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19 Pensions and similar obligations (continued)
The valuations of other post-employment benefit plans generally assume a higher initial level of medical cost inflation, which falls from 8.5%
to the long-term rate within the next five years. Assumed healthcare cost trend rates have a significant effect on the amounts reported for
healthcare plans. A one percentage point change in assumed healthcare cost trend rates would have the following effect:
€ million € million
1% point 1% point
increase decrease
Effect on total of service and interest cost components 1 (1)
Effect on total benefit obligation 17 (16)
The expected rates of return on plan assets were determined, based on actuarial advice, by a process that takes the long-term rates of return on
government bonds available at the balance sheet date and applies to these rates suitable risk premiums that take account of historic market
returns and current market long-term expectations for each asset class.
For the most important pension plans, representing approximately 80% of all defined benefit plans by liabilities, the assumptions used at
31 December 2009, 2008, 2007 and 2006 were:
United Kingdom Netherlands
2009 2008 2007 2006 2009 2008 2007 2006
Discount rate 5.7% 6.5% 5.8% 5.1% 5.1% 5.9% 5.5% 4.6%
Inflation 3.1% 2.8% 3.0% 2.9% 1.9% 2.0% 1.9% 1.9%
Rate of increase in salaries 4.6% 4.3% 4.5% 4.4% 2.4% 2.4% 2.4% 2.4%
Rate of increase for pensions
in payment (where provided) 3.1% 2.8% 3.0% 2.9% 1.9% 2.0% 1.9% 1.9%
Rate of increase for pensions in
deferment (where provided) 3.1% 2.8% 3.0% 2.9% 1.9% 2.0% 1.9% 1.9%
Expected long-term rates of return:
Equities 8.0% 7.8% 8.0% 8.0% 7.7% 7.2% 8.1% 7.6%
Bonds 4.9% 5.0% 5.0% 5.2% 4.6% 5.0% 4.7% 4.4%
Property 6.5% 6.0% 6.5% 6.5% 6.2% 5.7% 6.6% 6.1%
Others 6.7% 5.6% 6.3% 7.2% 5.3% 5.6% 4.1% 4.0%
Weighted average asset return 7.2% 7.0% 7.2% 7.3% 6.4% 6.2% 6.8% 6.6%
United States Germany
2009 2008 2007 2006 2009 2008 2007 2006
Discount rate 5.6% 5.6% 5.9% 5.8% 5.1% 5.9% 5.5% 4.6%
Inflation 2.4% 2.1% 2.3% 2.5% 1.9% 2.0% 1.9% 1.9%
Rate of increase in salaries 4.0% 4.0% 4.0% 4.0% 2.8% 2.8% 2.8% 2.6%
Rate of increase for pensions
in payment (where provided) 0.0% 0.0% 0.0% 0.0% 1.9% 2.0% 1.9% 1.9%
Rate of increase for pensions in
deferment (where provided) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Expected long-term rates of return:
Equities 7.8% 6.0% 7.8% 8.3% 7.7% 7.2% 8.1% 7.6%
Bonds 5.0% 5.1% 4.5% 5.2% 4.6% 4.2% 4.7% 4.4%
Property 6.3% 4.5% 6.3% 6.8% 6.2% 5.7% 6.6% 6.1%
Others 2.0% 1.2% 3.7% 4.8% 5.5% 4.4% 5.8% 3.0%
Weighted average asset return 6.6% 5.7% 6.8% 7.4% 5.9% 5.3% 6.5% 5.8%
Notes to the consolidated financial statements Unilever Group
114 Unilever Annual Report and Accounts 2009
Financial statements