Siemens 2007 Annual Report Download - page 259

Notes to Consolidated Financial Statements 259
(in millions of €, except where otherwise stated and per share amounts)
Notes to Consolidated Financial Statements
Pension benefi ts: Assumptions for the calculation of the DBO and NPBC
Assumed discount rates, compensation increase rates and pension progression
rates used in calculating the DBO together with long-term rates of return on plan
assets vary according to the economic conditions of the country in which the
retirement plans are situated or where plan assets are invested as well as capital
market expectations.
The weighted-average assumptions used for the actuarial valuation of the DBO
as of the balance sheet date were as follows:
The assumptions used for the calculation of the DBO as of the balance sheet
date of the preceding fi scal year are used to determine the calculation of interest
cost and service cost of the following year. Therefore, the assumptions used for
the calculation of the NPBC for fi scal 2008 are already determined. The total
expected return for fi scal 2008 will be based on expected rates of return multi-
plied by the fair value of plan assets at the fi scal 2007 balance sheet date (see table
below). The fair value and thus the expected return on plan assets are adjusted for
signifi cant events after the balance sheet date, such as a supplemental funding.
Due to the implementation of the BSAV, the effect of the compensation increase on
the domestic pension plans is substantially eliminated.
Year ended September 30, 2007 Year ended September 30, 2006
Total Domestic Foreign Total Domestic Foreign
Discount rate 5.3% 5.1% 5.6% 4.7% 4.5% 5.0%
Germany 5.1% 4.5%
U.S. 6.29% 5.95%
U.K. 6.0% 5.0%
Rate of compensation increase 2.7% 2.25% 3.5% 2.7% 2.25% 3.4%
Germany 2.25% 2.25%
U.S. 3.96% 3.95%
U.K. 4.0% 3.7%
Rate of pension progression 1.6% 1.5% 2.0% 1.2% 1.0% 1.8%
Germany 1.5% 1.0%
U.K. 3.1% 2.8%