Report & accounts 2002 in full - Unilever

Unilever Annual Report & Accounts and Form 20-F 2002
Notes to the consolidated accounts 89
Unilever Group
17 Pensions and similar obligations continued
FRS 17 Disclosures
With the objective of presenting pensions and other post retirement benefit plans’ assets and liabilities at their fair value on the balance
sheet, assumptions for FRS 17 are set by reference to market conditions at the balance sheet date. As such, there will be differences
between the assumptions used in SSAP 24 and those under FRS 17 and the values placed on assets and liabilities.
Assumptions
The major market-based actuarial assumptions, weighted by liabilities, used to value the principal defined benefit pension plans and plans
providing other post-retirement benefits and the expected long-term rates of return on assets, weighted by asset value, were:
31 Dec 2002 31 Dec 2001 31 Dec 2000
Principal Other Principal Other Principal Other
defined benefit post retirement defined benefit post retirement defined benefit post retirement
pension plans benefit plans pension plans benefit plans pension plans benefit plans
Discount rate 5.70% 6.50% 6.00% 7.25% 6.20% 7.50%
Inflation assumption 2.30% n/a 2.25% n/a 2.50% n/a
Rate of increase in salaries 3.60% 4.30% 3.50% 4.50% 3.80% 4.50%
Rate of increase for pensions in payment 2.20% n/a 2.00% n/a 2.10% n/a
Rate of increase for pensions in deferment
(where provided) 2.60% n/a 1.50% n/a 2.30% n/a
Long-term medical cost inflation (a) n/a 4.90% n/a 5.00% n/a 5.00%
Expected long-term rates of return:
Equities 8.20% 9.00% 8.40%
Bonds 4.90% 5.50% 5.30%
Others 5.40% 6.00% 5.30%
(a) The valuations of other benefit plans generally assume a higher initial level of medical cost inflation, which falls from 10% to the
long-term rate within the next five years.
Assumptions for the remaining defined benefits plans vary considerably depending on the economic conditions of the country where they
are situated.
For the most significant pension plans, representing over 75% of all defined benefit plans by liabilities, the assumptions at
31 December 2002 were:
United Kingdom Netherlands United States Germany
Discount rate 5.50% 5.40% 6.50% 5.40%
Inflation assumption 2.25% 2.25% 2.50% 2.00%
Rate of increase in salaries 3.75% 3.00% 4.50% 2.75%
Rate of increase for pensions in payment 2.50% 2.25% 0.00% 2.00%
Rate of increase for pensions in deferment (where provided) 2.50% 2.25% 0.00% 0.00%
Expected long-term rates of return:
Equities 8.00% 8.30% 8.30% 8.30%
Bonds 4.90% 4.70% 4.30% 4.70%
Others 5.80% 5.60% 4.30% 4.90%
Financial Statements