H
121
23 Pensions and other post-employment benefits
Ahold at a glance
Notes to the consolidated
financial statements
Our strategy
Our performance
Governan
Financials
Investors
Ahold Annual Report 2013
Defined benefit plans
Ahold has a number of defined benefit pension plans covering a substantial number of employees, former employees and retirees in the Netherlands and the United States. Generally,
the plans are career average or final pay defined benefit plans. In 2008, the Company decided to transition its defined benefit pension plan for active salaried, non-union and certain union
employees in the United States to a defined contribution pension plan, as further described below. In addition, Ahold provides additional pension benefits for certain company executives and
life insurance and medical care benefits for certain retired employees meeting age and service requirements at its U.S. subsidiaries, all of which the Company funds as claims are incurred.
The pension plans expose the Company to actuarial risks such as: longevity risk, interest rate risk, currency risk, salary risk and investment risk. Longevity risk relates to the mortality assumptions
used to value the defined benefit obligation where an increase in participants' life expectancies will increase a plan's liability. Interest rate risk relates to the discount rate used to value the
defined benefit obligation where a decrease in the discount rate will increase a plan's liability, however this will be partially offset by an increase in the return on a plan's investments in debt
instruments. The pension plans may mitigate interest rate risk by entering into interest rate swap contracts. Currency risk relates to the fact that a plan holds investments that may not be
denominated in the same currency as the plan's obligations. The pension plans may mitigate currency risk by purchasing forward currency instruments. Salary risk relates to salary increase
assumptions used to value the defined benefit obligation, where an increase will result in a higher plan liability. See below for more details on the Company's asset-liability matching strategy
employed to manage its investment risk.
Net assets relating to one plan are not offset against net liabilities of another plan, resulting in the following presentation of the pension and other post-employment benefits on the consolidated
balance sheet:
December 30,
December 29,
2012
million
2013
(restated)1
Defined benefit liabilities
(348)
(643)
Defined benefit assets
5
23
Total defined benefit plans
(343)
(620)
1 See Note 3 for an explanation of the restatements.
The defined benefit assets are part of the other non-current financial assets; for more information, see Note 15.
