at 1 January		1,852		4,177		1,374		381		7,784
Employer contributions		200		67		45		16		328
Employee contributions		0		22		13		0		35
Expected return on plan assets		71		272		79		17		439
Gains (+)/losses (–) on plan assets		–10		62		–11		–7		34
Benefit payments		–199		–193		–53		–26		–471
Transfers		0		0		17		1		18
Acquisitions		0		26		0		11		37
Settlements		0		0		–12		0		–12
Currency translation effects		0		–385		–34		–1		–420
Fair value of plan assets at 31 December		1,914		4,048		1,418		392		7,772

2006
Fair value of plan assets at 1 January		1,791		3,869		1,330		59		7,049
Employer contributions		217		40		60		16		333
Employee contributions		0		24		15		0		39
Expected return on plan assets		53		245		77		16		391
Gains (+)/losses (–) on plan assets		–1		80		–21		–1		57
Benefit payments		–208		–189		–47		–25		–469
Transfers		0		0		0		–2		–2
Acquisitions		0		17		0		316		333
Settlements		0		0		–5		0		–5
Currency translation effects		0		91		–35		2		58
Fair value of plan assets at 31 December		1,852		4,177		1,374		381		7,784

The plan assets are composed of fixed-income securities (32%; previous year: 29%), equities and investment funds (36%; previous year: 42%), real estate (16%; previous year: 16%), cash and cash equivalents (9%; previous year: 8%), insurance contracts (5%; previous year: 4%) and other assets (2%; previous year: 1%).

81% (previous year: 83%) of the real estate, which has a fair value of €1,040 million (previous year: €1,029 million), is owner-occupied by Deutsche Post AG.

40.7 Funded status


€m		2005		2006		2007
Present value of defined benefit obligations at 31 December		14,501		15,205		13,529
Fair value of plan assets at 31 December		–7,049		–7,784		–7,772
Funded status		7,452		7,421		5,757

40.8 Gains and losses


€m		2005		2006		2007
Actual return on plan assets		187		448		473
Expected return on plan assets		129		391		439
Experience gains (+)/losses (–) on plan assets		58		57		34



€m		2005		2006		2007
Experience gains (+)/losses (–) on defined benefit obligations		12		–226		116
Gains (+)/losses (–) in defined benefit obligations arising from changes in assumptions		–1,080		488		1,298
Total actuarial gains (+)/losses (–) on defined benefit obligations		–1,068		262		1,414

40.9 Changes in net pension provisions


€m		Germany		UK		Other		Deutsche Postbank Group		Total

2007
Net pension provisions at 1 January		4,524		174		125		1,115		5,938
Pension expense		343		39		–1		81		462
Benefit payments		–291		–1		–16		–45		–353
Contributions to funds		–200		–67		–45		–16		–328
Acquisitions		2		11		6		5		24
Transfers		5		0		6		3		14
Currency translation effects		0		–16		1		0		–15
Net pension provisions at 31 December		4,383		140		76		1,143		5,742

2006
Net pension provisions at 1 January		4,654		183		145		585		5,567
Pension expense		430		24		59		101		614
Benefit payments		–291		0		–16		–44		–351
Contributions to funds		–217		–40		–60		–16		–333
Acquisitions		0		2		0		410		412
Transfers		–52		0		–5		81		24
Currency translation effects		0		5		2		–2		5
Net pension provisions at 31 December		4,524		174		125		1,115		5,938

Payments amounting to €663 million are expected with regard to net pension provisions in 2008 (€353 million of this relates to the Group’s expected direct benefit payments and €310 million to expected payments to pension funds).

40.10 Pension expense


€m		Germany		UK		Other		Deutsche Postbank Group		Total

2007
Current service cost, excluding employee contributions		105		102		58		34		299
Interest cost		339		206		59		72		676
Expected return on plan assets		–71		–272		–79		–17		–439
Recognised past service cost		–39		1		4		–14		–48
Recognised actuarial gains (–)/losses (+)		42		2		–2		5		47
Effects of curtailments		–33		0		–39		0		–72
Effects of settlements		0		0		–8		1		–7
Effects of asset limit		0		0		6		0		6
Pension expense		343		39		–1		81		462

2006
Current service cost, excluding employee contributions		110		110		84		38		342
Interest cost		326		197		58		68		649
Expected return on plan assets		–53		–245		–77		–16		–391
Recognised past service cost		23		–31		–5		1		–12
Recognised actuarial gains (–)/losses (+)		44		2		6		10		62
Effects of curtailments		–20		–10		–16		0		–46
Effects of settlements		0		0		0		0		0
Effects of asset limit		0		1		9		0		10
Pension expense		430		24		59		101		614

In accordance with IAS 19.92 actuarial gains and losses are recognised only to the extent that they exceed the greater of 10% of the present value of the obligations or of the fair value of plan assets. The excess amount is spread over the expected remaining working lives of the active employees and recognised in the income statement.