Audi 2007 Annual Report Download - page 210

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29 Provisions for pensions
Provisions for pensions are created on the basis of plans to provide retirement, disability
and survivor benefits. The benefit amounts are generally contingent on the length of service
and the remuneration of the employees.
Both defined contribution and defined benefit commitments exist within the Group for
retirement benefit arrangements. In the case of defined contribution plans, the Company
pays contributions to public- or private-sector pension plans on the basis of statutory or
contractual requirements, or on a voluntary basis. Payment of the contributions releases the
Company from any other benefit obligations. The regular contributions paid are recorded as
expense for the year in question; they amounted to EUR 237 (220) million for the Audi Group.
Of this total, EUR 220 (206) million was paid into the government pension plan in Germany.
The retirement benefit systems are based predominantly on defined benefit plans, with a
distinction being made between systems based on provisions and externally financed bene-
fit systems.
The benefit entitlements to retirement benefits both in Germany and internationally are
measured according to the Projected Unit Credit Method pursuant to IAS 19 (Employee
Benefits), where the future obligations are measured on the basis of benefit claims vested
pro rata as of the balance sheet date. For purposes of measurement, trend assumptions are
used for the relevant quantities affecting the level of benefit.
The retirement benefit scheme within the Audi Group was evolved into a pension fund
model in Germany on January 1, 2001. The retirement benefit commitments for this model
are also classified as defined benefits in accordance with the requirements of IAS 19. The
remuneration-based annual cost of providing employee benefits is invested in mutual funds
on a fiduciary basis by Volkswagen Pension Trust e.V. This model offers employees the op-
portunity of increasing their pension entitlements, while providing full risk coverage. As the
mutual fund units administrated on a fiduciary basis satisfy the requirements of IAS 19 as
plan assets, these funds were offset against the retirement benefit obligations.
The amounts recorded in the Balance Sheet for defined benefits are presented in the fol-
lowing table:
EUR million Dec. 31, 2007 Dec. 31, 2006
Present value of externally funded defined benefit obligations 368 306
Fair value of plan assets 368 306
Financing status (balance) 0 0
Present value of defined benefit obligations not externally funded 1,957 1,974
Provisions for pensions recognized in the Balance Sheet 1,957 1,974