Philips 2014 Annual Report Download - page 155

Group nancial statements 12.9
Annual Report 2014 155
Philips Group
Changes in the eect of the asset ceiling in millions of EUR
2013 - 2014
2013 2014
Netherlands other total Netherlands other total
Balance as of January 1 777 586 1,363 555 428 983
Interest on unrecognized assets 25 31 56 19 28 47
Remeasurements (247) (155) (402) (336) 73 (263)
Exchange rate dierences – (34) (34) – 25 25
Balance as of December 31 555 428 983 238 554 792
Plan assets allocation
The asset allocation in the Company’s pension plans at
December 31 was as follows:
Philips Group
Plan assets allocation in millions of EUR
2013 - 2014
2013 2014
Netherlands other Netherlands other
Matching
portfolio:
- Debt
securities 11,238 4,282 10,663 5,051
- Other – 508 – 1,299
Return portfolio:
- Equity
securities 2,524 910 5,088 388
- Real estate 790 9 1,784 13
- Other 291 1,019 312 1,265
Total assets 14,843 6,728 17,847 8,016
Asset values related to buy-in contracts are now
included in the Matching portfolio under Other.
The assets in 2014 contain 17% (2013: 14%) unquoted
assets, the increase compared to 2013 mainly related to
the new buy-in value in the UK plan. Plan assets in 2014
do not include property occupied by or nancial
instruments issued by the Company.
Assumptions
The mortality tables used for the Company’s major
schemes are:
• Netherlands: Prognosis table 2014 including
experience rating TW2014.
• UK: SAPS 2002- Core CMI 2011 projection
• US: RP2014 HA/EE Fully Generational scaled with
MP2014
The weighted averages of the assumptions used to
calculate the dened-benet obligations as of
December 31 were as follows:
Philips Group
Assumptions used for dened-benet obligations in %
2013 - 2014
2013 2014
Netherlands other Netherlands other
Discount rate 3.4% 4.5% 2.1% 3.7%
Rate of
compensation
increase1) 2.0% 3.2% 2.0% 3.0%
1) The rate of compensation increase for the Netherlands consists of a
general 2% compensation increase and an individual salary increase
based on merit, seniority and promotion. The Company regularly
determines new turnover and disability rates and individual salary rates
for all active participants. Current gures are based on the period
2010-2012. The individual increase at the average age of 45 is 1.75%
(2013: 1.75%). The indexation assumption used to calculate the dened-
benet obligations for the Netherlands is 1.0% (2013: 1.0%).
Due to the nature of the pension plan in the
Netherlands an assumption is required for the future
pension accrual rate. If the xed premium does not
cover the cost of the target accrual of 1,85% per annum
a lower percentage must be applied for which the cost
will be covered by the xed premium. The Fund in the
Netherlands has set aside part of the EUR 600 million
received for active members accrual or indexation. The
accrual rate for the next 5 years starting 2015 is
expected to be 1,85%. Per 31 December 2014 the
average future accrual rate used to calculate the
dened-benet obligation and service cost is xed at
1,74% (2013: 1,85%) as after the ve year period a lower
percentage will apply assuming the current xed
premium level.
The (average) duration of the dened-benet
obligation of the pension plans is 17 years for the
Netherlands (2013: 15 years) and 12 years for other
countries (2013: 11 years).