Financial statements - Notes to the consolidated financial statements
Note 24
2005 1
The investment strategies are based on the composition of the obligations of the pension funds. With the aid of Asset Liability
Management-models (ALM) analyses have been made of scenarios that could occur in the future. Based on these analyses,
investment portfolios are determined on a plan by plan basis to produce a maximum return given a risk that is acceptable to all
parties involved. Less favorable years can be part of these scenarios. Currently the strategic targets are between 25%-60% for
equity securities, 30%-75% for debt securities, 2.5%-12.5% for real-estate investments and 0%-5% for other investments.
Basis used in determining the expected returns on plan assets
Expected contributions 2006
For the U.S. defined benefit plans, contributions are expected to decrease from EUR 289 in 2005 to EUR 40 in 2006.
For the Dutch defined benefit plans, the contributions are expected to increase from EUR 118 in 2005 to EUR 157 in 2006.
The assumptions required to calculate the actuarial present value of benefit obligations and net periodic benefit costs are
determined per plan. The key assumptions are as follows (expressed as weighted averages):
Pensions
In percentages
2004
Discount rate for obligations
4.00
4.50
Expected return on plan assets
5.70
5.91
Future salary increases
3.30
2.50
Plan assets
The pension plan asset allocation on a weighted average basis in the Netherlands was as follows:
ASSET CATEGORY (in percentages)
2005
2004
Equity securities
42
39
Debt securities
39
51
Real estate
8
8
Other
11
2
Total
100
100
In 2005 the fair value of the plan assets (both U.S. plans and Dutch plans) included EUR 2 of Ahold shares (2004: 0).
The expected return on plan assets is based on the current and projected investment portfolio mix of each plan, taking into
account the corresponding long-term yields for the separate asset categories, which depend on components like the risk-free
rate of return in real terms, expected inflation and expected risk and liquidity premiums. For U.S. plans, actual long-term
historical return information is also taken into account in determining the expected return on plan assets. The expected return
on plan assets is determined as a weighted-average rate of return based on the asset allocation. Due to differences in both
current and projected plan asset allocations over the plans, the expected rate of return can differ from plan to plan.
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