Chrysler 2014 Annual Report Download - page 168

166 2014 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
Plan obligations and costs are based on existing retirement plan provisions. Assumptions regarding any potential
future changes to benefit provisions beyond those to which the Group is presently committed are not made. The
assumptions used in developing the required estimates include the following key factors:
Discount rates. The Group selects discount rates on the basis of the rate of return on high-quality (AA-rated) fixed
income investments for which the timing and amounts of payments match the timing and amounts of the projected
pension payments.
Salary growth. The salary growth assumption reflects the Group’s long-term actual experience, outlook and
assumed inflation.
Inflation. The inflation assumption is based on an evaluation of external market indicators.
Expected contributions. The expected amount and timing of contributions is based on an assessment of minimum
funding requirements. From time to time contributions are made beyond those that are legally required.
Retirement rates. Retirement rates are developed to reflect actual and projected plan experience.
Mortality rates. Mortality rates are developed using our plan-specific populations, recent mortality information
published by recognized experts in this field and other data where appropriate to reflect actual and projected plan
experience.
Plan assets measured at net asset value. Plan assets are recognized and measured at fair value in accordance with
IFRS 13 - Fair Value Measurement. Plan assets for which the fair value is represented by the net asset value (“NAV”)
since there are no active markets for these assets amounted to €2,750 million and €2,780 million at December 31,
2014 and at 2013, respectively. These investments include private equity, real estate and hedge fund investments.
In 2014, following the release of new standards by the Canadian Institute of Actuaries, mortality assumptions used for
our Canadian benefit plan valuations were updated to reflect recent trends in the industry and the revised outlook for
future generational mortality improvements. The change increased our Canadian pension obligations by approximately
€41 million.
Additionally, retirement rate assumptions used for our U.S. benefit plan valuations were updated to reflect an ongoing
trend towards delayed retirement for FCA US employees. The change decreased our U.S. pension obligations by
approximately €261 million.
Significant differences in actual experience or significant changes in assumptions may affect the pension obligations
and pension expense. The effects of actual results differing from assumptions and of amended assumptions are
included in Other comprehensive income/(loss). The weighted average discount rate used to determine the benefit
obligation for the defined benefit obligation for the defined benefit plan was 4.03 percent at December 31, 2014 (4.69
percent at December 31, 2013).
At December 31, 2014 the effect of the indicated decrease or increase in selected factors, holding all other
assumptions constant, is shown below:
Effect on pension
defined benefit
obligation
(€ million)
10 basis point decrease in discount rate 317
10 basis point increase in discount rate (312)
At December 31, 2014, the net liabilities and net assets for pension benefits amounted to €5,166 million and to
€104 million, respectively (€4,253 million and €95 million, respectively at December 31, 2013). Refer to Note 25 for a
detailed discussion of the Group’s pension plans.