Siemens 2010 Annual Report Download - page 175

113 Report on post-balance sheet date events
114 Report on expected developments and associated
material opportunities and risks
128 Information required pursuant to § () and
§ () HGB and explanatory report
133 Information required pursuant to § () and
§ () no.  HGB and explanatory report
135 Compensation and declaration pursuant to §a HGB
135 Additional information for supplemental
financial measures
138 Siemens AG (Discussion on basis of HGB)
147 Consolidated Financial Statements
261 Additional information

pension benefit plans on September ,  showed an un-
derfunding of €. billion compared to an underfunding of
€. billion at the end of the prior fiscal year. The actual return
on plan assets for the last twelve months amounted to €.
billion, resulting mainly from fixed income investments and to
a lower extent from equity investments. This represents a
.% return, compared to the expected return of .%.
Siemens’ funding policy for its pension funds is part of its
overall commitment to sound financial management, which
also includes an ongoing analysis of the structure of its pen-
sion liabilities. To balance return and risk, Siemens has devel-
oped a pension benefit risk management concept. We have
identified as a prime risk a decline in the principle plans’
funded status as a result of the adverse development of plan
assets and / or defined benefit obligations. We monitor our in-
vestments and our defined benefit obligations in order to
measure such prime risk. The prime risk quantifies the ex-
pected maximum decline in the funded status for a given
confidence level over a given time horizon. A risk budget on
the group level forms the basis for the determination of our
investment strategy, i.e., the strategic asset class allocation of
principle plan assets and the degree of interest rate risk hedg-
ing. Both our risk budget and investment strategy are regularly
reviewed with the participation of senior external experts in
the international asset management and insurance industry to
allow for an integral view of pension assets and pension liabil-
ities. We select asset managers based on our quantitative and
qualitative analysis and subsequently constantly monitor their
performance and risk, both on a stand-alone basis, and in the
broader portfolio context. We review the asset allocation of
each plan in light of the duration of the related pension liabili-
ties and analyze trends and events that may affect asset values
in order to initiate appropriate measures at a very early stage.
Siemens also regularly reviews the design of its pension plans.
Historically, the majority of Siemens’ pension plans have in-
cluded significant defined benefits. However, in order to re-
duce the Company ’s exposure to certain risks associated with
defined benefit plans, such as longevity, inflation, effects of
compensation increases and other factors, we implemented
new pension plans in some of our major subsidiaries including
Germany, the U.S. and the U.K. during the last several years.
The benefits of these new plans are based predominantly on
contributions made by the Company and are still affected by
longevity, inflation adjustments and compensation increases,
but only to a minor extent. We expect to continue to review the
need for the implementation of similar plan designs in the
coming years to better control future benefit obligations and
related costs. In fiscal , the Company recognized a curtail-
ment gain of € million related to pension plans in the U.S.
Funded status of principal pension benefit plans (in billions of €)
Sept. ,
 (6.4)
Sept. ,
 (4.0)
The combined funding status of Siemens’ principal other post-
employment benefit plans on September ,  showed an
underfunding of €. billion compared to an underfunding of
€. billion at the end of the prior fiscal year. Other liabilities
for pension plans and similar commitments amounted to €.
billion on September , , compared to €. billion on
September , .
For more information on Siemens’ pension plans, see “Notes to
Consolidated Financial Statements.”