Unilever 2005 Annual Report Download - page 123

120 Unilever Annual Report and Accounts 2005
Notes to the consolidated accounts
Unilever Group
22 Pensions and similar obligations (continued)
Plan assets
The table below shows the changes in the fair value of plan assets during 2005 and 2004:
€ million € million € million € million
Other post- Other post-
Pension Pension employment employment
plans plans benefit plans benefit plans
Change in the fair value of plan assets during the year 2005 2004 2005 2004
1 January 13 441 12 850 14 3
Actual return on plan assets 2 483 1 275 39
Acquisitions/(disposals) (3) –––
Settlements (10) (23) ––
Employer contributions/surplus refunds 751 693 82 88
Plan member contributions 19 32 ––
Benefits paid from plan assets (1 160) (1 126) (84) (89)
Reclassification of benefits(b) 39 (166) ––
Currency retranslations 429 (94) 23
31 December 15 989 13 441 17 14
(b) During 2004, some plans changed from defined benefit to defined contribution. During 2005, certain obligations were reclassified as
employee benefit obligations.
Asset allocation
The asset allocation for the Group’s principal pension plans at 31 December 2004 and 2005, target allocation for 2006, and expected long-term
rates of return by asset category are as follows:
Long-term
Target Percentage Percentage expected
percentage of plan of plan return on
allocation assets at assets at plan assets at
for 31 December 31 December 31 December
Long-term asset category 2006 2005 2004 2005
Equity securities 62 61 63 7.4%
Debt securities 26 25 24 4.2%
Property 9995.8%
Other 3546.1%
100 100 100 6.4%
Equity securities include Unilever securities amounting to €34 million (0.2% of total plan assets) and €24 million (0.2% of total plan assets) at
31 December 2005 and 2004 respectively.
Investment strategy
The Group’s investment strategy in respect of its funded pension plans is implemented within the framework of the various statutory
requirements of the territories where the plans are based. The Group has developed policy guidelines for the allocation of assets to different
classes with the objective of controlling risk and maintaining the right balance between risk and long-term returns in order to limit the cost to
the company of the benefits provided. To achieve this, investments are well diversified, such that the failure of any single investment would not
have a material impact on the overall level of assets. The plans invest the largest proportion of the assets in equities which the Group believes
offer the best returns over the long term commensurate with an acceptable level of risk. The Group also keeps a proportion of assets invested
in property, bonds and cash. Most assets are managed by a number of external fund managers with a small proportion managed in-house.
Unilever has recently launched a pooled investment vehicle (Univest) which it believes will offer its pension plans around the world a simplified
investment solution to implement their strategic asset allocation models initially for equities. The aim is to provide a high quality, well diversified
risk-controlled solution.