o www.ahold.com/reports2009
Notes to the consolidated financial statements
23 Pensions and other post-employment benefits - continued
Financials
In 2008, the Company decided to transition its defined benefit pension plan for active salaried, non-union and certain union employees
("eligible employees") in the United States to a defined contribution pension plan. Eligible employees who were at least 50 or had 25
or more years of service as of December 31, 2009 could choose to either stay in the defined benefit plan or transfer to the new 401(k)
plan. All other eligible employees were transferred to the new 401(k) plan. Accrued benefits under the defined benefit plan for employees
transferred to the new 401(k) plan were frozen for pay and service as of December 31, 2009. The resulting curtailment gain in 2008 was
largely offset by accrued additional (transition) contributions that the Company will make for a period of five years (2010-2014) to
employees meeting certain age or service requirements that were transferred to the new 401(k) plan, resulting in a net gain of €4 million.
During 2009, after all eligible employees had made their choice, the curtailment gain was recalculated and reduced by €2 million. The
Company intends to settle the frozen accrued benefits in 2012. When a settlement occurs, the resulting gain or loss (i.e., the difference
between the value of the benefits determined under the prevailing rules at that time and the value of the corresponding assets at that
time) will be recognized at the settlement date.
The settlements in 2008 related to Schuitema; the resulting gains were presented as part of the result on divestment of discontinued
operations.
Cash contributions
Company contributions are expected to decrease from €167 million to €120 million in the Netherlands and from $133 million (€96 million)
to $54 million (€38 million) in the United States from 2009 to 2010, respectively.
As of year-end 2009, the funding ratio, calculated in accordance with regulatory requirements, of the largest Dutch plan was 116 percent
and of the largest U.S. plan was 102 percent. Under the financing agreement with the Dutch pension fund, Ahold can be required
to contribute a maximum amount of €150 million over a five-year period if the funding ratio is below 105 percent. The 2009 company
contributions included additional contributions of €50 million in the Netherlands and $88 million (€62 million) in the United States, to
bring the funding ratios to minimum required levels. In addition, the 2009 company contributions in the Netherlands were higher because
the 2008 contributions reflected a 20 percent discount on the normal contribution level, which was based on the funding ratio as of
December 30, 2007.
Actuarial assumptions
The assumptions used in the actuarial calculations of the defined benefit obligations and net periodic benefit cost require a large degree
of judgment. Actual experience may differ from the assumptions made. The following table provides a summary of the funded status of
all defined benefit plans and the experience adjustments (i.e., the part of the actuarial results that is not caused by changes in actuarial
assumptions) on defined benefit obligations and plan assets. The experience adjustments for each year relate to the plans included in
the Company's consolidated balance sheet at the end of that year.
million 2009
2008
2007
2006
2005
Defined benefit obligations at year end (3,167)
Fair value of plan assets at year end 3,089
(2,835)
2,636
(3,028)
3,514
(3,739)
3,673
(4,110)
3,324
Surplus/(deficit) (78)
(199)
486
(66)
(786)
Experience gains (losses) on defined benefit obligations 2
Experience gains (losses) on plan assets 157
(29)
(785)
39
(156)
4
184
(70)
220
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):
The Netherlands United States
Percent
2009
2008
2009
2008
Discount rate for obligations
Expected return on plan assets
Future salary increases
5.0
6.3
3.8
5.6
6.5
3.8
6.2
7.9
5.0
6.5
7.9
5.0
The discount rates used to calculate the present value of the obligations are based on the market yields on high-quality corporate bonds
(i.e., bonds rated AA) with the same currency and term as the obligations. In determining the discount rates, the Company has used
consistent methodologies compared to prior years.
Ahold Annual Report 2009 90
