2 www.ahold.com/reports2008
Notes to the consolidated financial statements
22 Pensions and other post-employment benefits continued
Equity securities 31 40 48 58
Debt securities 53 43 39 32
Real estate 9 9 3 2
Other 7 8 10 8
Total 100 100 100 100
Financial statements
AHOLD ANNUAL REPORT 2008 81
The following table shows the effect on the defined benefit obligation and on net periodic benefit cost if the discount rate would
have been 0.5 percent higher or lower as of year-end 2008:
million
The Netherlands
United States
Total
0.5%-point increase
Defined benefit obligations at year-end 2008
(135)
(63)
(198)
Net periodic benefit cost 2009
(7)
(8)
(15)
0.5%-point decrease
Defined benefit obligations at year-end 2008
Net periodic benefit cost 2009
152
8
70
9
222
17
The expected return on plan assets is determined as a weighted-average rate of return 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. In addition, actual long-term historical return information is taken into account. The actual return on plan assets in
2008 was negative 17.5 percent for the Dutch plans (2007: positive 0.3 percent) and negative 18.8 percent for the U.S. plans
(2007: positive 8.6 percent).
The assumed medical cost trend rates used in measuring the defined benefit obligations related to medical care plans were
9.2 percent in 2008 and 9.8 percent in 2007, declining to an ultimate trend rate of 5.0 percent as of 2015. Because of the
limited size of Ahold's medical care plans, the impact of a 1.0 percent-point increase or decrease in assumed medical cost trend
rates on the defined benefit obligation and net periodic benefit cost would be negligible.
Plan assets
The pension plan asset allocation can differ per plan. On a weighted average basis, the allocation was as follows:
The Netherlands United States
Percent 2008 2007 2008 2007
In the Netherlands, 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
40-50 percent for equity securities, 35-45 percent for debt securities, 5-15 percent for real estate investments and 0-20 percent
for other investments.
In the United States, the plan assets are generally managed by outside investment managers and rebalanced periodically. The
committees for the various U.S. plans establish investment policies and strategies and regularly monitor the performance of the
assets, including the selection of investment managers, setting long-term strategic targets and monitoring asset allocations. Target
allocation ranges are guidelines, not limitations, subject to variation from time to time, or as circumstances warrant. Occasionally,
the committees may approve allocations above or below a target range. The investment strategy with respect to pension plan assets
is to invest in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA") and fiduciary standards. The long
term primary objective for the plan assets is to protect the assets from erosion of purchasing power, and to provide for a reasonable
amount of long-term growth of capital, without undue exposure to risk. Currently, the strategic targets are between 50-70 percent
for equity securities, 25-45 percent for debt securities and 0-10 percent for other investments.
In 2008, the fair value of the plan assets (Dutch and U.S. plans in the aggregate) included EUR 1 million of Ahold shares
(2007: EUR 1 million).
