Unilever 2005 Annual Report Download - page 125
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122 Unilever Annual Report and Accounts 2005
Notes to the consolidated accounts
Unilever Group
22 Pensions and similar obligations (continued)
Assumptions
The assumptions in respect of principal plans used to determine the periodic expense in the table above for pensions and other retirement
benefits are given in the table below:
%%%%%%
Other post- Other post- Other post-
Pension Pension Pension employment employment employment
Weighted average assumptions used to determine net cost plans plans plans benefit plans benefit plans benefit plans
for the principal plans for the years ended 31 December 2005 2004 2003 2005 2004 2003
Discount rate 5.1 5.5 5.7 5.7 6.1 6.5
Expected long-term rate of return on plan assets 6.8 7.2 6.9 n/a n/a n/a
Salary increases 3.6 3.7 3.6 4.5 4.5 4.3
Pension increases 2.2 2.2 2.2 n/a n/a n/a
Expected rate of return on plan assets
The expected rate of return on plan assets was determined, based on actuarial advice, by a process that takes the current long-term rates of
return available on government bonds and applies to these rates suitable risk premiums that take account of historic market returns and current
market expectations.
Post-employment healthcare benefits
Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one percentage point change
in assumed healthcare cost trend rates would have the following effects:
€ million € million
1% point 1% point
increase decrease
Effect on total of service and interest cost components 7(6)
Expected cash flows
During 2006 Unilever currently expects to make cash contributions of €510 million to funded defined benefit plans. This includes both
mandatory and discretionary payments. In addition, a further €64 million is expected to be contributed to defined contribution plans.
The table below shows the expected benefit payments from defined benefit plans. The benefits paid from funded plans include amounts
funded by employee contributions. The benefits paid in respect of unfunded plans are made from the Group’s cash resources.
€ million € million
Pension benefits Other benefits
Expected benefit payments Funded Unfunded Unfunded
2006 861 261 97
2007 892 241 101
2008 914 247 105
2009 939 259 107
2010 958 265 110
2011–2015 5 087 1 471 556