Unilever 2001 Annual Report Download - page 73

Unilever Annual Report & Accounts and Form 20-F 2001
NOTES TO THE CONSOLIDATED ACCOUNTS
Unilever Group
>70
17 Pensions and similar obligations continued
The following aggregated information is related to the
principal plans:
million million
31 Dec 31 Dec
2001 2000
Actuarial value of assets 16 233 16 198
Provisions 2 093 1 827
Prepayments (868) (748)
Liabilities 14 433 13 869
Financing level %* 121% 125%
Actual market value of assets 16 440 18 450
*Assets plus net provisions as % of liabilities.
The average assumptions for valuing these principal plans, weighted
by liabilities were:
2001 2000
Interest rate 7.0% 7.1%
Salary increases 4.3% 4.3%
Pension increases 2.9% 3.0%
The actuarial value of assets is generally a smoothed market value
determined by spreading gains and losses relative to the actuarial
basis over a three- to five-year period.
For the remaining defined benefit plans, as at 31 December
2001, the market value of the assets was 536 million
(2000: 487 million), and net provisions in the accounts
amounted to 1 176 million (2000: 1 379 million). The overall
level of financing of these defined benefit plans at the dates of
the last valuations was 91% (2000: 90%).
Pension costs and contributions paid by the Group to the funds
have been reduced in recent years mainly due to surpluses in the
Group’s two biggest funds. These surpluses were recognised by
amortisation using the mortgage method. The net amount of
surplus recognised in the profit and loss account in 2001 was
370 million (2000: 309 million).
In 2001 the Group received a gross cash refund of 221 million
from a Netherlands fund in a surplus position. A further refund
has been received in 2001 of 76 million from a Finnish fund in
surplus. Cash refunds do not directly impact the pension charge
for 2001 as the surplus is amortised in accordance with the
Group’s accounting policies.
The Group also operates a number of defined contribution plans.
The assets of all the Group’s defined contribution plans are held in
independently administered funds. The pension costs charged to
the profit and loss account represent contributions payable by the
Group to the funds. The market value of the assets of externally
funded defined contribution plans as at 31 December 2001 was
416 million (2000: 271 million). The value of assets of
the defined contribution plans exclude 401(k) plans in the United
States, the corresponding cost of which is included in Staff Costs
under note 3 on page 62.
Group companies provide other post-retirement benefits (mainly
post-retirement medical benefit plans) to a number of retired
employees in certain countries, principally the United States, under
several different plans which are predominantly unfunded. These
other post-retirement plans are accounted for in accordance with
SFAS 106 and SFAS 112.
Further disclosures required in accordance with FRS 17
In respect of the principal defined benefit pension plans and plans
providing other post retirement benefits, the major actuarial
assumptions at 31 December 2001, weighted by liabilities, were:
Other
Pensions benefits
Discount rate 6.00% 7.25%
Rate of increase in salaries 3.50% 4.50%
Rate of increase for pensions in payment 2.00% n/a
Rate of increase for pensions
in deferment (where provided) 1.50% n/a
Inflation assumption 2.25% n/a
Medical cost inflation n/a 5.00%
The assets, liabilities and surplus position of these plans and the
expected rates of return were:
million million million
Long-term
Other rate of
Pensions benefits return
value at value at expected
31 Dec 31 Dec at 31 Dec
2001 2001 2001
Equities 10 494 –9.00%
Bonds 4 138 –5.50%
Other 1 808 3 6.00%
Total market value of assets 16 440 3 7.79%
Present value of plan liabilities (15 039) (1 171)
Aggregate net
surplus/(deficit) in the plans 1 401 (1 168)
Irrecoverable surplus (268) –
Related deferred tax liability (634) 467
Net pension asset/(liability) 499 (701)
Of which, in respect of funded
plans in surplus:
Aggregate surplus 2 723 –
Irrecoverable surplus (268) –
Related deferred tax liability (832) –
Net pension asset 1 623 –
And, in respect of funded plans in
deficit and unfunded plans:
Aggregate deficit (1 322) (1 168)
Related deferred tax asset 198 467
Net pension liability (1 124) (701)
The surplus in the plans is only recoverable to the extent that the
Group can benefit from either refunds formally agreed or future
contribution reductions. All risk benefits were valued using the
expected cost of benefits payable in the year.
For the remaining defined benefit plans, the market value of assets
as at 31 December 2001 was 536 million (2000: 487 million).
At the most recent valuations, the aggregate deficit and unfunded
obligations in these plans was 1 245 million. The related deferred
tax amount was 388 million.
If the above amounts had been recognised in the financial
statements, the Group’s net assets and profit retained at
31 December 2001 would be as follows:
million million
Net Profit
Assets Retained
Unilever Group as reported 7 859 6 619
Excluding SSAP 24 liability 2 842 2 817
Net assets/Profit retained
excluding pension liability 10 701 9 436
FRS 17 pension liability (1 059) (1 040)
Net assets/Profit retained
including FRS 17 pension liability 9 642 8 396