Annual report 2009 - Dexia.com

Notes to the consolidated fi nancial statementsManagement reporth. Range of assumptions to determine pension expenseDiscountrateInflation31/12/08Expected return Expected return Expected returnon assets on bonds on sharesSalary increaserateEurope 5.00% – 5.75% 2.25% 5.00% – 5.60% 5.00% – 5.75% 8.00% – 8.75% 2.25% – 5.25%Switzerland 3.25% 1.30% 3,75% 3.25% 6.25% 2.50%United Kingdom 6.40% 3.20% 6.78% 6.00% 8.10% 4.70%31/12/09Discount rate Inflation Expected return Expected return Expected return Salary increaseon assets on bonds on sharesrateEurope 3.50% – 5.00% 2.50% 4.20% – 5.55% 2.95% – 4.68% 5.95% – 7.68% 2.50% – 5.50%Switzerland 3.25% 0.90% 3.50% 3.25% 6.70% 2.50%United Kingdom 5.70% 3.60% 6.74% 4.20% 8.40% 4.70%Consolidatedfinancial statementsannual financial statementsAdditional informationComment on assumptions:Return on shares takes into account a risk premium.The expected return on assets is function of the asset allocation.I. Reconciliation with financial statementsLong-term obligations 2008 2009Outstanding liability relating to defined benefit plans 676 686Outstanding liability relating to other postretirement obligations 52 54Outstanding liability relating to other long-term employee benefits 36 39Total outstanding liability reported in the financial statements (1) 764 779Total liability calculated by actuarials 764 780TOTAL LIABILITY RELATING TO INSIGNIFICANT PLANS 0 (1)Outstanding asset reported in the financial statements (2) 17 19Total assets analysed by actuarials 17 22TOTAL ASSETS RELATING TO INSIGNIFICANT PLANS 0 (3)(1) See note 8.6.A.(2) See note 7.12.A.j. Concentration riskSome of Dexia’s plan assets are insurance policies issued by Ethias.The fair value of the plan assets amounts to respectively EUR 954 million as at 31 December 2008 and EUR 870 million as at31 December 2009.Sensibility to changes of interest ratesAn increase/decrease of 25bp of interest rate would lead to the following consequences on 2009 amounts:The Benefit Obligation as at end of the year 2009 would decrease/increase by 2.8/2.9% but the amount reported in “provision”would remain unchanged for the pension plans as the actuarial gains and losses would absorb the differences.The service cost for the year 2010 would decrease/increase by 3.2/3.3%, interest cost would increase/decrease by 2.0/2.2%and the expected return on plan assets would increase/decrease by 5.1/5.1%.The total net pension cost would decrease/increase in 2010 by 3.6/4.4% as a decrease of 25bp would result in a higher amortizationof actuarial losses.Without any amortization, the decrease/increase of total net pension cost would be 3.5/3.4%.E. DEFINED CONTRIBUTION PLANContributions to legal pensions are not included in the amounts.The amount recognised as an expense for defined contribution plans was EUR 26.7 million for 2009 compared to EUR 30 millionfor 2008.156Dexia Annual report 2009