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106 Unilever Annual Report and Accounts 2007
Financial statements continued
Notes to the consolidated accounts Unilever Group
20 Pensions and similar obligations (continued)
Income statement
The charge to the income statement comprises:
€ million € million € million
2007 2006 2005
Charged to operating profit:
Defined benefit pension and other benefit plans
Current service cost (329) (369) (349)
Employee contributions 12 13 18
Special termination benefits (59) (56) (73)
Past service cost 35 293 (12)
Settlements/curtailments 72 48 95
Defined contribution plans (52) (61) (63)
Total operating cost (321) (132) (384)
Charged to other finance income/(cost):
Interest on retirement benefits (1 013) (977) (984)
Expected return on assets 1 171 1 018 931
Total other finance income/(cost) 158 41 (53)
Net impact on the income statement (before tax) (163) (91) (437)
Significant Items on the face of the income statement
During 2006 we updated certain terms of the defined benefit plan in the UK which resulted in a one-off credit to the income statement in
2006 of €120 million. During 2006 a number of initiatives were taken to reduce the cost of post employment healthcare benefits, principally in
the United States, through changes to the design of the plans. As a consequence, a reduction in liability of €146 million was recognised in the
income statement for 2006.
Cash flow
Group cash flow in respect of pensions and similar post employment benefits comprises company contributions paid to funded plans and
benefits paid by the company in respect of unfunded plans. In 2007, the benefits paid in respect of unfunded plans amounted to €280 million
(2006: €333 million; 2005: €328 million). Company contributions to funded defined benefit plans are subject to periodic review, taking account
of local legislation. In 2007, contributions to funded defined benefit plans including funding of previously unfunded benefits amounted to
€878 million (2006: €758 million; 2005: €508 million). Contributions to defined contribution plans including 401k plans amounted to
€52 million (2006: €61 million; 2005: €63 million). In 2007, a €50 million refund of assets was received out of recognised surplus from Finland
(2005: €15 million from unrecognised surplus). Total contributions by the Group to funded plans, net of refunds, are currently expected to be
about €235 million in 2008 (2007 Actual: €878 million). In addition, we may make further contributions in 2008 to fund currently unfunded
obligations. Benefit payments by the Group in respect of unfunded plans are currently expected to be about €243 million in 2008 (2007 Actual:
€280 million).
Statement of recognised income and expense
Amounts recognised in the statement of recognised income and expense:
€ million € million € million € million € million
Cumulative
since
1 January
2007 2006 2005 2004 2004
Actual return less expected return on pension and other benefit plan assets (236) 533 1 592 369 2 258
Experience gains/(losses) arising on pension plan and other benefit plan liabilities 103 51 27 (47) 134
Changes in assumptions underlying the present value of the pension and other
benefit plan liabilities 946 474 (1 706) (1 047) (1 333)
Actuarial gain/(loss) 813 1 058 (87) (725) 1 059
Change in unrecognised surplus –142 (41) 2 103
Refund of unrecognised assets ––15 –15
Net actuarial gain/(loss) recognised in statement of recognised
income and expense (before tax) 813 1 200 (113) (723) 1 177