Notes to the consolidated financial statements 105 23 Pensions and other post-employment benefits Defined benefit plans Ahold at a glance Business review Governance Financials Ahold Annual Report 2014 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 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 28, December 29, million 2014 2013 Defined benefit liabilities (290) (348) Defined benefit assets 5 5 Total defined benefit plans (285) (343) The defined benefit assets are part of the other non-current financial assets; for more information, see Note 15. Net defined benefit cost is comprised of the following components. The net interest (income) expense is presented within net financial expenses in the income statement and plan remeasurements are presented as other comprehensive income. All other components of net defined benefit cost are presented in the income statement as cost of sales, selling expenses, and general and administrative expenses, depending on the functional areas of the employees earning the benefits. million 2014 2013 Service cost Current service cost 104 119 Past service cost gain (68) Gain on settlement - (9) Net interest expense 16 24 Administrative cost 9 8 Components of defined benefit cost recorded in the income statement 61 142 Remeasurements recognized: Return on plan assets, excluding amounts included in net interest (income) cost (698) 102 Loss from changes in demographic assumptions 53 13 (Gain) loss from changes in financial assumptions 650 (298) Experience gains (losses) 20 (47) Components of defined benefit cost recognized in other comprehensive income 25 (230) Total net defined benefit cost 86 (88)

Jaarverslagen | 2014 | | pagina 7