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Note 18 – Employee benefits
Employee benefits decreased 220,794 thousand euros compared to December 31, 2010 and are
composed of the following:
(thousands of euros) 12/31/2009 Increase Decrease 12/31/2010
Provision for employee severance indemnities 973,266 34,264 (130,452) 877,078
Provision for termination benefit incentives 142,830 216,128 (96,527) 262,431
Provision for pension plans 1,707 (350) 1,357
Total 1,117,803 250,392 (227,329) 1,140,866
of which:
non-current portion 974,597 967,755
current portion (*) 143,206 173,111
(*) The current portion refers only to the Provision for termination benefit incentives and Provision for pension plans
(thousands of euros) 12/31/2010 Provision
charges/
present value
Decrease 12/31/2011
Provision for employee severance indemnities 877,078 (63,981) (72,637) 740,460
Provision for termination benefit incentives 262,431 13,482 (97,308) 178,605
Provision for pension plans 1,357 - (350) 1,007
Total 1,140,866 (50,499) (170,295) 920,072
of which:
non-current portion 967,755 741,117
current portion (*) 173,111 178,955
(*) The current portion refers only to the Provision for termination benefit incentives and Provision for pension plans
Provision for employee severance indemnities recorded a total decrease of 136,618 thousand euros;
the reduction of 72,637 thousand euros in the "Decrease" column refers to indemnities paid to
employees who terminated employment or for advances. The negative change of
63,981 thousand euros in the “Provision charges/present value” column is the sum of provision charges
for interest accruing during the year (+37,532 thousand euros) and actuarial adjustments made at
December 31, 2011 (-101,513 thousand euros) connected with the change in economic parameters
(discount and inflation rate), as well as the new law on pensions, Law 214 of December 22, 2011, which
extends the estimated period in which a person works.
According to national law, the amount to which each employee is entitled depends on the period of
service and must be paid when the employee leaves the company. The amount of severance indemnity
due upon termination of employment is calculated on the basis of the period of employment and the
taxable compensation of each employee. This liability is adjusted annually based on the official cost-ofliving
index and legally-prescribed interest earned. The liability is not associated with any vesting
condition or period or any funding obligation; hence, there are no assets servicing the provision. In
accordance with IAS 19, this provision has been recognized as a “Defined benefit plan”, for the amount
due up to December 31, 2006.
Under the regulations introduced by Legislative Decree 252/2005 and Law 296/2006 (the State
Budget Law 2007), the severance indemnities accruing from 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, revaluations of the provision for the employee severance
indemnities at December 31, 2006, made on the basis of the official cost-of-living index and legallyprescribed
interest, are retained in the provision for employee severance indemnities.
Telecom Italia S.p.A. Separate Financial Statements Note 18 – Employee benefits 380