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
Multi-employer plans
A significant number of union employees in the United States are covered by multi-employer plans based on obligations arising from collective
bargaining agreements. These plans provide retirement and other benefits to participants based on their service to contributing employers.
The benefits are paid from assets held in trust for that purpose. Trustees are appointed in equal number by employers and unions and they are
typically responsible for oversight of the investment of the assets and administration of the plan. Contribution rates and benefit levels are generally
determined through the collective bargaining process between the participating employers and unions. None of the Company’s collective
bargaining agreements require that a minimum funding requirement exists for these plans.
Most of these plans are defined contribution plans. All plans that are defined benefit plans, on the basis of the terms of the benefits provided, are
accounted for as defined contribution plans because there is insufficient information available to account for these plans as defined benefit plans.
These plans are generally flat dollar benefit plans. Ahold Delhaize is only one of several employers participating in each of these plans and there
is no reliable basis to accurately determine Ahold Delhaize’s share of plan obligations and assets following defined benefit accounting principles.
Furthermore, the financial statements of the multi-employer plans are drawn up on the basis of other accounting policies than those applied by
Ahold Delhaize. Consequently, these multi-employer plans are not included in the Company’s balance sheet.
Defined benefit plans
Ahold Delhaize participates in 11 multi-employer pension plans that are defined benefit plans on the basis of the terms of the benefits provided.
The following table presents the Company’s estimate of its proportionate share of each plan’s deficit or surplus. Ahold Delhaize’s participation
is the relative amount of its contributions during the year in relation to the total amount of contributions made to the plan. The estimate of the
Company’s net proportionate share of the plans’ deficits is based on the latest available information received from these plans, such as the plans’
measurement of plan assets and the use of discount rates between 6.5% and 8.0%. The information received has been updated for market trends
and conditions through the end of 2016, and does not represent Ahold Delhaize’s direct obligation. While this is our best estimate, based upon
information available to us, it is imprecise and not necessarily reliable.
The risks of participating in multi-employer plans are different from the risks of single employer plans. Ahold Delhaize’s contributions may be used
to provide benefits to employees of other participating employers. Ahold Delhaize may become obligated for a plan’s unfunded obligations if
other participating employers cease to participate in the plan. Similarly, if a number of employers cease to have employees participating in the
plan, Ahold Delhaize could be responsible for an increased share of the plan’s deficit. If Ahold Delhaize withdraws from a plan, it may be required
to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
