2011 Annual Report - OTCIQ.com

120 Notes
The actuarial assumptions used to measure the defined benefit
obligations at E.ON’s German and U.K. subsidiaries as of
the respective balance sheet date are as follows:
Actuarial Assumptions
December 31, 2011 December 31, 2010
Percentages
Germany U.K. Germany U.K.
Discount rate 4.75 4.60 5.00 5.40
Salary increase rate 2.50 3.40 2.75 4.00
Pension increase rate1 2.00 2.80 2.00 3.30
Expected rate of return on plan assets 4.70 4.90 4.70 5.80
1 The pension increase rate for Germany applies to eligible individuals not subject to a one-percent pension increase rate.
The net periodic pension cost is calculated for the E. ON Group
companies in Germany and in the United Kingdom on the
basis of the actuarial assumptions that were determined for
the preceding balance sheet date:
Actuarial Assumptions
2011 2010
Percentages
Germany U.K. Germany U.K.
Discount rate 5.00 5.40 5.50 5.70
Salary increase rate 2.75 4.00 2.75 4.00
Pension increase rate1 2.00 3.30 2.00 3.30
Expected rate of return on plan assets 4.70 5.80 4.70 6.10
1 The pension increase rate for Germany applies to eligible individuals not subject to a one-percent pension increase rate.
In addition, there are pension funds in Germany for which
an expected rate of return on plan assets of 4.50 percent
(2010: 4.50 percent; 2009: 4.50 percent) is used as a basis for
the respective subsequent fiscal year.
To measure the E.ON Group’s occupational pension obligations
for accounting purposes, the Company has employed the
current versions of the biometric tables recognized in each
respective country for the calculation of pension obligations.
Other company-specific actuarial assumptions, including
employee fluctuation, have also been included in the
computations.
The discount rate assumptions used by E.ON basically reflect
the currency-specific rates available at the end of the respective
fiscal year for high-quality fixed-rate corporate bonds with
a duration corresponding to the average period to maturity
of the respective pension benefit obligations.
At the E.ON Group, a uniform increase or decrease of 0.5 percentage
points in the discount rates would change the present
value of the defined benefit obligation by -€961 million and
+€1,075 million, respectively, as of December 31, 2011.