Defined Benefit Plans
FINANCIAL STATEMENTS
In Belgium, Delhaize Group has a defined benefit pension plan covering approximately 4% of its employees. The plan
provides lump-sum benefits to participants upon death or retirement based on a formula applied to the last annual salary of
the participant before his/her retirement or death. The plan is subject to the legal requirement to guarantee a minimum return
on the contributions paid by plan participants. The assets of the plan, which are made up from the contributions, are
managed through a fund that is administered by an independent insurance company, providing a minimum guaranteed
return. The plan participant's contributions are defined in the terms of the plan, while the annual contributions to be paid by
the Group are determined based on the funding level of the plan and are calculated based on current salaries, taking into
account the legal minimum funding requirement, which is based on the vested reserves to which employees are entitled
upon retirement or death. The plan mainly invests in debt securities in order to achieve the required minimum return. The
Group bears any risk above the minimum guarantee given by the insurance company. There are no asset ceiling restrictions.
In the U.S., Delhaize Group operates several defined benefit pension plans. These plans are subject to the Employee
Retirement Income Security Act of 1974 (ERISA). In line with ERISA, Delhaize America has established the Benefit Plans
Fiduciary Committee ("the Committee") to manage and administer all plans and serve as a fiduciary where applicable. Its
main responsibilities include (a) establishing appropriate procedures for plan administration and operations, (b) managing
participant rights and benefits, enrolling participants and maintaining plan records and (c) establishing and periodically
updating an investment policy for the funded plans and investing, monitoring and safeguarding the assets of those plans. In
accordance with its responsibilities, the Committee reviews the funding policy annually to determine if it is consistent with the
plan's projected benefit needs. The plans operated by Delhaize America can be grouped into three different types:
a) Cash balance plans set up a hypothetical individual account for each employee, and credits each participant annually
with a plan contribution that is a percentage of the participant's monthly compensation. The contributions are transferred
to a separate plan asset that generates return based on the investment portfolio. The largest plan is funded, covers
approximately 44% of the Hannaford employees and is subject to a minimum funding requirement. Since several years,
the plan is frozen for new employees and for further accruals of current employees.
The plan is not subject to any asset ceiling restrictions and any net assets are recognized in "Other non-current assets"
(2012: $5 million (€4 million)).
The investment policy of the funded plan was amended in 2012 and as from then invests predominantly in debt
securities.
b) Delhaize America sponsors unfunded non-qualified retirement savings plans offered to a limited number of Delhaize
America employees. These plans provide benefit to the participant at some time in the future by deferring a part of their
annual cash compensation that is adjusted based on returns of a hypothetical investment account. The balance is
payable upon termination or retirement of the participant.
During 2012, Delhaize America amended a non-qualified defined contribution retirement and savings plan offered to
Hannaford executives by closing it for new employees and future services. Following the plan amendment Delhaize
America bears more than insignificant longevity and financing risk in connection with the plan. Consequently, the plan
classification changed to a defined benefit plan and the net liability of $28 million (€22 million) was transferred from
other non-current liabilities to pension benefit provisions.
c) Further, Delhaize America operates unfunded supplemental executive retirement plans ("SERP"), covering a limited
number of executives. Benefits are calculated on the annual average of the participant's annual cash compensation
multiplied by a percentage based on years of service and age at retirement. These plans expose Delhaize America to
risks relating to longevity and discount rate.
In Serbia, Delhaize Group has an unfunded defined benefit plan that provides a lump-sum benefit upon retirement of the
employee, as prescribed by Serbian law. The benefit is based on a fixed multiple of the higher of the (i) average gross salary
of the employee, (ii) average gross salary in the company or (iii) average gross salary in the country, each determined at the
time the employee retires. There is no legal requirement to fund these plans with contributions or other plan assets. The
main risks of the plan relate to the discount rate, inflation and the future salary increase.
During 2014, Serbian law was amended, lowering the fixed multiple of the benefit that an employer has to pay upon
retirement of the employee, which resulted in the recognition of insignificant negative past service cost.
In Greece, Delhaize Group operates an unfunded defined benefit post-employment plan. This plan relates to retirement
benefits prescribed by Greek law, consisting of lump-sum compensation payable in case of normal retirement or termination
of employment. The amount of the indemnity is based on the employee's monthly earnings and a multiple depending on the
length of service and the status of the employee. There is no legal requirement to fund these plans with contributions or
other plan assets. The plan exposes the Group to risk in connection with the applicable discount rate and the future salary
increase. The employees are covered by the plan once they have completed a minimum service period, generally one year.
During 2013, and following the change of the respective law, the indemnity payable by the employer has been limited to 16
years (previously 28 years) of service (and for employees who had more than 16 years of service upon law publication, the
indemnity is based on service capped at that time up to a maximum of 28 years). The change resulted in a negative past
service cost of €3 million which has been recognized when the plan amendment occurred.
