Philips 2012 Annual Report Download - page 163

12 Group financial statements 12.11 - 12.11
Annual Report 2012 163
The classification of the net balance is as follows:
2011 2012
Netherlands other total Netherlands other total
Prepaid pension costs under other non-current assets − 5 5 − 7 7
Accrued pension costs under other liabilities − (1,198) (1,198) − (1,169) (1,169)
Provision for pensions under provisions (7) (808) (815) (7) (853) (860)
Liabilities directly associated with assets held for sale formely
reported as provision − (10) (10) − − −
(7) (2,011) (2,018) (7) (2,015) (2,022)
Cumulative amount of actuarial (gains) and losses recognized in the
Consolidated statements of comprehensive income (pre tax): EUR
4,160 million (2011 EUR 3,909 million).
Plan assets in the Netherlands
The asset allocation in the Company’s pension plan in the Netherlands
at December 31 was as follows:
in %
2011 2012
actual actual
Matching portfolio: 72 71
- Debt securities 72 71
Return portfolio: 28 29
- Equity securities 16 15
- Real estate 5 5
- Other 7 9
100 100
The objective of the Matching portfolio is to match part of the interest
rate sensitivity of the plan’s real pension liabilities. The Matching
portfolio is mainly invested in euro-denominated government bonds
and investment grade debt securities and derivatives. Leverage or
gearing is not permitted. The size of the Matching portfolio is targeted
to be at least 64% of the fair value of the plan’s real pension obligations
(on the assumption of 2% inflation). The objective of the Return
portfolio is to maximize returns within well-specified risk constraints.
The long-term rate of return on total plan assets is expected to be 5.4%
per annum, based on expected long-term returns on debt securities,
equity securities and real estate of 4.5%, 9.0% and 8% respectively.
Philips Pension Fund in the Netherlands
On November 13, 2007, various officials, on behalf of the Public
Prosecutor’s office in the Netherlands, visited a number of offices of
the Philips Pension Fund and the Company in relation to a widespread
investigation into potential fraud in the real estate sector. The Company
was notified that one former employee and one employee of an affiliate
of the Company had been detained. This affiliate, Philips Real Estate
Investment Management B.V., managed the real estate portfolio of the
Philips Pension Fund between 2002 and 2008. The investigation by the
public prosecutor concerns the potential involvement of (former)
employees of a number of Dutch companies with respect to fraud in
the context of certain real estate transactions. Neither the Philips
Pension Fund nor any Philips entity is a suspect in this investigation. The
Philips Pension Fund and Philips have cooperated with the authorities
and have also conducted their own investigation. Formal notifications
of suspected fraud have been filed with the public prosecutor against
the (former) employees concerned and with our insurers. This has
resulted in several convictions in 2012. Furthermore, actions have been
taken to claim damages from the responsible individuals and legal
entities. This has resulted in a number of settlements between the
responsible individuals and Philips Pension Fund. Philips Pension Fund
has also received payment on the insurance claims in 2012. The Philips
Pension Fund and Philips are currently assessing the amount of residual
damages, if any, and the possibilities of a settlement thereof. At this time
it is not possible to assess the outcome and consequences of this
matter.
Plan assets in other countries
The asset allocation in the Company’s pension plans in other countries
at December 31 is shown in the table below. This table also shows the
Trustees’ target allocation for 2013:
in %
2011 2012 2013
actual actual target
Equity securities 16 16 17
Debt securities 75 75 81
Real estate 1 − −
Other 8 9 2
100 100 100
Plan assets in 2012 do not include property occupied or financial
instruments issued by the Company.