Loreal 2011 Annual Report Download - page 187

185REGISTRATION DOCUMENT − L’ORÉAL 2011
Corporate social, environmental and societal responsibility
6
Social information
Employee B enefit and pension schemes and other
benefits
Depending on the legislation and practices in each country,
L’Oréal adheres to pension schemes, pre-retirement arrangements
and E mployee B enefit schemes offering a variety of additional
coverage for its employees.
In2002, L’Oréal set up a Supervisory Committee for pension
and E mployee B enefit schemes offered by its subsidiaries. This
committee ensures the implementation and the monitoring of
L’Oréal’s pension and E mployee B enefits policy as defined by the
L’Oréal Executive Committee.
This policy provides for general principles in the following
areas: definition and implementation of schemes, relations
with employees, financing and cost of the schemes, and
management of the schemes. Approval must first be obtained
from the Supervisory Committee prior to the introduction of any
new scheme or the modification of any existing scheme. The
Supervisory Committee works together closely with the operational
management of the d ivisions and zones.
The characteristics of the pension schemes and other pre-
retirement benefits offered by the subsidiaries outside France vary
depending on the applicable laws and regulations as well as the
practices of the companies in each country.
In many countries, L’Oréal participates in establishing additional
retirement benefits for its employees through a whole series of
defined benefit schemes and/or defined contribution schemes
(e.g. United States, the Netherlands, Belgium, Canada, and
Latin American countries). In some cases, the defined benefit
schemes have been closed to new recruits who are offered
defined contribution schemes (Germany, Belgium and the United
Kingdom). This series of defined benefit and defined contribution
schemes makes it possible to share the financial risks and ensure
improved cost stability. In defined contribution schemes, the
Company’s commitment mainly consists in paying a percentage
of the employee’s annual salary into a pension plan each year.
The defined benefit schemes are financed by payments into
specialist funds or by setting up provisions, in accordance with
the accounting standards adopted by L’Oréal. The performance
of the managers of the main funds established, as well as the
financial stability rating of the custodians, are regularly reviewed
by the Supervisory Committee.
Employee pension schemes in France
In France, L’Oréal has supplemented its retirement plan by creating
on January1st, 2001 a defined benefit scheme with conditional
entitlements based on the employee’s presence in the Company
at the end of his/her career. Then, on September1st, 2003, a defined
contribution scheme with accrued entitlements was introduced.
Defined benefit scheme
In order to provide additional cover, if applicable, to compulsory
pensions provided by the French Social Security compulsory
pension scheme, the ARRCO or AGIRC (mandatory French
supplementary pension schemes), L’Oréal introduced on
January1st, 2001, a defined benefit scheme with conditional
entitlements, the “Retirement Income Guarantee for former
Senior Managers” (“Garantie de ressources des retraités anciens
cadres dirigeants”).
Prior to this, on December31st, 2000, L’Oréal
closed another defined benefit scheme, also with conditional
entitlements, the “Pension Cover of the Members of the Comité
de Conjoncture”
(“Garantie de retraite des membres du Comité
de Conjoncture”).
Access to the “Retirement Income Guarantee for former Senior
Managers”, created on January1st, 2001, is open to former L’Oréal
Senior Managers who fulfil, in addition to having ended their career
with the Company, the condition of having had the status of Senior
Manager within the meaning of ArticleL.3111-2 of the French
Labour Code for at least ten years at the end of their career.
This scheme provides entitlement to payment to the beneficiary
retiree of a Life Annuity, as well as, after his/her death, the
payment to the beneficiary’s spouse and/or ex-spouse (s) of
a surviving Spouse Pension and, to the children, of an Orphan
Pension, subject to the children fulfilling certain conditions. The
calculation basis for the Guaranteed Income is the average of
the salaries for the best three years out of the seven calendar
years prior to the end of the Senior Manager’s career at L’Oréal.
The Guaranteed Income is calculated based on the beneficiary’s
number of years of professional activity in the Company at the
date of the end of his/her career at L’Oréal, and limited to a
maximum of 25years, each year leading to a steady, gradual
increase of 1.8% in the level of the Guarantee. At this date,
the gross Guaranteed Income may not exceed 50% of the
calculation basis for the Guaranteed Income, nor exceed the
average of the fixed part of the salaries for the three years used
for the calculation basis. A gross annuity and gross Lump Sum
Equivalent are then calculated taking into account the sum
of the annual pensions accrued on the date when the retiree
applies for his/her pension as a result of his/her professional
activity and on the basis of a beneficiary who is 65years of age.
The Life Annuity is the result of the conversion into an annuity
at the beneficiary’s age on the date he/she applies for his/her
pension of the gross Lump Sum Equivalent, less the amount of
all payments due as a result of termination of the employment
contract, excluding any paid notice period and paid holiday
and less all salaries paid under an early retirement leave plan,
if such lump sum equivalent is the result of these operations.
Around 450Senior Managers are eligible for this scheme, subject
to their fulfilling all the conditions after having ended their career
with the Company.
Access to the Pension Cover for Members of the “Comité de
Conjoncture” has been closed since December31st, 2000.
This former scheme granted entitlement to payment to the
beneficiary retiree, after having ended his/her career with the
Company, of a Life Annuity as well as, after his/her death, the
payment to the spouse and/or ex-spouse (s) of a surviving Spouse
Pension and, to the children, of an Orphan Pension, subject to
the children fulfilling certain conditions. The calculation basis
for the Pension Cover is the average of the salaries for the best
three years out of the seven calendar years prior to the end of the
beneficiary’s career at L’Oréal. The Pension Cover is calculated
on the basis of the beneficiary’s number of years’ service and
limited to a maximum of 40years, it being specified that at the date
of closure of the scheme, on December31st, 2000, the minimum
length of service required was 10years. The Pension Cover may
not exceed 40% of the calculation basis for the Pension Cover,
plus 0,5% per year for the first twenty years, then 1% per year for the
following twenty years, nor exceed the average of the fixed part
of the salaries for the three years used for the calculation basis.
Around 120Senior Managers (active or retired) are eligible for this
scheme subject to the condition, for those in active employment,
of fulfilling all the conditions after having ended their career with
the Company.