Chrysler 2005 Annual Report Download - page 128

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Fiat Group Consolidated Financial Statements at December 31, 2005 - N otes to the Consolidated Financial Statements
26. Provisions for employee benefits
Group companies provide post-employment benefits for their employees, either directly or by contributing to independently administered
funds.
The way these benefits are provided varies according to the legal, fiscal and economic conditions of each country in which the Group
operates, the benefits generally being based on the employees’ remuneration and years of service.The obligations relate both to active
employees and to retirees.
Group companies provide post-employment benefits under defined contribution and/or defined benefit plans.
In the case of defined contribution plans, the company pays contributions to publicly or privately administered pension insurance plans
on a mandatory, contractual or voluntary basis. O nce the contributions have been paid, the company has no further payment obligations.
Liabilities for contributions accrued but not paid are included in the item O ther payables (see N ote 30).The entity recognise the contribution
cost when the employee has rendered his service and includes this cost in Cost of Sales, Selling, General and Administrative costs and
Research and development costs. In 2005, these expenses totalled 1,080 million euros (1,070 million euros in 2004).
Defined benefit plans may be unfunded, or they may be wholly or partly funded by contributions by an entity, and sometimes its employees,
into an entity, or fund, that is legally separate from the employer and from which the employee benefits are paid.
In the case of funded and unfunded post employment benefits, included in the item post-employment benefits, the Group obligation is
determined on an actuarial basis, using the Projected Unit Credit Method and is offset against the fair value of plan assets, if any.W here the
fair value of plan assets exceed the post-employment benefits obligation, and the group has a right of reimbursement or a right to reduce
future contributions, the surplus amount is recognised in accordance with IAS 19 as an asset.As discussed in the paragraph Significant
accounting policies, actuarial gains and losses are accounted for from January 1, 2004 using the corridor approach.
Finally, the Group grants certain O ther long-term benefits to its employees; these benefits include those generally paid when the employee
attains a specific seniority or in the case of disability. In this case the measurement of the obligation reflects the probability that payment will
be required and the length of time for which payment is expected to be made.The amount of this obligation is calculated on an actuarial basis
using the Projected Unit Credit Method.The corridor approach is not used for actuarial gains and losses arising from this obligation.
The item O ther provisions for employees consists of the best estimate at the balance sheet date of short-term employee benefits payable
by the Group within twelve months after the end of the period in which the employees render the related service.
Changes in Provisions for employee benefits for the year ended D ecember 31, 2005 are as follows:
Change in
the scope of
At consolidation At
December and other December
(in millions of euros) 31, 2004 Provision Utilisation changes 31, 2005
Post-employment benefits:
Employee severance indemnity 1,179 121 (150) 133 1,283
Pension Plans 977 55 (157) (3) 872
Health care plans 1,024 76 (64) 66 1,102
O ther 262 26 (39) 45 294
Total post-employment benefits 3,442 278 (410) 241 3,551
O ther long-term employee benefits 100 136 (28) 8 216
O ther provisions for employees 140 18 (13) 7 152
Total provision for employee benefits 3,682 432 (451) 256 3,919