Note 24
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24 Pensions and other post-employment benefits Dutch defined benefit plans
Dutch pensions
2006 2005
Ahold has a number of defined benefit pension plans
covering a substantial number of employees within the
United States and the Netherlands. All plans have been
established in accordance with applicable legal
requirements, customs and existing circumstances in each
country. Generally, the plans are average salary pension
plans. In addition, Ahold provides life insurance and medical
care benefits for certain retired employees meeting age and
service requirements at its U.S. subsidiaries, which the
Company funds as claims are incurred. All defined benefit
pension plans are either wholly or partly funded.
The components of the pension and other post-employment
benefits and the presentation in the balance sheets can be
summarized as follows:
Defined benefit obligations
(3,739)
(4,110)
Fair value of plan assets
3,673
3,324
Surplus/(deficit)
(66)
(786)
Unrecognized actuarial (gains) losses and
past service cost
(408)
194
Total defined benefit plans
(474)
(592)
Pension and other post-employment
benefits provisions
(482)
(604)
Pension and other post-employment benefits assets
8
12
Total defined benefit plans
(474)
(592)
The amounts recognized in the statement of operations for
defined benefit plans are as follows
2006
2005
2004
Current service cost
143
162
149
Interest cost
187
189
170
Expected return on plan assets
(217)
(179)
(148)
Actuarial losses
14
1
Past service cost
(2)
14
1
Gains on curtailments and settlements
(14)
(44)
(12)
Total net periodic benefit cost
111
143
160
The following table provides a summary of the funded
status of all defined benefit plans throughout Ahold and
the experience adjustments (i.e., the effects of differences
between the previous actuarial assumptions and what has
actually occurred) on defined benefit obligations and
plan assets:
2006
2005
2004
Defined benefit obligations at year-end
(3,739)
(4,110)
(3,547)
Fair value of plan assets at year-end
3,673
3,324
2,549
Surplus/(deficit)
(66)
(786)
(998)
Experience adjustments on
defined benefit obligations
4
(70)
47
Experience adjustments on plan assets
184
220
89
Because of the significance of defined benefit plans in the
Netherlands and the United States and the different
assumptions applicable to these plans, in the remainder of
this note the Dutch defined benefit plans (in the aggregate)
are shown separately from the U.S. defined benefit plans
(in the aggregate).
Defined benefit obligation
Beginning of the year
2,521
2,317
Current service cost
92
115
Interest cost
103
109
Contributions by plan participants
20
18
Gains on curtailments and settlements
(14)
(33)
Actuarial (gains) losses
(346)
62
Past service cost
21
15
Business acquisitions
2
Benefits paid
(81)
(82)
End of the year
2,318
2,521
Plan assets
Fair value of assets, beginning of the year
2,222
1,842
Expected return on plan assets
135
109
Actuarial gains (losses)
148
217
Company contribution
158
118
Contributions by plan participants
20
18
Benefits paid
(81)
(82)
Fair value of assets, end of the year
2,602
2,222
Surplus/(deficit)
284
(299)
Unrecognized actuarial (gains) losses
(466)
41
Net assets/(liabilities)
(182)
(258)
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):
Discount rate for obligations 4.70 4.00 4.50
Expected return on plan assets 5.96 5.91 5.91
Future salary increases 3.65 3.30 2.50
The actual return on plan assets was 11.8 percent,
18.1 percent and 13.0 percent for 2006, 2005 and 2004,
respectively.
Plan assets
The pension plan asset allocation on a weighted average
basis in the Netherlands was as follows:
Asset category (in percentages)
2006
2005
2004
Equity securities
42
42
39
Debt securities
40
39
51
Real estate
9
8
8
Other
9
11
2
Total
100
100
100
Ahold Annual Report 2006 95
December 31, January 1,
2006 2006
Dutch pensions
In percentages
2006
2005 2004
