Unilever 2000 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 2000 Unilever annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

77
Unilever Annual Report & Accounts and Form 20-F 2000 Financial Statements
Notes to the consolidated accounts
Unilever Group
Unilever Annual Report & Accounts and Form 20-F 2000
33 Pension and other benefit plans
In the majority of countries in w hich the Group operates, employees’ retirement arrangements are provided by defined benefit plans
based on employee pensionable remuneration and length of service. These are either externally funded, w ith the assets of the plan held
separately from those of the Group in independently administered funds, or are unfunded but w ith provisions maintained in the Group
balance sheet. All are subject to regular actuarial review. Actuarial advice is provided by both external consultants and actuaries employed
by the Unilever Group.
Valuations are carried out annually for the largest plans and at least every three years for other plans using the projected unit method,
with the aim of ensuring that as far as possible current and future regular pension charges remain a stable percentage of pensionable
payroll. The actuarial assumptions used to calculate the benefit obligation vary according to the economic conditions of the country in
which the plan is situated. It is usually assumed that, over the long term, the annual rate of return on investments w ill be higher than
the annual increase in pensionable remuneration and in present and future pensions in payment.
The assets and liabilities of the principal defined benefit plans have been remeasured as at 30 September 2000 and then projected to the
year end. The principal plans of Bestfoods have been included in the 31 December 2000 figures below. Together, these plans constitute
92% of the Unilever plans based on the market value of assets and net provisions as at 31 December 2000.
For the principal plans the following aggregated information is available:
million
31 December 31 December
2000 1999
Actuarial value of assets 16 198 14 089
Provisions 1 827 1 311
Prepayments (748) (613)
Liabilities 13 869 12 071
Financing level % 125% 123%
Actual market value of assets 18 450 17 574
The average assumptions for valuing these principal plans, weighted by liabilities were:
Interest rate 7.1% 7.1%
Salary increases 4.3% 4.4%
Pension increases 3.0% 3.1%
The actuarial value of assets is generally a smoothed market value determined by spreading gains and losses relative to the actuarial basis
over a three to five year period.
The level of financing represents the actuarial value of fund assets and the net provisions held in the consolidated accounts, expressed as
a percentage of the liabilities, being the value of benefits accrued to members, after allow ing for expected future increases in pensionable
remuneration and pensions in the course of payment.
For the remaining defined benefit plans, as at 31 December 2000, the market value of the assets was 487 million (1999: 374 million),
and net provisions in the accounts amounted to 1 379 million (1999: 1 184 million). The overall level of financing of these remaining
defined benefit plans at the dates of the last valuations was 90% (1999: 91% ).
Pension costs and Company contributions to defined benefit plans (as shown in note 18 on page 62) have been reduced in recent years
principally by the amortisation of surpluses in the Group’s two biggest funds, w hich have been amortised using the ‘mortgage method’.
The net amount of surplus recognised in the profit and loss account in 2000 w as 309 million (1999: 243 million).
In 2000 the Group received a gross cash refund of 442 million from a Netherlands fund in a surplus position and expects to receive a
further refund of the same amount in 2001. This was made in conjunction w ith a package of benefit improvements, the total value of
which is 140 million. Further refunds have been received in 2000 of 40 million from a Finnish fund and 32 million from an Irish fund,
both in surplus. These cash refunds do not directly impact the pension charge for 2000 as the surplus is amortised in accordance w ith the
Group’s accounting policies.
The Group also operates a number of defined contribution plans. The assets of all the Group’s defined contribution plans are held in
independently administered funds. The pension costs charged to the profit and loss account represent contributions payable by the Group
to the funds. The market value of the assets of externally funded defined contribution plans as at 31 December 2000 was 271 million
(1999: 262 million). These figures, including restated 1999, have decreased due to consolidation of a defined contribution plan w ithin
a defined benefit plan. This change had no material impact on total pension costs. The value of assets of the defined contribution plans
exclude 401(k) plans in the United States, the corresponding cost of which is included in Staff Costs under note 3 on page 56.
Group companies provide other post-retirement benefits (mainly post-retirement medical benefit plans) to a number of retired employees
in certain countries, principally the United States, under several different plans which are predominantly unfunded. These other post-
retirement plans are accounted for in accordance with SFAS 106 and SFAS 112.