Chrysler 2011 Annual Report Download - page 202

201
Consolidated
Financial Statements
at 31 December 2011
26. Provisions for employee benefits
A detail of provisions for employee benefits is as follows:
(€ million) At 31 December 2011 At 31 December 2010 (*)
Pension benefits 2,863 128
Health care and life insurance plans 1,922 2
Employee leaving entitlements in Italy 793 846
Other post-employment benefits 145 113
Total Post-employment benefits 5,723 1,089
Other provisions for employees and liabilities for share based payments 1,006 491
Other long-term employee benefits 297 124
Total Provision for employee benefits 7,026 1,704
Defined benefit plan assets 85 8
Total Defined benefits plan assets 85 8
(*) The amounts relate to Continuing Operations.
Provisions for employee benefits consist of the benefits which will be provided after the completion of employment such as pensions, health care and life
insurance plans, and the benefits which will be provided during an employee’s working life.
The Group provides post-employment benefits for their active employees and retirees. The way these benefits are provided varies according to the legal,
fiscal and economic conditions of each country in which the Group operates and may change periodically. The plans are classified by the Group on the
basis of the type of benefit provided as follows: Pension benefits, health care and life insurance plans, Reserve for Employee leaving entitlements in Italy
(TFR) and Other post-employment benefits.
Moreover, Group companies additionally provide post-employment benefits under defined contribution plans. In this case, the Group pays contributions
to public or private pension insurance plans on a legally mandatory, contractual, or voluntary basis, and by paying these contributions the Group fulfils all
of its obligations. The Group recognises the cost for defined contribution plans over the period in which the employee renders service and classifies this by
function in Cost of sales, Selling, general and administrative costs and Research and development costs. In 2011 this costs totalled €1,383 million (€937
million in 2010 for Continuing Operations).
Pension benefits
Group companies sponsor both non-contributory and contributory defined benefit pension plans. The non-contributory pension plans cover certain
employees (hourly and salaried) in the United States, Canada and Mexico and certain employees and retirees in the UK. Benefits are based on a fixed
rate for each year of service. Additionally, contributory benefits are provided to certain salaried employees. These plans provide benefits based on the
employee’s cumulative contributions, years of service during which the employee contributions were made and the employee’s average salary during the
five consecutive years in which the employee’s salary was highest in the fifteen years preceding retirement.
Liabilities arising from these plans are usually funded by contributions made by the employer and, at times by the employees, into a separate company or
fund which independently administers the plan assets and from which the employee benefits are paid. 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 as long as the fund is in surplus.