BMW 2006 Annual Report Download - page 96

The main assumptions, in addition to life expectancy,
depend on the economic situation in each particular
country. The following weighted average values are
used in the United Kingdom (UK) and in the other
countries:
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The salary level trend refers to the expected rate
of salary increase which is estimated annually de-
pending on inflation and the period of service of em-
ployees with the Group.
In the case of funded plans, the defined benefit
obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the
pension obligations and the enterprise has a right of
reimbursement or a right to reduce future contribu-
tions, the surplus amount is recognised in accor-
dance with IAS 19 as an asset under other assets. In
the case of funded pension plans, a liability is recog-
nised under pension provisions where the benefit
obligation exceeds fund assets.
Actuarial gains or losses may result from
in-
creases or decreases in either the present value of
the defined benefit obligation or in the fair value of
the plan assets. Causes of actuarial gains or losses
include the effect of changes in the measurement
parameters, changes in estimates caused by the
actual development of risks impacting on pension
obligations and differences between the actual and
expected return on plan assets. Past service cost
arises where a BMW Group company introduces a
defined benefit plan or changes the benefits payable
under an existing plan.
Based on the measurement principles con-
tained in IAS 19, the following funding status applies
to the Group’s pension plans:
in % Germany UK Other
31 December 2006 2005 2006 2005 2006 2005
in euro million Germany UK Other Total
31 December 2006 2005 2006 2005 2006 2005 2006 2005
Discount rate 4.40 4.25 5.11 4.72 5.19 5.28
Salary level trend 3.25 3.25 4.12 3.86 2.59 2.62
Pension level trend 1.75 1.75 3.09 2.83 1.79 1.89
Present value of pension benefits covered by
accounting provisions 4,412 4,234 ––134 112 4,546 4,346
Present value of funded pension benefits – –6,568 6,576 316 315 6,884 6,891
Defined benefit obligations 4,412 4,234 6,568 6,576 450 427 11,430 11,237
Fair value of plan assets – –6,134 5,784 298 233 6,432 6,017
Net obligation 4,412 4,234 434 792 152 194 4,998 5,220
Income (+) expense (–) from past service cost
not yet recognised – –––1–2 1–2
Amount not recognised as an asset because of
the limit in IAS 19.58 – –5–11 10 16 10
Balance sheet amount at 31.12. 4,412 4,234 439 792 164 202 5,015 5,228
thereof pension provision 4,412 4,234 440 819 165 202 5,017 5,255
thereof pension asset (–) – ––1 –27 –1 ––2 –27
Pension provisions relating to pension plans in
other countries amounted to euro 165 million (2005:
euro 202 million).This includes euro 80 million (2005:
euro 82 million) relating to externally funded plans.