Engineering

3.6 Consolidated financial statements Notes to the consolidated financial statements
Net periodic pension cost
The net periodic pension cost for the defined benefit plans were as follows:
million €
Consolidated financial statements
166 | 167
Year ended Sept. 30, 2010 Year ended Sept. 30, 2011
Outside
Outside
Germany Germany Germany Germany
Service cost 69 31 90 35
Interest cost 287 111 249 102
Expected return on plan assets (13) (106) (13) (111)
Past service cost 2 7 0 1
Settlement and curtailment loss/(gain) 0 (1) 0 45
Net periodic pension cost 345 42 326 72
The above presented net periodic pension cost for defined benefit
plans in the amount of €326 million (2009/2010: €345 million) in
Germany and of €72 million (2009/2010: €42 million) outside
Germany include €17 million (2009/2010: €17 million) and €1 million
(2009/2010: €2 million), respectively, attributable to discontinued
operations. These costs are presented in income/(loss) from
discontinued operations in the consolidated statement of income.
Assumptions
The assumptions for discount rates and the rates of compensation
increase on which the calculation of the obligations are based were
derived in accordance with standard principles and established for
The Group applied the following weighted average assumptions to determine benefit obligations:
%
each country as a function of their respective economic conditions.
Discount rates are generally determined based on market yields of high
quality corporate bonds in the respective countries with terms
corresponding to the estimated terms of the post-employment benefit
obligations. The expected return on plan assets is determined based
on detailed studies conducted by the plans’ third party investment and
actuarial advisors. The studies take into consideration the long-term
historical returns and the future estimates of long-term investment
returns based on the target asset allocation.
Sept. 30, 2010 Sept. 30, 2011
Outside
Germany Germany
Outside
Germany
Germany
Weighted-average assumptions:
Discount rate 4.10 4.47 5.00 4.41
Expected return on plan assets 6.00 6.73 6.00 6.07
Rate of compensation increase 2.50 1.86 2.50 2.16
Plan assets
In the Group, the majority of reported plan assets associated with the
funded pension plans are located in the USA, Great Britain and to a
lesser extent in Germany and some other European countries. The
Group invests in diversified portfolios consisting of an array of asset
classes that attempt to maximize returns while minimizing volatility. The
asset classes include national and international stocks, fixed income
government and non-government securities and real estate. Plan
assets do not include any direct investments in ThyssenKrupp debt
securities, equity securities or real estate.