+1 - Solvay

Financial
Actuarial assumptions used in determining the annual cost
Eurozone Europe Other USA Other
2006 2007 2006 2007 2006 2007 2006 2007
Discount rates 4.5 % 4.5 % 3.5 % - 7 % 3.5 % - 6 % 5.75 % 5.8 % 11.3 % 11.3 %
Expected rates
of future salary
increases 2.5 % - 4.75 % 2.5 % - 4.5 % 2 % - 5 % 2 % - 5 % 4 % 4 % 8 % 8 %
Expected (longterm)
rates of
return on plan
assets 4.5 % - 6 % 4.5 % - 6 % 3.5 % - 5.95 % 3.5 % - 5.95 % 8.5 % 8.5 % 11.3 % 11.3 %
Expected rates
of pension
growth 0 % - 2 % 0 % - 2 % 0 % - 2.7 % 0 % - 2.7 % not avail. not avail. not avail. not avail.
Expected rates
of medical care
cost increases 0 % - 2 % 0 % - 2 % not avail. not avail. 5 % - 9 % 5 % - 9 % 6.6 % 6.6 %
95
The main categories of plan assets are:
2006 2007
Shares 50 % 48 %
Bonds 46 % 47 %
Property 1 % 2 %
Other assets 3 % 3 %
With respect to the invested assets, it should be noted that:
• they produced an actual return of EUR 60 million in 2007 (112 in 2005). This amount is slightly below
the expected return of EUR 79 million (EUR 76 million in 2006), following the fall in stock market prices linked to
the “subprime” crisis;
• these assets do not contain any direct investment in Solvay group shares or in property or other assets
occupied or used by Solvay. This does not exclude Solvay shares being included in mutual investment fund
type investments;
• the expected rate of return is defined at local level with the help of a local actuary. It is determined using
the “building block approach” which factors in long-term inflation and the expected long-term return on each
asset category.
The Group expects to recognize provisions for post-employment benefits in the amount of EUR 97 million for 2008.
The assumptions made for medical expenditure have a major impact on the amounts recognized in the income
statement. Sensitivity to a change of percentage in the expected rates of increase of medical expenses is as follows:
EUR Million 1 % increase 1 % decrease
Effect on the aggregate of the service cost and the interest cost 3 -2
Effect on defined benefit obligation 23 -18
Solvay Global Annual Report 2007