to download Telecom Italia Annual Report 2011 - Company Reporting

2007 are assigned, as elected by the employees, to either the INPS Treasury Fund or to supplementary
pension funds and take the form of a “Defined contribution plan”.
However, for all companies, the revaluations of the amounts in the provision for employee severance
indemnities existing at the election date, and also the amounts accrued and not assigned to
supplementary pension plans for companies with less than 50 employees, are retained in the provision
for employee severance indemnities. In accordance with IAS 19, this provision has been recognized as a
“Defined benefit plan”.
Under IAS 19, employee severance indemnities have been recalculated with actuarial techniques using
the Projected Unit Credit Method as follows:
• the future possible benefits which could be paid to each employee registered in the program in the
event of retirement, death, disability, resignation etc. have been projected on the basis of a series
of financial assumptions (cost-of-living increases, interest rate, increase in compensation etc.). The
estimate of future benefits includes any increases for additional service seniority as well as the
estimated increase in the compensation level at the measurement date – only for employees of
companies with less than 50 employees during the year 2006;
• the average present value of future benefits has been calculated, at the measurement date, on the
basis of the annual interest rate adopted and the probability that each benefit has to be effectively
paid;
• the liability of each interested company has been calculated as the average present value of future
benefits that will be generated by the existing provision at the measurement date, without
considering any future accruals (for companies with at least 50 employees during the year 2006) or
identifying the amount of the average present value of future benefits which refer to the past
service already matured by the employee in the company at the measurement date (for the others).
The following assumptions have been made:
FINANCIAL ASSUMPTIONS Executives Non- executives
Inflation rate 2.0% per annum 2.0% per annum
Discount rate 5.1% per annum 5.1% per annum
Increase in compensation:
equal to or less than 40 years of age 1.0% per annum 1.0% per annum
over 40 but equal to or less than 55 years of age 0.5% per annum 0.5% per annum
over 55 years of age 0.0% per annum 0.0% per annum
DEMOGRAPHIC ASSUMPTIONS Executives Non- executives
Probability of death Mortality tables RG 48
published by “Ragioneria
Generale dello Stato”
Probability of disability
INPS tables divided by age
and sex
Mortality tables RG 48
published by “Ragioneria
Generale dello Stato”
INPS tables divided by age
and sex
Probability of resignation (in relation to the company):
up to 40 years of age From 3.0% to 5.0%
per annum
From 1.5% to 4.0%
per annum
over 40 up to 50 years of age From 1.5% to 4.0%
per annum
From 0.5% to 2.5%
per annum
over 50 years of age None None
Probability of retirement
Probability of receiving at the beginning of the year an advance
from the provision for severance indemnities accrued equal to
70%
Reaching the minimum requisites established by the
Obligatory General Insurance updated on the basis of
Law 214 of December 22, 2011
3.0%
per annum
3.0%
per annum
The adoption of the above assumptions resulted in a liability for employee severance indemnities at
December 31, 2011 of 829 million euros (986 million euros at the end of 2010).
Telecom Italia Group
Consolidated Financial Statements
Note 20 – Employee benefits 238