Philips 2005 Annual Report Download - page 156

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Philips Annual Report 2005156
Postemploymentbenetsandobligatoryseverancepayments
Theprovisionforpostemploymentbenetscoversbenetsprovidedto
former or inactive employees after employment but before retirement,
includingsalarycontinuation,supplementalunemploymentbenetsand
disability-relatedbenets.
The provision for obligatory severance payments covers the Company’s
commitment to pay employees a lump sum upon the employee’s
dismissal or resignation. In the event that a former employee has passed
away, the Company may have a commitment to pay a lump sum to the
deceased employee’s relatives.
Other provisions
Other provisions include provisions for employee jubilee funds totaling
EUR 109 million (2004: EUR 102 million) and expected losses on
existing projects/orders totaling EUR 26 million (2004: EUR 46 million).
22
Pensions
Employee pension plans have been established in many countries in
accordance with the legal requirements, customs and the local situation
in the countries involved. The majority of employees in Europe and
NorthAmericaarecoveredbydened-benetpensionplans.The
benetsprovidedbytheseplansarebasedonemployees’yearsof
serviceandcompensationlevels.Themeasurementdateforalldened-
benetpensionplansisDecember31.
Contributions are made by the Company, as necessary, to provide assets
sufcienttomeetthebenetspayabletodened-benetpensionplan
participants. These contributions are determined based upon various
factors, including funded status, legal and tax considerations as well as
local customs.
TheCompanyfundscertaindened-benetpensionplansasclaims
areincurred.Theprojectedbenetobligation,accumulatedbenet
obligation and fair value of plan assets for both funded and unfunded
dened-benetpensionplanswithaccumulatedbenetobligationsin
excess of plan assets are included in the table below:
2004 2005
Projectedbenetobligation 6,047 7,030
Accumulatedbenetobligation 5,776 6,669
Fair value of plan assets 4,380 5,036
Groupnancialstatements