21. Employee Benefits
21.1 Pension Plans
Defined Contribution Plans
Delhaize Group Annual Report 2014 133
A substantial number of Delhaize Group's employees are covered by defined contribution and defined benefit pension plans,
mainly in the U.S., Belgium, Greece and Serbia. In addition, the Group has also other post-employment defined benefit
arrangements, being principally health care arrangements in the U.S.
The actuarial valuations performed on the defined benefit plans require making a number of assumptions about, besides others,
discount rates, inflation, interest crediting rate and future salary increases or mortality rates. For example, in determining the
appropriate discount rate, management considers the interest rate of high-quality corporate bonds (at least AA rating) in the
respective currency in which the benefits will be paid and with the appropriate maturity; mortality rates are based on publicly
available mortality tables for the specific country. Any changes in the assumptions applied will impact the carrying amount of the
pension obligations, but will not necessarily have an immediate impact on future contributions. All significant assumptions are
reviewed periodically. Plan assets are measured at fair value, using readily available market prices. Actuarial gains and losses
(i.e., experience adjustments and effects of changes in financial and demographic actuarial assumptions) and the return on the
plan assets, excluding amounts included in net interest on the net defined benefit liability (asset), are directly recognized in OCI.
The major assumptions applied in connection with defined benefit plans are summarized below.
In Belgium, Delhaize Group sponsors for substantially all of its employees a defined contribution plan, under which the
Group and the employees (starting in 2005) also, contribute a fixed monthly amount. The contributions are adjusted annually
according to the Belgian consumer price index. Employees that were employed before implementation of the plan were able
to choose not to participate in the employee contribution part of the plan. The plan assures the employee a lump-sum
payment at retirement based on the contributions made. The Group also sponsors an additional defined contribution plan,
without employee contribution, for a limited number of employees. The plans also provide with death in service benefits.
Belgian law prescribes a minimum guaranteed rate of return (currently 3.75% and 3.25% for employee and employer
contributions, respectively) over the career of the employee for defined contribution plans, which the Group substantially
insured with an external insurance company that receives and manages the contributions to the plan. The weighted average
years to pension of the plan participants at December 31, 2014 is 26 years (assuming retirement at the age of 65). At the
end of 2014, the minimum guaranteed reserves, the plan assets and the net liabilities were as follows:
(in millions of 2014
Plan Assets (69)
Minimum guaranteed reserves 66
Sum of individual deficits
As the application of defined benefit accounting to such plans has been recognized by the IASB to be conceptually
problematic, the Group accounts for these plans as defined contribution plans, but acknowledges that these plans have
some defined benefit features, as the return provided by the insurance company can be below the legally required minimum
return, in which case the employer has to cover the gap with additional contributions.
In order to monitor this potential exposure, Delhaize Group calculated the discounted value of the positive differences
between the minimum reserves, increased with the currently applicable minimum guaranteed rates of return up to the date of
retirement, and the paid-up insured benefits. At December 31, 2014, this would not have resulted in a net liability position for
the Group. Decreasing the discount rate applied to the defined benefit obligation by 50 basis points, would also not have
resulted in a net liability position.
The expenses related to these plans were €11 million in 2014, €11 million in 2013 and €10 million in 2012, respectively. In
2015, the Group expects to contribute approximately €9 million to these plans.
In the U.S., Delhaize Group sponsors profit-sharing retirement plans covering all employees at Food Lion and Hannaford
with one or more years of service. Profit-sharing contributions substantially vest after three years of service. Forfeitures of
profit-sharing contributions are used to reduce future employer contributions or offset plan expenses. The profit-sharing
contributions to the retirement plan are discretionary and determined by Delhaize America, LLC's Board of Directors. The
profit-sharing plans also include a 401(k) feature that permits participating employees to make elective deferrals of their
compensation and requires that the employer makes matching contributions.
The defined contribution plans generally provide benefits to participants upon death, retirement or termination of
employment.
The expenses related to these U.S. defined contribution retirement plans were €26 million in 2014 (out of which €1 million
presented as part of discontinued operations following the disposal of Sweetbay, Harveys and Reid's), €44 million in 2013
(€5 million in discontinued operations) and €46 million in 2012 (€5 million in discontinued operations), respectively.
In addition, Delhaize Group operates defined contribution plans in Greece to which only a limited number of employees are
entitled and where the total expense is insignificant to the Group as a whole.
