sain t-gobain annu al report 2008 annual report

Description of defined benefit plans
The Group’s main defined benefit plans are as follows:
In France, in addition to length-of-service awards, there are
three defined benefit plans all of which are final salary plans.
These plans were closed to new entrants by the companies
concerned between 1969 and 1997.
In Germany, retirement plans provide pensions and death
and disability benefits for employees. These plans have been
closed to new entrants since 1996.
In the Netherlands, ceilings have been introduced for
supplementary pension plans, above which they are converted
into defined contribution plans.
In the United Kingdom, retirement plans provide pensions
as well as death and permanent disability benefits. These
defined benefit plans – which are based on employees’
average salaries over their final years of employment – have
been closed to new entrants since 2001.
In the United States and Canada, the Group’s defined
benefit plans are final salary plans. Since January 1, 2001, new
employees have been offered a defined contribution plan.
Provisions for other long-term employee benefits amounted
to €188 million at December 31, 2008 (December 31, 2007:
€175 million; December 31, 2006: €189 million), and covered all
other employee benefits, notably long-service awards in
France, jubilees in Germany and employee benefits in the
United States. The related projected benefit obligation is
generally calculated on an actuarial basis using the same
rules as for pension obligations.
Measurement of pension
and other post-employment benefit obligations
Pensions and other post-employment benefit obligations are
determined on an actuarial basis using the projected unit
credit method, based on estimated final salaries.
The Group’s total pension and other post-employment benefit
obligations amounted to €6,803 million at December 31, 2008
(December 31, 2007: €7,699 million; December 31, 2006:
€8,544 million).
Plan assets
For defined benefit plans, plan assets have been progressively
built up by contributions, primarily in the United States, the
United Kingdom and Germany. Contributions paid by the
Group totaled €172 million in 2008 (2007: €157 million; 2006:
€855 million). The actual return on plan assets was a negative
€716 million in 2008 (2007: positive return of €256 million;
2006: positive return of €569 million).
Contributions for 2006 included exceptional payments of
€672 million, of which €516 million to transfer a substantial
portion of German pension obligations to an external fund.
The fair value of plan assets – which came to €4,976 million
at December 31, 2008 (December 31, 2007: €6,405 million;
December 31, 2006: €6,799 million) – is deducted from the
Group’s projected benefit obligation, as estimated using the
projected unit credit method, in order to calculate the
unfunded obligation to be covered by a provision.
Plan assets are mainly composed of equities (46%) and bonds
(46%), with the remaining 8% invested in other asset classes.
157 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Saint-Gobain – Financial Report 2008