Notes to the consolidated financial statements
110
23 Pensions and other post-employment benefits (continued)
Ahold at a glance
Business review
Governance
Financials
Ahold
Annual Report 2014
In the Netherlands, the plan assets are managed by outside investment managers following investment strategies based on the composition of the plan liabilities. With the aid of Asset Liability Management modeling,
analyses are made of possible future economic scenarios and investment portfolios. Based on these analyses, investment strategies are determined to produce optimal investment returns at acceptable funding ratio risk levels.
Less favorable years can be part of these scenarios. Currently, the strategic targets for asset allocation of the Dutch pension plan are: 40% variable yield and 60% fixed income. To partially hedge against interest rate risk
exposure on the pension liabilities, the Dutch pension plan uses interest rate swap contracts. The Dutch early retirement plan has a relatively short remaining term; therefore the plan assets are invested in short-term fixed income
securities and cash instruments only.
In the United States, the plan assets are 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. Pension plan assets are invested in a trust intended to comply with the Employee Retirement Income
Security Act of 1974, as amended, (ERISA) and applicable fiduciary standards. The long-term investment objective for the plan's assets is to maintain an acceptable funding ratio between assets and plan liabilities without
undue exposure to risk. Currently, the strategic targets are: 45% equity securities, 45% debt securities and 10% other investments.
In 2014, the Dutch plans had €0.6 million of plan assets invested in Ahold's financial instruments (2013: €3 million). In 2014 or 2013, the U.S. plans did not have any plan assets invested in Ahold financial instruments.
The actual return on plan assets in 2014 was 24.1% for the Dutch plans (2013: negative 1.0%) and 12.0% for the U.S. plans (2013: 9.2%),
Benefit maturities
The weighted average duration of the defined benefit obligations of the Dutch and U.S. plans are 25.4 and 14.1 years, respectively.
The Dutch and U.S. plans have the following expected schedule of benefit payments.
million
The Netherlands
United States
Total
Amount due within one year
81
63
144
Amount due between two and five years
322
271
593
Amount due between six and ten years
486
389
875
