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106 Unilever Annual Report & Accounts and Form 20-F 2003
Notes to the consolidated accounts
Unilever Group
17 Pensions and similar obligations continued
Assumptions
The assumptions in respect of principal plans used to determine the periodic expense in the table above for pensions and other retirement
benefits are given in the table below:
%%%%%%
Other post- Other post- Other post-
Pension Pension Pension employment employment employment
plans plans plans benefit plans benefit plans benefit plans
2003 2002 2001 2003 2002 2001
Weighted average assumptions used to determine net cost
for the principal plans for the years ended 31 December
Discount rate 5.70 6.00 6.25 6.50 7.25 7.50
Expected long-term rate of return on plan assets 6.90 7.75 7.25 n/a n/a n/a
Salary increases 3.60 3.75 3.75 4.30 4.50 4.50
Pension increases 2.20 2.50 2.50 n/a n/a n/a
Expected rate of return on plan assets
The expected rate of return on plan assets was determined, based on actuarial advice, by a process that takes the current long-term rates of
return available on government bonds and applies to these rates suitable risk premiums that take account of available historic market returns
and current market expectations.
Post-employment healthcare benefits
Assumed healthcare cost trend rates have a significant effect on the amounts reported for the healthcare plans. A one-percentage-point change
in assumed healthcare cost trend rates would have the following effects:
€ million € million
1% point 1% point
increase decrease
Effect on total of service and interest cost components 6 (5)
Expected cash flows
During 2004 Unilever expects to make cash contributions of €500 million to funded defined benefit plans. This includes both mandatory and
discretionary payments. In addition, a further €30 million is expected to be contributed to defined contribution plans.
The table below shows the expected benefit payments from defined benefit plans. The benefits paid from funded plans include amounts
funded by employee contributions. The benefits paid in respect of unfunded plans are made from the Group’s cash resources.
€ million € million
Pension benefits Other benefits
Funded Unfunded Unfunded
Expected benefit payments
2004 863 223 96
2005 840 236 99
2006 872 244 102
2007 902 255 104
2008 916 265 106
2009–2013 4 950 1 477 560