Notes to the
consolidated
financial statements
continued
23 Pensions and other post-employment benefits continued
49
73
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
1.9
3.5
0.7
During 2016, Ahold Delhaize changed its policy of accounting for employee contributions to its defined benefit plan in the Netherlands. Previously,
employee contributions were attributed to the periods of future service when measuring the defined benefit obligation; now they are considered to
be a reduction of service costs in the period in which the related service is rendered. This change in policy increased the funded status of the plan
by €28 million, which has been recognized in Other comprehensive income.
As of year-end 2016, the funding ratio, calculated in accordance with regulatory requirements, of the largest Dutch plan was 104%. Under the
financing agreement with the Dutch pension fund, contributions are made as a percentage of employees’ salaries and shared between Ahold
Delhaize and the employees. The agreement also allows for a reduction in premiums if certain funding conditions are met. In addition, Ahold
Delhaize can be required to contribute a maximum amount of €150 million over a five-year period if the funding ratio is below 105%. Since the
statutory funding ratio has dropped below the minimum required threshold, the Company and the Dutch pension fund are currently determining
whether or not additional funding will be required under the financing agreement.
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):
Cash contributions
From 2016 to 2017, Company contributions are expected to increase from €114 million in the Netherlands to €116 million, decrease from $100 million
(€90 million) to $60 million (€57 million) for all defined benefit plans in the United States, and increase from €8 million to €14 million for all plans in
the rest of the world.
The Ahold USA pension plan’s funding ratio at year-end 2016 was 116%, measured using regulatory interest rates allowed by the U.S. government as
part of funding relief, which are higher than otherwise would be allowed. Under the current funding policy, a $35 million (€33 million) contribution is
expected to be made to the Ahold USA pension plan in 2017.
21.2
23.8
22.8
25.1
21.1
23.7
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
23.0
25.6
21.0
23.4
20.2
22.9
20.1
22.8
21.0
23.7
Years
Longevity at age 65 for current pensioners
Male
Female
Longevity at age 65 for current members aged 50
Male
Female
Percent
Discount rate
Future salary increases
Future pension increases
The Netherlands
2016 2015
24
3.6
0.8
The Netherlands
2016 2015
United States
2015
4.5
0.0
Rest of world
2015
N/A
N/A
N/A
2016
4.5
0.0
2016
1.8
2.9
0.0
United States
2016 2015
Rest of world
2016 2015
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:
