Siemens 2010 Annual Report Download - page 258

6 To our shareholders 21 Corporate Governance 49 Combined management’s discussion and analysis

The weighted-average discount rate used for the actuarial valu-
ation of the DBO at period-end and the expected return on plan
assets for the fiscal year ending at period-end were as follows:
The total weighted average discount rate for the year ended
September , , was . percent.
The rates of compensation increase for countries with signifi-
cant effects with regard to this assumption were as follows for
the years ended September ,  and : U.S.: . percent
and . percent, U.K. . percent and . percent, Switzerland:
. percent and . percent, Netherlands: . percent and
. percent. The compensation increase rate for the domestic
pension plans for the year ended September , , was
. percent (: . percent). However, due to the imple-
mentation of the BSAV, the effect of the compensation increase
on the domestic pension plans is substantially eliminated. The
rates of pension progression for countries with significant ef-
fects with regard to this assumption were as follows for the
years ended September ,  and : Germany: . per-
cent and . percent, U.K.: . percent and . percent, Nether-
lands: . percent and . percent.
The assumptions used for the calculation of the DBO as of the
period-end of the preceding fiscal year are used to determine
the calculation of interest cost and service cost of the follow-
ing year. The total expected return for the fiscal year will be
based on the expected rates of return for the respective year
multiplied by the fair value of plan assets at the preceding fis-
cal years period-end date. The fair value and thus the expected
return on plan assets are adjusted for significant events after
the fiscal year end, such as a supplemental funding.
The discount rate assumptions reflect the rates available on
high-quality corporate bonds or government bonds of consis-
tent duration and currency at the period-end date. The ex-
pected return on plan assets is determined on a uniform basis,
considering long-term historical returns, asset allocation, and
future estimates of long-term investment returns. In fiscal
 and fiscal , the expected return on plan assets re-
mained primarily unchanged. Changes of other actuarial as-
sumptions not mentioned above, such as employee turnover,
mortality, disability, etc., had an only minor effect on the over-
all DBO as of September , .
Experience adjustments, which result from differences between
the actuarial assumptions and the actual occurrence, did not
affect the DBO in fiscal , decreased the DBO by . percent
in fiscal , increased the DBO by . percent in fiscal 
and did not affect the DBO in fiscal  and fiscal .
Pension benefits: Sensitivity analysis
A one-percentage-point change of the established assump-
tions mentioned above, used for the calculation of the NPBC
for fiscal , or a change in the fair value of plan assets of
€, as of September , , respectively, would result in
the following increase (decrease) of the fiscal  NPBC:
Effect on NPBC 
due to a one-
percentage-point / €
increase decrease
Discount rate 47 (67)
Expected return on plan assets (210) 210
Rate of compensation increase 21 (20)
Rate of pension progression 159 (124)
Fair value of plan assets (32) 32
Year ended September ,  Year ended September , 
Total Domestic Foreign Total Domestic Foreign
Discount rate 4.2% 4.0% 4.4% 5.3% 5.3% 5.2%
Germany 4.0% 4.0% 5.3% 5.3%
U.S. 4.80% 4.80% 5.69% 5.69%
U.K. 5.3% 5.3% 5.7% 5.7%
Expected return on plan assets 6.4% 6.5% 6.2% 6.5% 6.5% 6.4%
Germany 6.5% 6.5% 6.5% 6.5%
U.S. 6.95% 6.95% 6.97% 6.97%
U.K. 6.0% 6.0% 6.5% 6.5%