2012 Annual Report - Italcementi Group

1.18. Employee benefits
The company operates pension plans, post-employment medical benefit plans and post-employment benefits.
It also has other commitments, in the form of bonuses payable to employees on the basis of length of service
in the company (“Other long-term benefits”).
Defined contribution plans
Defined contribution plans are structured post-employment benefit programs where the company pays fixed
contributions to an insurance company or pension fund and will have no legal or constructive obligation to pay
further contributions if the fund does not dispose of sufficient assets to pay all the employee benefits accruing
in respect of services rendered during the current year and in previous years.
These contributions are paid in exchange for the services rendered by employees and recognized as expense
as incurred.
Defined benefit plans
Defined benefit plans are structured post-employment benefit programs that constitute a future obligation for
the company. In substance, the company assumes the actuarial and investment risks of the plan. In
accordance with IAS 19, the company uses the unit credit projection method to determine the present value of
obligations and the related current service cost.
This actuarial calculation requires use of consistent and objective actuarial assumptions about demographic
variables (mortality rate, personnel turnover rate) and financial variables (discount rate, future increases in
salaries and medical benefits).
The post-employment benefits in Italy (TFR, trattamento di fine rapporto) are treated in the same way as
benefit obligations arising from defined benefit plans.
Termination benefits
Termination benefits include provisions for restructuring costs recognized when the company has approved a
detailed formal plan that has already been implemented or notified to the third parties concerned.
Actuarial gains and losses
Actuarial gains and losses on post-employment defined benefit plans may arise as a result of changes in the
actuarial assumptions used in two consecutive periods or as a result of changes in the obligation value or in
the fair value of any plan asset in respect of the actuarial assumptions used at the beginning of the period.
The company uses the corridor method whereby actuarial gains and losses are recognized as income or
expense when their unrecognized cumulative net value, for each plan, at the end of the previous period
exceeds 10% of the greater of the defined benefit obligation or the fair value of plan assets at that date. These
gains or losses are taken to profit or loss over the estimated average residual working life of the employees
participating in the plans.
Actuarial gains and losses relating to “Other long-term benefits” (service medals, length of service benefits)
and to early retirement benefits are recognized as income or expense immediately.
Past service cost
Changes in liabilities resulting from a change to an existing defined benefit plan are recognized as expense on
a straight-line basis over an average period until the benefits have vested. Costs for benefits that vest
immediately upon changes to a plan are recognized as expense as incurred.
Curtailment and settlement
Gains or losses on the curtailment or settlement of a defined benefit plan are recognized as income or expense
when the curtailment or settlement occurs. The gain or loss includes changes in the present value of the
obligation, changes in the fair value of plan assets, actuarial gains or losses and past service costs not
previously accounted for.
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