Chrysler 2007 Annual Report Download - page 292

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. Once the contributions have been paid the company has no further payment
obligations. Liabilities for contributions accrued but not yet paid at the balance sheet date are included in the item Other payables
(see Note 25). The company recognises the contribution cost for the year on the basis of the service rendered by the employee in
the item Personnel costs (see Note 5).
In the case of post-employment benefits the company’s obligation is determined on an actuarial basis, using the Projected Unit
Credit Method. Any resulting actuarial gains and losses are accounted for using the corridor approach.
Finally, the company grants certain other long-term benefits to its employees; these benefits include those generally paid when the
employee attains a specific seniority. In this case, the measurement of the obligation reflects the probability that payment will be
made and the period over which the 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 the actuarial gains and losses arising from this
obligation.
Changes in provisions for employee benefits during the year are as follows:
At At
(in thousands of euros) December 31, 2006 Accruals Utilisations Other changes December 31, 2007
Post-employment benefits:
- Employee severance indemnity 6,716 1,110 (1,308) (354) 6,164
- Other 9,851 2,890 (567) 89 12,263
Total post-employment benefits 16,567 4,000 (1,875) (265) 18,427
Other long-term employee benefits 1,504 263 (176) 19 1,610
Total Provisions for employee benefits and similar provisions 18,071 4,263 (2,051) (246) 20,037
Post-employment benefits and Other long-term employee benefits are calculated on the basis of the following actuarial
assumptions:
At December 31, 2007 At December 31, 2006
Discount rate 4.66% 3.93%
Future salary increase rate 2.94% 4.28%
Inflation rate 2.00% 2.00%
Theoretical retirement age Years: 60 (F) - 65 (M) Years: 60 (F) - 65 (M)
Mortality rate SI02 SI99
Average annual departure rate 9.30% 9.79%
The provisions for employee benefits and similar may be summarised as follows:
Employee severance indemnity
The Employee severance indemnity represents the obligation due to employees under Italian law (recently amended by Law
no. 296/06) that has accrued up to December 31, 2006 and that will be settled when the employee leaves the company. In certain
circumstances, a portion of the accrued liability may be given to an employee during his working life as an advance. This is an
unfunded defined benefit plan, under which the benefits are almost fully accrued, with the sole exception of future revaluations.
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 291