to download Telecom Italia Annual Report 2011 - Company Reporting

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 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 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.
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 5.0%
in each year
1.5%
in each year
over 40 up to 50 years of age 4.0%
in each year
0.5%
in each year
over 50 years of age None None
Probability of retirement
Reaching the minimum requisites established by the Obligatory
General Insurance updated on the basis of Law 214 of
December 22, 2011
Probability of receiving at the beginning of the year an advance
from the provision for severance indemnities accrued equal to
70%
3.0%
in each year
3.0%
in each year
The adoption of the above assumptions resulted in a liability for employee severance indemnities at
December 31, 2011 and 2010, respectively, of 740,460 thousand euros and 877,078 thousand euros.
Telecom Italia S.p.A. Separate Financial Statements Note 18 – Employee benefits 381