23 Pensions and other post-employment benefits (continued)
Ahold Annual Report 2012 113
Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Notes to the consolidated
financial statements
During 2012, the Company amended its defined benefit pension plan in the Netherlands. The plan amendments included, among other changes, raising the retirement age and gradually
increasing the amount that participants will contribute in future years. The effect of all amendments was a net curtailment gain of €33 million.
During 2012, the Company has changed its methodology for measuring past service years within the Dutch pension fund. The previous methodology was to calculate past service years based
on a participant's accrued benefits, but this has been changed to a methodology that will use the maximum past service years based on a participant's actual date of hire or accrued benefits.
The effect of the change on the 2012 year end defined benefit obligation is an increase of €1 01 million, which has been recognized as a current year actuarial loss.
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 years of age 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 a 401 (k) plan. All other eligible employees were transferred to a 401(k) plan. Accrued benefits under the defined benefit plan for employees transferred to a 401 (k)
plan were frozen for pay and service as of December 31, 2009 (frozen plan). The resulting curtailment gain in 2008 was largely offset by accrued additional (transition) contributions that the
Company will make to a 401 (k) plan for a period of five years (2010-2014) to employees meeting certain age or service requirements who were transferred to a 401 (k) plan. During 2012,
the Company settled the frozen accrued benefits of participants who elected to receive a lump sum payout. At that time the Company recognized a settlement loss of €121 million, which
consisted of the amortization of the unrecognized actuarial losses attributable to the benefits settled. In addition, the Company also recognized a liability for the remainder of the benefits, which
will be settled by the purchase of annuity contracts in 2013.
Cash contributions
From 2012 to 2013, Company contributions are expected to increase from €122 million to €1 32 million in the Netherlands and decrease from $251 million (€193 million) to $88 million
(€66 million) in the United States.
As of year-end 2012, the funding ratio, calculated in accordance with regulatory requirements, of the largest Dutch plan was 114% and the ongoing U.S. pension plan was 118%. Since the
frozen plan was terminated effective July 12011the plan is no longer subject to U.S. funding requirements. However, under plan termination rules Ahold will be required to fully fund the
liabilities at the time the assets are distributed to settle the plan. 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% (€50 million was paid under this agreement in 2009). The contributions to the U.S. plans in 2012 included additional
contributions of $62 million (€48 million) in order to bring funding ratios to minimum required levels and $131 million (€100 million) in partial settlement of the frozen plan.
Actuarial assumptions
The assumptions used in the actuarial calculations of the defined benefit obligations and net defined 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 balance sheet
at the end of that year.
million
2012
2011
2010
2009
2008
Defined benefit obligations at year end
(4,817)
(3,624)
(3,415)
(3,167)
(2,835)
Fair value of plan assets at year end
4,163
3,879
3,496
3,089
2,636
Surplus (deficit)
(654)
255
81
(78)
(199)
Experience gains (losses) on defined benefit obligations
19
34
(25)
2
(29)
Experience gains (losses) on plan assets
269
93
112
157
(785)
