Siemens 2007 Annual Report Download - page 261

Notes to Consolidated Financial Statements 261
(in millions of €, except where otherwise stated and per share amounts)
Notes to Consolidated Financial Statements
Pension benefi ts: Sensitivity analysis
A one-percentage-point change of the established assumptions mentioned above,
used for the calculation of the NPBC for fi scal 2008, and a change in the fair value
of plan assets of €500, as of September 30, 2007, respectively, would result in the
following increase (decrease) of the fi scal 2008 NPBC:
Increases and decreases in the discount rate, rate of compensation increase
and rate of pension progression which are used in determining the DBO do not
have a symmetrical effect on NPBC primarily due to the compound interest effect
created when determining the net present value of the future pension benefi t. If
more than one of the assumptions were changed simultaneously, the cumulative
impact would not necessarily be the same as if only one assumption was changed
in isolation.
Pension benefi ts: Plan assets
The asset allocation of the plan assets of the principal pension benefi t plans as of
the balance sheet date for fi scal 2007 and 2006 as well as the target asset alloca-
tion for fi scal year 2008, are as follows:
Derivatives are reported under the asset class whose risk is hedged. Current
asset allocation is biased towards high quality government and selected corporate
bonds. Siemens constantly reviews the asset allocation in light of the duration of
its pension liabilities and analyzes trends and events that may affect asset values
in order to initiate appropriate measures at a very early stage.
Effect on NPBC 2008 due to a
one-percentage-
point/€500 increase
one-percentage-
point/€500 decrease
Discount rate (27) 19
Expected return on plan assets (224) 224
Rate of compensation increase 32 (27)
Rate of pension progression 146 (122)
Fair value of plan assets (32) 32
Target asset
allocation
September
30, 2008
Asset allocation
September 30, 2007 September 30, 2006
Asset class Total Domestic Foreign Total Domestic Foreign
Equity 20 – 50% 33% 29% 39% 31% 24% 44%
Fixed income 40 – 70% 54% 61% 42% 57% 66% 41%
Real estate 5 – 15% 8% 7% 11% 8% 7% 10%
Cash and other assets 5 – 15% 5% 3% 8% 4% 3% 5%
100% 100% 100% 100% 100% 100%