Mercedes 1998 Annual Report Download - page 99

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a) Pension plans and similar obligations
Pension plans and similar obligations are comprised of the
following components:
1998 1997
In 1998 the accrued postretirement benefits mainly decreased
due to contributions to a Voluntary Employees’ Beneficiary
Association (“VEBA”) trust in 1998, 1997 and 1996 totalling
€ 1,498 which are now designated for the payment of
postretirement health care benefits and therefore appropriated
to plan assets.
Pension Plans
The Group provides pension benefits to substantially all of its
hourly and salaried employees. Plan benefits are principally
based upon years of service. Certain pension plans are based
on salary earned in the last year or last five years of
employment while others are fixed plans depending on
ranking (both wage level and position).
At December 31, 1998, plan assets were invested in diversified
portfolios that consisted primarily of real estate, debt and equity
securities, including 14.4 million shares of DaimlerChrysler
Ordinary Shares with a market value of € 1,197 in a U.S. plan,
which were contributed in connection with the Merger (see
Note 20).
Assets and income accruing on all pension trust and relief
funds are used solely to pay pension benefits and administer
the plans.
The following information with respect to the Group’s pension
plans is presented by U.S. Plans and Non-U.S. Plans which are
principally comprised of plans in Germany. The schedules are in
accordance with SFAS 132 which does not change the method of
accounting for such plans.
In 1998 DaimlerChrysler used the rates of the new Heubeck
mortality tables for the valuation of the German pension liabilities.
The mortality assumptions reflect longer living expectations as
well as lower levels of disability, which resulted in a significant
increase in actuarial losses for Non-U.S. Plans in 1998.
95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31,
Pension liabilities (Pension plans) 9,148 8,739
Accrued postretirement health
and life insurance benefits 7,020 8,818
Other pension liabilities 450 264
16,618 17,821
Change in Projected benefit obligations:
Projected benefit obligations at beginning
of year 14,235 13,048 11,430 11,881
Foreign currency exchange rate changes (1,001) (211) 1,757 178
Service cost 378 309 261 277
Interest cost 931 834 899 817
Plan amendments 43 39 35 3
Actuarial losses 658 849 683 450
Effect of curtailments/settlements –1––
Acquisitions and other (143) 132 2 (20)
Benefits paid (898) (595) (832) (538)
Projected benefit obligations at end of year 14,203 14,406 14,235 13,048
Change in plan assets:
Fair value of plan assets at beginning of year 16,231 4,521 12,608 3,947
Foreign currency exchange rate changes (1,220) (190) 1,957 192
Actual return on plan assets 2,254 526 2,445 591
Employer contributions 1,300 5 33 60
Plan participant contributions –2015 1
Acquisitions and other (115) 122 9 (60)
Benefits paid (897) (235) (836) (210)
Fair value of plan assets at end of year 17,553 4,769 16,231 4,521
At December 31, At December 31,
1998 1997
U.S. Plans Non-U.S. U.S. Plans Non-U.S.
Plans Plans