Note 24
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Financial statements - Notes to the consolidated financial statements
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 percent
for equity securities, 30-75 percent for debt securities, 2.5-12.5 percent for real estate investments and 0-5 percent for
other investments.
U.S. defined benefit plans
The changes in the defined benefit obligation and plan assets for the U.S. defined benefit plans were as follows.
The unfunded benefit plans include other benefits (such as life insurance and medical care) and supplemental executive
retirement plans.
U.S
pensions
U
.S. unfunded
benefits
benefit plans
2006
2005
2006
2005
Defined benefit obligation
Beginning of the year
1,418
1,088
171
142
Current service cost
48
45
2
2
Interest cost
76
71
8
9
Past service cost
(28)
Gains on curtailments and settlements
(14)
(1)
Actuarial (gains) losses
(38)
104
(4)
13
Liabilities extinguished on settlements
(12)
(11)
(2)
Foreign currency exchange rate changes
(148)
177
(16)
21
Benefits paid
(41)
(42)
(15)
(13)
End of the year
1,303
1,418
118
171
Plan assets
Fair value of assets, beginning of the year
1,102
707
Expected return on plan assets
81
70
Actuarial gains (losses)
35
(23)
Company contribution
23
276
15
13
Assets distributed on settlements
(12)
(11)
Foreign currency exchange rate changes
(117)
125
Benefits paid
(41)
(42)
(15)
(13)
Fair value of assets, end of the year
1,071
1,102
Surplus/(deficit)
(232)
(316)
(118)
(171)
Unrecognized actuarial losses
55
141
10
16
Unrecognized past service cost
(7)
(4)
Net assets/(liabilities)
(177)
(175)
(115)
(159)
In 2005, an additional contribution of USD 288 (EUR 236) was made to decrease the deficit of several U.S. pension plans.
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):
U.S. pensions
U.S
unfunded benefit plans
In percentages
2006 2005 2004
2006
2005
2004
Discount rate for obligations
5.98 5.75 6.00
5.95
5.55
6.00
Expected return on plan assets
7.88 7.94 8.24
N/A
N/A
N/A
Future salary increases
4.80 4.83 4.00
4.96
5.00
4.00
The actual return on plan assets was 10.6 percent, 5.1 percent and 8.0 percent for 2006, 2005 and 2004, respectively.
Plan assets
The pension plan asset allocation can differ per plan. In the United States, allocation on a weighted average basis was
as follows:
Asset category (in percentages)
2006
2005
2004
Equity securities
63
62
55
Debt securities
33
34
32
Real estate
Other
4
4
13
Total
100
100
100
96 Ahold Annual Report 2006
