Mercedes 2010 Annual Report Download - page 219

Consolidated Financial Statements | Notes to the Consolidated Financial Statements | 215
The Group used the following weighted average assumptions to
determine net periodic pension cost:
German plans Non-German plans
2010 2009 2010 2009
In %
Discount rates 5.3 5.9 5.1 5.0
Expected long-term returns on plan assets 5.5 6.5 7.0 7.2
Expected long-term remuneration increases 1–-3.9 3.7
Expected increase in cost of living 21.8 1.8 ––
1 For most German plans, expected increases in long-term remuneration are not a part of the benefit formula.
2 For most non-German plans, expected increases in cost of living are not a part of the benefit formula.
Discount rates. The discount rates for German and non-German
pension plans are determined annually as of December 31
on the basis of high-quality corporate bonds with maturities and
values matching those of the pension payments.
Expected return on plan assets. The expected long-term rates
of return for German and non-German plan assets are primarily
derived from the asset allocations of plan assets and expected
future returns for the various asset classes in the portfolios.
Temporary variability in the asset allocations of plan assets does
not result in adjustments of the expected long-term rates of
return. For the determination of the expected long-term rates of
return, our investment committees survey banks and large
asset portfolio managers about their expectations for future
returns for the relevant market indices. The allocation-weighted
average return expectations serve as an initial indicator for the
expected rate of return on plan assets for each pension fund.
In addition, Daimler considers long-term actual plan assets’
results and historical market returns in its evaluation in order to
reflect the long-term character of the plan assets.
Multi-employer plans. Daimler participates in some collec-
tively bargained defined benefit pension plans maintained by
more than one employer. The Group accounts for these plans
in its consolidated financial statements as defined contribution
plans because the information required to use defined benefit
accounting is not available in a timely manner and in sufficient
detail. The Group cannot exercise direct control over such
plans and the plan-trustees have no legal obligation to share
information directly with participating employers. Higher
contributions by the Group to such a pension plan could result in
particular when an underfunded status exceeds a specific level.