Notes to the consolidated financial statements
112
23 Pensions and other post-employment benefits (continued)
Female
Ahold at a glance
Business review
Governance
Financials
Ahold
Annual Report 2015
Cash contributions
From 2015 to 2016, Company contributions are expected to remain unchanged at €113 million in the Netherlands and increase from $27 million (€24 million) to $101 million (€93 million) for all defined benefit plans in the
United States.
As of year-end 2015, the funding ratio, calculated in accordance with regulatory requirements, of the largest Dutch plan was 111%. Under the financing agreement with the Dutch pension fund, contributions are made as a
percentage of employees' salaries and shared between Ahold and the employees. The agreement also allows for a reduction in premiums if certain funding conditions are met. In addition, Ahold can be required to contribute
a maximum amount of €150 million over a five-year period if the funding ratio is below 105%. The U.S. pension plan's funding ratio at year-end 2015 was 111%, measured using regulatory interest rates allowed by the U.S.
government as part of funding relief, which are higher than otherwise would be allowed. Contributions to the U.S. pension plan are required under the current funding policy if the prior year-end funding ratio falls below 100%
as measured using regulatory interest rates without funding relief in order to avoid variable Pension Benefit Guaranty Corporation (PBGC) premiums. Under these rules a $78 million (€72 million) contribution will be made to the
U.S. pension plan in 2016.
Actuarial assumptions
The calculations of the defined benefit obligation and net defined benefit cost are sensitive to the assumptions set out below. These assumptions require a large degree of judgment. Actual experience may differ from the
assumptions made. The assumptions required to calculate the actuarial present value of benefit obligations and the net defined benefit costs are determined per plan and are as follows (expressed as weighted averages):
Percent
2015
The Netherlands
2014
2015
United States
2014
Discount rate
2.4
2.3
4.9
4.3
Future salary increases
3.6
3.7
4.5
4.5
Future pension increases
0.8
0.8
0.0
0.0
Assumptions regarding longevity are based on published statistics and mortality tables. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 65:
Years
2015
The Netherlands
2014
2015
United States
2014
Longevity at age 65 for current pensioners
Male
21.0
20.9
20.1
20.0
23.4
23.3
22.8
22.7
Longevity at age 65 for current members aged 50
Male
22.8
22.7
21.0
20.9
Female
25.1
25.0
23.7
23.6