Mercedes 2003 Annual Report Download - page 154

Financial Reporting | Overview | Analysis of the Financial Situation | Statement by the Board of Management | Independent Auditors’ Report | Financial Statements
The pretax decrease in the minimum pension liability in 2003
included in other comprehensive income (loss) was €662 million
and in 2002 and 2001 there was an increase in the minimum pen-
sion liability included in other comprehensive income (loss) of
€10,022 million and €1,436 million for the years ended December
31, respectively.
Other Postretirement Benefits
Certain DaimlerChrysler operations in the U.S. and Canada provide
postretirement health and life insurance benefits to their employ-
ees. Upon retirement from DaimlerChrysler the employees may
become eligible for continuation of these benefits. The benefits and
eligibility rules may be modified.
Investment Policies and Strategies. At December 31, 2003,
plan assets were invested in diversified portfolios that consisted
primarily of debt and equity securities. Assets and income accruing
on all pension trust and relief funds are used solely to pay benefits
and administer the plans. The Group’s other benefit plan asset
allocation at December 31, 2003 and 2002, and target allocations
for 2004 are as follows:
Asset allocation is based on a Benchmark Portfolio designed to
diversify investments among the following primary asset classes:
U.S. Equity, International Equity and U.S. Fixed Income. The
objective of the Benchmark Portfolio is to achieve a reasonable
balance between risk and return.
The investment process is overseen by investment committees
which consist of senior financial management and other appropriate
executives. The Investment Committees meet regularly to approve
the asset allocations and review the risks and results of the funds
and approve the selection and retention of external managers of
specific portfolios.
The majority of investments reflects the asset classes designated
by the Benchmark Portfolio. To maintain a wide range of diversifica-
tion and improve return possibilities, a small percentage of assets
(approximately 5%) is allocated to highly promising markets such as
High Yield Debt and Emerging Markets. Internal controlling units
monitor all investments. External depositary banks provide safe-
keeping of securities as well as reporting of transactions and
assets.
Funded Status. The following information is presented with
respect to the Group’s postretirement benefit plans:
A reconciliation of the funded status, which is the difference
between the accumulated postretirement benefit obligations and
the fair value of plan assets, to the liability recognized for accrued
postretirement health and life insurance benefits in pension plans
and similar obligations is as follows:
62
37
–
1
2002
68
32
–
–
65
35
–
–
2003
2004
planned
Equity securities
Debt securities
Real Estate
Other
(in % of plan assets)
(in millions of €)
At December 31,
20022003
15,933
(2,553)
278
983
(383)
1,242
11
198
(799)
14,910
2,232
(490)
379
(673)
137
(54)
1,531
15,095
(2,454)
262
1,062
(90)
2,863
59
7
(871)
15,933
2,982
(447)
(294)
1
–
(10)
2,232
Change in accumulated postretirement benefit obligations:
Accumulated postretirement benefit obligations
at beginning of year
Foreign currency exchange rate changes
Service cost
Interest cost
Plan amendments
Actuarial losses
Settlement/curtailment loss
Acquisitions and other
Benefits paid
Accumulated postretirement benefit obligations
at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Foreign currency exchange rate changes
Actual gains (losses) on plan assets
Employer contributions (withdrawals)
Dispositions/Acquisitions
Benefits paid
Fair value of plan assets at end of year
(in millions of €)
At December 31,
20022003
13,379
(5,114)
(62)
8,203
13,701
(4,979)
(555)
8,167
Funded status
Amounts not recognized:
Unrecognized actuarial net losses
Unrecognized prior service cost
Net liabilitiy recognized