Notes to the
consolidated
financial statements
continued
23 Pensions and other post-employment benefits continued
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
The actual return on plan assets in 2016 was 10.7% for the Dutch plan (2015: negative 1.3%) and 6.1% for the Ahold USA pension plan (2015: negative 2.7%).
In the Netherlands, the plan assets are managed by outside investment managers following investment strategies based on the composition of
the plan liabilities. With the aid of asset liability management modeling, analyses are made of possible future economic scenarios and investment
portfolios. Based on these analyses, investment strategies are determined to produce optimal investment returns at acceptable funding ratio risk
levels. Less favorable years can be part of these scenarios. Currently, the strategic targets for asset allocation of the Dutch pension plan are: 40%
variable yield and 60% fixed income. To partially hedge against interest rate risk exposure on the pension liabilities, the Dutch pension plan uses
interest rate swap contracts.
In the United States, the plan assets are managed by outside investment managers and rebalanced periodically. The committees for the various
U.S. plans establish investment policies and strategies and regularly monitor the performance of the assets, including the selection of investment
managers, setting long-term strategic targets and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, subject to
variation from time to time or as circumstances warrant. Occasionally, the committees may approve allocations above or below a target range.
Pension plan assets are invested in a trust intended to comply with the Employee Retirement Income Security Act of 1974 (ERISA), as amended,
and applicable fiduciary standards. The long-term investment objective for the plan’s assets is to maintain an acceptable funding ratio of the
plan’s assets and liabilities without undue exposure to risk. Currently, the strategic targets are: 35% equity securities, 55% debt securities and 10%
other investments.
Benefit maturities
The weighted average duration of the defined benefit obligations of the plans in the Netherlands, U.S., and the rest of world are 25.6, 13.5, and
16.5 years, respectively.
Defined contribution plans
The Company operates defined contribution plans in the Netherlands, United States, Belgium, Greece and the Czech Republic. As mentioned
above, the defined contribution plans in Belgium are accounted for as defined benefit plans due to the guaranteed return elements of the
plans. The largest defined contribution plans exist in the United States, where the Company sponsors profit-sharing retirement plans that include
a 401(k) feature that permits participating employees to make elective deferrals of their compensation and requires the Company to make
matching contributions.
During 2016 and 2015, the Company contributed €63 million and €37 million, respectively, to its defined contribution plans. These contributions
were recognized as an expense in the income statement and related entirely to continuing operations in 2016 and 2015.
In 2016, the Dutch plan had €1.2 million of plan assets invested in Ahold Delhaize’s financial instruments (2015: €0.8 million). In 2016 or 2015, the U.S.
plans did not have any plan assets invested in Ahold Delhaize financial instruments.
The expected schedule of benefit payments for the plans are as follows.
million
Amount due within one year
Amount due between two and five years
Amount due between six and ten years
Total
173
725
1,062
The Netherlands
84
343
525
United States
86
351
486
Rest of world
3
31
51
