BMW 2007 Annual Report Download - page 112

110 Group Financial Statements
73 Group Financial Statements
73 Income Statements
74 Balance Sheets
76 Cash Flow Statements
78 Group Statement of Changes
in Equity
79 Statement of Income and
Expenses recognised directly
in Equity
80 Notes
80 – Accounting Principles
and Policies
89 – Notes to the Income
Statement
96 – Notes to the Balance Sheet
117 – Other Disclosures
131 – Segment Information
The expense from reversing the discounting of pen-
sion obligations and the income from the expected
return on plan assets are reported as part of the
financial result. All other components of pension
expense are included in the relevant income state-
ment under costs by function.
Pension plan assets are invested in various
investment categories, the most predominant one
being bonds. Other equity instruments and alter-
native investments such as property are also con-
sidered. The expected rate of return is derived on
the basis of the specific investment strategy applied
to each individual pension fund, either by applying
percentages based on long-term state bonds or
using absolute estimates of pension fund income.
The actual return from external pension funds
was euro 314 million (2006: euro 432 million).
The level of the pension obligations differ de-
pending on the pension system applicable in each
country. Since the state pension system in the
United Kingdom only provides a basic fixed amount
benefit, retirement benefits are largely organised in
the form of company pensions and arrangements
financed by the individual. The pension benefits in
the United Kingdom therefore contain contributions
made by the employee.
Past service cost included in the expense from
pension obligations decreased in 2007 by euro 103
million as a result of the Retirement Age Amendment
Act passed in 2007 which raised the statutory retire-
ment age for the state pension scheme in Germany.
The later retirement age of employees resulted in
an amendment to the pension plan in place at the
Group’s German entities. The resulting decrease in
the pension obligation was recognised in the income
statement.
The net obligation from pension plans in Ger-
many, the United Kingdom and other countries
changed as follows:
The defined benefit plans of the BMW Group give
rise to an expense from pension obligations in the
financial year 2007 of euro 319 million (2006: euro
445 million), comprising the following components:
in euro million Germany UK Other Total
2007 2006 2007 2006 2007 2006 2007 2006
Current service cost 150 160 64 64 29 34 243 258
Expense from reversing the discounting of
pension obligations 192 169 323 307 22 25 537 501
Past service cost – 103 – – – – 1 – 103 1
Expected return on plan assets (–) – – – 335 – 300 – 23 – 15 – 358 – 315
Expense from pension obligations 239 329 52 71 28 45 319 445
in euro million Germany
Defined benefit obligation Plan assets Net obligation
2007 2006 2007 2006 2007 2006
1 January 4,414* 4,234 – – 4,414 4,234
Expense from pension obligations 239 329 – – 239 329
Payments to external funds – – – – – –
Pension payments – 80 – 72 – – – 80 – 72
Actuarial gains (–) and losses (+) – 776 – 167 – – – 776 – 167
Employee contributions to the deferred remuneration
retirement scheme 52 87 – – 52 87
Translation differences and other changes – 1 – – – 1
31 December 3,849 4,412 – – 3,849 4,412
*
including entities consolidated for the first time during the financial year