Mercedes 2003 Annual Report Download - page 153
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Please find page 153 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Expected Return on Plan Assets. The expected rate of return
for U.S. plans is based on long-term actual portfolio results,
historical total market returns and an assessment of the expected
returns for the asset classes in the portfolios. The assumptions
are based on surveys of large asset portfolio managers and peer
group companies of future return expectations over the next
ten years. Accordingly, negative returns during a one or two year
period may not significantly change the historical long term rate
of return such as to necessitate or warrant revision of the expected
long term rate of return.
A similar process is implemented to determine the expected rate
of return on plan assets for German Plans. Both capital market sur-
veys as well as the expertise of major banks and industry profes-
sionals are used to determine the expected rate of return on plan
assets.
Net Pension Cost. The components of net pension cost were for
the years ended December 31, 2003, 2002 and 2001 as follows:
Contributions. Employer contributions to the Group’s defined ben-
efit pensions plans were €2,056 million and €1,428 million for the
years ended December 31, 2003 and 2002, respectively. The
employer contribution to the Group’s defined benefit pension plans
is expected to approximate €1.5 billion in 2004, of which €0.1 bil-
lion is estimated to be needed to satisfy minimum funding require-
ments, and an additional €1.4 billion is expected to be contributed
at the Group’s discretion. The Group anticipates that the expected
2004 employer contribution will comprise €1.5 billion in cash.
Accumulated Benefit Obligation. For all pension plans that
have an accumulated benefit obligation in excess of plan assets,
information pertaining to the accumulated benefit obligation
and plan assets are presented as follows:
The expected rate of return on plan assets set for 2001 and 2002
was 7.9% for German Plans. The expected rate of return on plan
assets set for 2001 and 2002 was 10.1% and 10.1% for non-German
Plans (primarily U.S. plans), respectively. During 2002, the Invest-
ment Committees described above decided to gradually shift the
pension fund portfolio asset distribution towards a mix more
weighted with fixed income assets than in prior years, which by
definition would modestly lower return expectations. In addition,
at that time, the Investment Committees’ analysis of market trends
caused management to believe that future long-term returns for
equities and fixed income assets would be lower than the returns
experienced over the previous 25 years.
Therefore, the expected rates of return were lowered to 7.5% for
German plans and 8.5% for non-German plans as of January 1, 2003.
For 2004 the expected rates of return on plan assets are identical
with the rates applied in 2003.
344
1,397
(1,870)
53
287
–
211
24
235
226
629
(595)
74
–
–
334
1
335
198
612
(649)
–
–
–
161
1
162
384
1,622
(2,692)
3
291
1
(391)
208
(183)
404
1,696
(2,750)
(11)
356
148
(157)
625
468
256
632
(509)
173
–
–
552
50
602
German
Plans
2001
Non-German
Plans
German
Plans
2002
Non-German
Plans
German
Plans
2003
Non-German
Plans
(in millions of €)
Service cost
Interest cost
Expected return on plan assets
Amortization of:
Unrecognized net actuarial (gains) losses
Unrecognized prior service cost
Unrecognized net obligation
Net periodic pension cost (benefit)
Settlement/curtailment loss
Net pension cost (benefit)
11 ,12 2
10,224
7,934
At December 31,
2001
32,300
31,206
23,882
31,487
30,547
25,660
At December 31,
2002
At December 31,
2003
Projected benefit obligation
Accumulated
benefit obligation
Plan Assets
(in millions of €)
(in billions of €)
3.5
7.6
2009-
2013
20082007200620052004
0.6
1.6
0.5
1.5
0.5
1.5
0.5
1.5
0.4
1.5
German Plans
Non-German Plans
| 149148
Estimated Future Pension Benefit Payments. Pension benefits
pertaining to the Group’s German and non-German plans were
€527 million and €1,599 million, respectively during 2003, and
€506 million and €1,852 million, respectively during 2002. The
total estimated future pension benefits to be paid by the Group’s
pension plans for the next 10 years approximates €21.2 billion
and are expected to be paid as follows: