LensCrafters 2013 Annual Report Download - page 135

Liabilities for termination indemnities mainly include post-employment benefits of the Italian companies’
employees (hereinafter “TFR”), which at December 31, 2013 amounted to Euro 38.1 million (Euro 39.7 million as of
December 31, 2012).
Effective January 1, 2007, the TFR system was reformed, and under the new law, employees are given the
ability to choose where the TFR compensation is invested, whereas such compensation otherwise would be directed to
the National Social Security Institute or Pension Funds. As a result, contributions under the reformed TFR system are
accounted for as a defined contribution plan. The liability accrued until December 31, 2006 continues to be considered a
defined benefit plan. Therefore, each year, the Group adjusts its accrual based upon headcount and inflation, excluding
changes in compensation level.
This liability as of December 31, 2013 represents the estimated future payments required to settle the
obligation resulting from employee service, excluding the component related to the future salary increases.
Contribution expense to pension funds was Euro 19.4 million and Euro 18.6 million for the years 2013 and
2012, respectively.
In application of IAS 19, the valuation of TFR liability accrued as of December 31, 2006 was based on the
Projected Unit Credit Cost method. The main assumptions utilized are reported below:
2013 2012
ECONOMIC
ASSUMPTIONS
Discount rate 3.15% 3.25%
Annual TFR increase rate 3.00% 3.00%
Death probability: Those determined by the
General Accounting
Department of the
Italian Government,
named RG48
Those determined by the
General Accounting
Department of the
Italian Government,
named RG48
Retirement probability: Assuming the
attainment of the first of
the retirement
requirements applicable
for the Assicurazione
Generale Obbligatoria
(General Mandatory
Insurance)
Assuming the
attainment of the first of
the retirement
requirements applicable
for the Assicurazione
Generale Obbligatoria
(General Mandatory
Insurance)
Movements in liabilities during the course of the year are detailed in the following table:
(Amounts in thousands of Euro)
2013 2012
Liabilities at the beginning of the period 39,708 36,257
Expenses for interests 1,248 1,606
Actuarial loss (income) (201) 4,532
Benefits paid (2,660) (2,687)
Liabilities at the end of the period 38,095 39,708
Pension funds
Qualified Pension Plans—U.S. Holdings sponsors a qualified noncontributory defined benefit pension plan, the
Luxottica Group Pension Plan (“Lux Pension Plan”), which provides for the payment of benefits to eligible past and
present employees of U.S. Holdings upon retirement. Pension benefits are gradually accrued based on length of service
and annual compensation under a cash balance formula. Participants become vested in the Lux Pension Plan after three
years of vesting service as defined by the Lux Pension Plan.
In 2013, the Lux Pension Plan was amended so that
employees hired on or after January 1, 2014 would not be eligible to participate.