Unilever 2003 Annual Report Download - page 103

Download and view the complete annual report

Please find page 103 of the 2003 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 169

  • 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
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169

100 Unilever Annual Report & Accounts and Form 20-F 2003
Notes to the consolidated accounts
Unilever Group
17 Pensions and similar obligations continued
FRS 17 Disclosures
Assumptions
With the objective of presenting pensions and other post-employment benefit plans’ assets and liabilities at their fair value on the balance
sheet, assumptions for FRS 17 are set by reference to market conditions at the valuation date. The actuarial assumptions used to calculate the
benefit obligations vary according to the country in which the plan is situated. The assumptions, weighted by liabilities, used to value the
principal defined benefit pension plans (covering approximately 90% of pension liabilities – the ‘principal pension plans’) and plans providing
other post-employment benefits, and in addition the expected long-term rates of return on assets, weighted by asset value, are:
31 Dec 2003 31 Dec 2002 31 Dec 2001
Principal Other Principal Other Principal Other
defined post- defined post- defined post-
benefit employment benefit employment benefit employment
pension benefit pension benefit pension benefit
plans plans plans plans plans plans
Discount rate 5.50% 6.10% 5.70% 6.50% 6.00% 7.25%
Inflation assumption 2.40% n/a 2.30% n/a 2.25% n/a
Rate of increase in salaries 3.70% 4.50% 3.60% 4.30% 3.50% 4.50%
Rate of increase for pensions in payment 2.20% n/a 2.20% n/a 2.00% n/a
Rate of increase for pensions in deferment (where provided) 2.60% n/a 2.60% n/a 1.50% n/a
Long-term medical cost inflation(a) n/a 4.90% n/a 4.90% n/a 5.00%
Expected long-term rates of return:
Equities 8.40% 8.20% 9.00%
Bonds 5.00% 4.90% 5.50%
Others 6.40% 5.40% 6.00%
(a) The valuations of other benefit plans generally assume a higher initial level of medical cost inflation, which falls from 9.50% to the
long-term rate within the next five years.
Assumptions for the remaining defined benefit plans vary considerably depending on the economic conditions of the country where they
are situated.
For the most important pension plans, representing over 75% of all defined benefit plans by liabilities, the assumptions used at 31 December
2003 and 2002 were:
United Kingdom Netherlands United States Germany
2003 2002 2003 2002 2003 2002 2003 2002
Discount rate 5.40% 5.50% 5.20% 5.40% 6.10% 6.50% 5.20% 5.40%
Inflation assumption 2.70% 2.25% 1.80% 2.25% 2.50% 2.50% 1.80% 2.00%
Rate of increase in salaries 4.20% 3.75% 2.50% 3.00% 4.50% 4.50% 2.50% 2.75%
Rate of increase for pensions in payment 2.80% 2.50% 1.80% 2.25% 0.00% 0.00% 1.80% 2.00%
Rate of increase for pensions in deferment
(where provided) 2.80% 2.50% 1.80% 2.25% 0.00% 0.00% 0.00% 0.00%
Expected long-term rates of return:
Equities 8.30% 8.00% 8.30% 8.30% 8.60% 8.30% 8.30% 8.30%
Bonds 5.30% 4.90% 4.70% 4.70% 4.70% 4.30% 4.70% 4.70%
Others 6.40% 5.80% 6.80% 5.60% 4.70% 4.30% 5.50% 4.90%