Chrysler 2008 Annual Report Download - page 179

Defined benefit plans may be unfunded, or they may be wholly or partly funded by contributions by an entity, and sometimes by
its employees, into an entity, or fund, that is legally separate from the employer and from which the employee benefits are paid.
Benefits are generally payable under these plans after the completion of employment. The plans are classified by the Group on the
basis of the type of benefit provided as follows: Reserve for employee severance indemnity (TFR), Pension plans, Health care plans
and Other.
Reserve for employee severance indemnity (“TFR”)
The TFR consists of the residual obligation for severance indemnities which was required until 31 December 2006 under Italian
legislation to be paid to employees of Italian companies with more than 50 employees when leaving the company, and accrued
over the employee’s working life for other companies. This provision is settled to retiree employees and may be partially paid
in advance if certain conditions are met. This defined benefit post-employment plan is unfunded.
Pension plans
The item Pension plans consists principally of the obligations of Group companies operating in the United States (mainly to the
CNH – Case New Holland Sector) and in the United Kingdom towards certain employees and former employees of the Group.
Under these plans a contribution is generally made to a separate fund (trust) which independently administers the plan assets.
The Group’s funding policy is to contribute amounts to the plan equal to the amounts required to satisfy the minimum funding
requirements prescribed by the laws and regulations of each individual country. Prudently the Group makes discretionary
contributions in addition to the funding requirements. If these funds are overfunded, that is if they present a surplus compared to
the requirements of law, the Group companies concerned may not be required to contribute to the plan in respect of the minimum
performance requirement as long as the fund is in surplus.
The investment strategy for these assets depends on the features of the plan and on the maturity of the obligations. Typically long-
term plan benefit obligations are funded by investing mainly in equity securities; short and medium-term plan benefit obligations
are funded by investing in fixed income securities, which are less volatile.
In the United Kingdom the Group participates in a plan financed by various entities belonging to the Group, called the “Fiat Group
Pension Scheme”, amongst others. Under this plan, participating employers make contributions on behalf of their active employees
(active), retirees and employees who have left the Group but have not yet retired (deferred).
Health care plans
The item Health care plans comprise obligations for health care and insurance plans granted to employees of the Group working in
the United States and Canada (mostly relating to CNH – Case New Holland Sector). These plans generally cover employees retiring
on or after reaching the age of 55 who have had at least 10 years of service. CNH United States salaried and non-represented
hourly and Canada employees hired after 1 January 2001 and 1 January 2002, respectively, are not eligible for health care and
insurance benefits under the CNH plans. Until 31 December 2006 these plans were fully unfunded; starting in 2007, the Group
began making contributions on a voluntary basis to a separate and independently managed fund established to finance the North
American health care plans.
Fiat Group Consolidated Financial Statements at 31 December 2008178