XXII. Defined benefit plans

At 31 December 2015 this item amounted to € 100,195k (€ 101,836k at the close of the previous year).

The table below shows details of employee benefits recognized as defined benefit plans. The legal obligation for Italian post-employment benefits (trattamento di fine rapporto or “TFR”) is € 55,284k, compared with € 59,773k determined on an actuarial basis.

(k)  31.12.201531.12.2014Change
Defined benefit plans:      
Post-employment benefit 59,773 66,046 (6,273)
Health insurance plans 387 247 140
Other defined benefit plans 40,035 35,543 4,492
Total 100,195 101,836 (1,641)
 

The following is a reconciliation of the present value of the obligation and the fair value of assets against the liability recognized:

 

(k)  31.12.201531.12.201431.12.201331.12.201231.12.2011
Present value of the funded plans 116,001 106,490 91,005 94,806 89,635
Fair value of the plan assets (82,313) (77,263) (74,601) (73,164) (71,676)
  33,688 29,227 16,404 21,642 17,959
Present value of the unfunded plans 66,507 72,609 73,932 77,589 54,281
Discontinued Operations – demerger(Travel Retail & Duty-Free) - - - 10,223 11,944
Net liabilities recognised 100,195 101,836 90,336 109,454 84,184
 

The actuarial assumptions used to calculate defined benefit plans are summarized in the following table:

 Italy Switzerland The Netherlands Other plans
   20152014   20152014   20152014   20152014
Discount rate 1.4% 0.9%   0.8% 1.1%   2.6% 2.4%   1.6%–3.0% 1.3%–2.2%
Inflation rate 2.0% 2.0%   - -   - -   2.0% 2.0%
Yield on assets - -   2.6% 3.0%   - -   - -
Salary increase rate - -   1.0% 1.0%   1.0% 1.0%   1.0%–2.5% 1.0%–2.5%
Pension increase rate 3.0% 3.0%   - -   - -   - -
Increase in healthcare costs - -   - -   - -   7.0% 7.4%
 

The discount rates were determined based on the yield of high grade corporate bonds at the date of these financial statements.

Below are the amounts recognized in the income statement for defined benefit plans:

(k)  20152014Change
Current service costs 2,327 1,121 1,206
Past service costs (27) (21) (6)
Net interest expense 1,075 2,284 (1,209)
Total 3,375 3,384 (9)
 

Interest expense is recognized under “Financial expense” net of interest income on plan assets, while the current service cost is recognized under “Personnel expense”.

Movements in the present value of post-employment benefit obligations are as follows:

 

(k)ItalySwitzerlandThe NetherlandsOther plansTotal
Present value of the obligation at 31 December 2013 68,528 69,495 21,510 5,403 164,936
Current service costs - 996 (241) 366 1,121
Past service cost - - - (21) (21)
Interest expense 1,577 1,789 776 163 4,305
Actuarial losses (gains) due to:          
– demographic assumptions - - 27 35 62
– financial assumptions 6,178 12,484 3,634 929 23,225
– experience adjustments 694 (1,940) (910) 2 (2,154)
Employees' share of contributions - 2,303 - 59 2,362
Benefit paid (10,931) (4,397) (606) (403) (16,337)
Exchange rate losses/(gains) - 1,570 - 30 1,600
Other - - - - -
Present value of the obligation at 31 December 2014 66,046 82,300 24,190 6,563 179,099
Current service costs - 1,885 - 442 2,327
Past service cost - - - (27) (27)
Interest expense 581 1,001 573 122 2,277
Actuarial losses (gains) due to:          
– demographic assumptions - - - 76 76
– financial assumptions (1,941) 11,037 (2,342) 72 6,826
– experience adjustments (393) (7,728) - (404) (8,525)
Employees' share of contributions - 2,527 - 68 2,595
Benefit paid (4,520) (5,830) (602) (208) (11,160)
Exchange rate losses/(gains) - 8,990 - 30 9,020
Other - - - - -
Present value of the obligation at 31 December 2015 59,773 94,182 21,819 6,734 182,508
 

In 2014, the steep reduction in discount rates with respect to the prior year led to actuarial losses from financial assumptions of more than € 23m, which did not reoccur in 2015 as the rates were stable.

This table shows movements in the present value of plan assets:

 

(k)ItalySwitzerlandThe NetherlandsOther plansTotal
Fair value of the assets at 31 December 2013 - 53,338 21,263 - 74,601
Interest income - 1,427 593 - 2,020
Estimated yield on plan assets, except interest income - 777 (1,421) - (644)
Employees' share of contributions - 2,303 - 72 2,375
Group's share of contributions - 2,602 239 48 2,889
Benefits paid - (4,397) (606) (119) (5,122)
Exchange rate gains/(losses) - 1,145 - - 1,145
Other - - - - -
Fair value of the assets at 31 December 2014 - 57,195 20,068 - 77,263
Interest income - 722 480 - 1,202
Estimated yield on plan assets, except interest income - (1,018) (741) - (1,759)
Employees' share of contributions - 2,527 - 68 2,595
Group's share of contributions - 3,064 161 (16) 3,209
Benefits paid - (5,830) (602) (52) (6,484)
Exchange rate gains/(losses) - 6,287 - - 6,287
Other - - - - -
Fair value of the assets at 31 December 2015 - 62,947 19,366 - 82,313
 

Regarding the Swiss pension fund, the Swiss subsidiary has arranged a refinancing plan with the local authorities involving a diverse series of measures.

Due to a legislative change, starting on 1 January 2016 the defined contribution plans in Belgium will be converted into defined benefit plans. At 31 December 2015 the present value of those plans’ combined obligations was € 2,595k and the fair value of plan assets was € 2,623k.

The main categories of plan assets are:

 SwitzerlandThe Netherlands
Cash and cash equivalents 6% -
Equity instruments 24% -
Bonds 42% -
Real estate 25% -
Other securities 3% 100%

Equity instruments and bonds have official market prices.

The occurrence of reasonably possible variations in actuarial assumptions at the close of the year would have affected the defined benefit obligation as quantified in the table below.

 Italy Switzerland The Netherlands Other plans
(k)IncreaseDecreaseVar. IncreaseDecreaseVar. IncreaseDecreaseVar. IncreaseDecreaseVar.
Discount rate (1,122) 1,161 0.25%   (3,057) 3,257 0.25%   (902) 962 0.25%   (304) 390 0.50%
Salary increase rate - - -   509 n,a, 0.25%   - - -   384 (299) 0.50%
Pension increase rate - - -   - - -   1,503 (1,334) 0.50%   - - -
Inflation rate 714 714 0.25%   - - -   - - -   - - -
 

At the close of the year, the weighted average duration of the defined benefit obligation was 12.9 years for 2015 and 12.2 years for 2014.