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108 Unilever Annual Report and Accounts 2010
Financial statements
Notes to the consolidated financial statements Unilever Group
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 8.0%
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 18 (17)
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 2010, 2009, 2008 and 2007 were:
United Kingdom Netherlands
2010 2009 2008 2007 2010 2009 2008 2007
Discount rate 5.4% 5.7% 6.5% 5.8% 4.7% 5.1% 5.9% 5.5%
Inflation 3.1% 3.1% 2.8% 3.0% 1.8% 1.9% 2.0% 1.9%
Rate of increase in salaries 4.1% 4.6% 4.3% 4.5% 2.3% 2.4% 2.4% 2.4%
Rate of increase for pensions
in payment (where provided) 3.0% 3.1% 2.8% 3.0% 1.8% 1.9% 2.0% 1.9%
Rate of increase for pensions in
deferment (where provided) 3.1% 3.1% 2.8% 3.0% 1.8% 1.9% 2.0% 1.9%
Expected long-term rates of return:
Equities 7.7% 8.0% 7.8% 8.0% 7.0% 7.7% 7.2% 8.1%
Bonds 4.6% 4.9% 5.0% 5.0% 4.3% 4.6% 5.0% 4.7%
Property 6.2% 6.5% 6.0% 6.5% 5.5% 6.2% 5.7% 6.6%
Others 7.1% 6.7% 5.6% 6.3% 5.6% 5.3% 5.6% 4.1%
Weighted average asset return 6.9% 7.2% 7.0% 7.2% 5.9% 6.4% 6.2% 6.8%
Number of years a current pensioner is expected to
live beyond age 65:
Men 21.5 21.4 21.3 21.2 21.4 20.8 20.7 20.7
Women 23.4 22.8 22.8 22.7 23.3 21.9 21.9 21.9
Number of years a future pensioner currently aged
45 is expected to live beyond age 65:
Men 23.3 23.5 23.5 23.5 23.0 20.8 20.7 20.7
Women 25.1 25.9 25.9 25.9 24.2 21.9 21.9 21.9
2010 2009
United States
2008 2007 2010 2009 2008
Germany
2007
Discount rate
Inflation
Rate of increase in salaries
Rate of increase for pensions
in payment (where provided)
Rate of increase for pensions in
deferment (where provided)
Expected long-term rates of return:
Equities
Bonds
Property
Others
Weighted average asset return
5.2%
2.3%
4.0%
0.0%
0.0%
7.4%
4.4%
5.9%
1.7%
6.2%
5.6%
2.4%
4.0%
0.0%
0.0%
7.8%
5.0%
6.3%
2.0%
6.6%
5.6%
2.1%
4.0%
0.0%
0.0%
6.0%
5.1%
4.5%
1.2%
5.7%
5.9%
2.3%
4.0%
0.0%
0.0%
7.8%
4.5%
6.3%
3.7%
6.8%
4.7%
1.8%
2.8%
1.8%
0.0%
7.0%
4.2%
5.5%
5.5%
5.5%
5.1%
1.9%
2.8%
1.9%
0.0%
7.7%
4.6%
6.2%
5.5%
5.9%
5.9%
2.0%
2.8%
2.0%
0.0%
7.2%
4.2%
5.7%
4.4%
5.3%
5.5%
1.9%
2.8%
1.9%
0.0%
8.1%
4.7%
6.6%
5.8%
6.5%
Number of years a current pensioner is expected to
live beyond age 65:
Men
Women
Number of years a future pensioner currently aged
45 is expected to live beyond age 65:
Men
Women
19.0
20.9
20.5
22.4
18.8
20.8
20.5
22.4
18.8
20.8
20.4
22.4
19.4
21.5
19.4
21.5
19.0
23.3
19.0
23.3
17.9
21.4
17.9
21.4
17.9
21.4
17.9
21.4
17.9
21.4
17.9
21.4