Pharmaceuticals Sector - Solvay

Post-employment benefi t plans are classifi ed into defi ned contribution and defi ned benefi t plans.
- Defi ned contribution plans
Defi ned contribution plans are those for which the company pays fi xed contributions into a separate entity or fund
in accordance with the provisions of the plan. Once these contributions have been paid, the company has no
further obligation. EUR 29 million of contributions to these plans were charged to income in 2005 (EUR 22 million
in 2004).
- Defi ned benefi t plans
All plans which are not defi ned contribution plans are deemed to be defi ned benefi t plans. These plans can be
either funded via outside pension funds or insurance companies (“funded plans”) or fi nanced within the group
(“unfunded plans”). All main plans are assessed annually by independent actuaries. The amounts charged to
income in respect of these plans are:
EUR million 2004 2005
Service cost 54 50
Interest cost 118 117
Expected return on plan assets -66 -71
Amortization of actuarial net losses / (gains) 4 7
Impact of change in asset ceiling - current year -2 3
Past service cost - recognized in current year -6 -7
Losses / (gains) on curtailments / settlements -3 -23
Net expense recognized - Defi ned benefi t plans 99 76
The cost of these benefi t plans is charged variously to cost of sales, commercial and administrative costs, research &
development costs, other fi nancial gains and losses and non-recurring items.
Overall the charge has decreased by EUR 23 million, mainly owing to the reduction of our commitments for postemployment
health care in the Netherlands. This reduction in our commitments, recognized in the 2005 accounts,
follows the disposal of the complementary health care plan following a change in the law.
With regard to the invested assets it should be noted that:
- they produced an actual return of EUR 112 million in 2005 (compared to EUR 63 million in 2004). This amount
should be compared to the expected return of EUR 71 million (EUR 66 million in 2004);
- these assets do not contain any direct investment in Solvay group shares, though this does not exclude Solvay
shares being included in mutual investment fund type investments.
The amounts recorded in the balance sheet in respect of defi ned benefi t plans are:
EUR million 2004 2005
Defi ned benefi t obligations - funded plans 1 458 1 616
Fair value of plan assets at end of period -1 049 -1 232
Defi cit for funded plans 409 384
Defi ned benefi t obligations - unfunded plans 805 855
Funded status 1 214 1 239
Unrecognized actuarial gains (losses) -258 -311
Unrecognized past service cost 17 10
Amounts not recognized as asset due to asset ceiling 15 18
Net liability (asset) in balance sheet
Liability recognized in the balance sheet 1 010 1 009
Asset recognized in the balance sheet -22 -53
Solvay Global Annual Report 2005
83