Annual Report 2006 - Boehringer Ingelheim

Pension provisions
Boehringer Ingelheim’s pension schemes are based on various defined contribution plans as well as
defined benefit plans.
Pension obligations arising from direct or indirect defined benefit plans are determined on the basis of
the projected unit credit method, taking future salary and pension increases into consideration.
The actuarial calculation of the pension obligation from defined benefit plans is based on country-
specific biometric data (e. g. in Germany the “generation tables” issued in 2005 by Professor Klaus
Heubeck) and actuarial assumptions. The main countries applied the following parameters:
Germany USA Japan
Parameter (in %) 2006 2005 2006 2005 2006 2005
Discount rate 4.5 4.1 5.8 5.5 1.5 1.5
Expected return on plan assets 6.0 6.0 8.0 8.0 2.2-3.0 2.2–3.0
Salary increase 3.5 2.5 5.5 5.5 2.4-3.0 2.4–4.7
Pension increase 1.7 1.7 3.0 3.0 0.0 0.0
At the balance sheet date, the present value of the expected pension obligation was netted with the fair
value of the respective pension plan assets (funded status).
Based on this, pension provisions are determined by deducting unrealised transition amounts as well
as unrealised actuarial gains and losses from the funded status. Based on the “corridor approach”,
unrealised gains and losses are amortised over the expected average service periods of the respective
active employees. At balance sheet date, pension commitments (including total unrealised transition
amounts and actuarial gains and losses) of EUR 498 million (2005: EUR 698 million) were not recognised
as part of pension provisions.
In conjunction with defined contribution plans, group companies paid contributions to state or
private insurers on the basis of legal or contractual regulations. On payment of the contributions the
companies no longer have any performance obligations. Contributions are recognised as personnel
costs.
Notes to the consolidated financial statements 2006 131