Audi 2014 Annual Report Download - page 252

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE BALANCE SHEET
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PROVISIONS FOR PENSIONS
Provisions for pensions are created on the basis of plans to
provide retirement, disability and surviving dependent benefits.
The benefit amounts are generally contingent on the length of
service and the remuneration of the employees.
Both defined contribution and defined benefit plans exist within
the Audi 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 statu-
tory or contractual requirements, or on a voluntary basis.
Payment of these contributions releases the Company from
any other benefit obligations. Current contribution payments
are reported as an expense for the year in question. In the case
of the Audi Group, they totaled EUR 341 (319) million. Of this,
contributions of EUR 319 (299) million were paid in Germany
toward statutory pension insurance.
The retirement benefit systems are based predominantly on
defined benefit plans, with a distinction being made between
systems based on provisions and externally financed benefit
systems. The provisions for pensions for defined benefit plans
are calculated by independent actuaries in accordance with
IAS 19 using the projected unit credit method, a method
commonly used internationally. This measures future obliga-
tions on the basis of the pro rata benefit claims acquired as of
the balance sheet date. The measurement takes account of
actuarial assumptions regarding discounting rates, remunera-
tion and retirement benefit trends, staff turnover rates and
increasing costs of health care. Actuarial gains and losses
result from deviations in what has actually occurred compared
with the assumptions made during the previous year and from
changes in assumptions. They are reported in equity with no
effect on profit or loss during the period in which they occur, as
part of revaluations, taking deferred taxes into account. These
revaluations also include the interest income from plan assets.
The retirement benefit scheme within the Audi Group was
evolved into a Contractual Trust Arrangement (CTA) in Germany
on January 1, 2001. The trust is a contribution-based retire-
ment benefit scheme with guarantees backed by Volkswagen
Pension Trust e.V., Wolfsburg. An annual cost of providing
benefits, based on remuneration and status, is converted into
a retirement benefits entitlement payable for life (guarantee
components) using annuity conversion factors. The annuity
conversion factors include a guaranteed rate of interest. When
the benefits are due, the retirement benefits components
acquired annually are added together. The cost of providing
benefits is invested on an ongoing basis in a dedicated fund
that is managed on a fiduciary basis by Volkswagen Pension
Trust e.V. and invested in the capital market. If the plan assets
are higher than the present value of the obligations calculated
using the guaranteed interest rate, a surplus is allocated
(surplus components).
The pension fund model is classed as a defined benefit plan
pursuant to IAS 19. The dedicated fund administered on a
fiduciary basis satisfies the requirements of IAS 19 as plan
assets and has therefore been offset against the obligations.
30.1 / AMOUNTS RECORDED IN THE BALANCE SHEET FOR DEFINED BENEFIT OBLIGATIONS
EUR million Dec. 31, 2014 Dec. 31, 2013
Present value of externally funded defined benefit obligations 1,662 1,032
Fair value of plan assets 1,156 972
Financing status (balance) 505 60
Present value of defined benefit obligations not externally funded 4,079 3,150
Due to the limit on a defined benefit asset amount
not capitalized under IAS 19 – –
Provisions for pensions recognized in the Balance Sheet 4,585 3,209