Home /
6 - Other liabilities
(€ million) | 31.12.2012 | 31.12.2011 |
---|---|---|
Liabilities directly associated to non-current assets and disposal groups classified as held for sale | 0 | 0 |
Deferred tax liabilities | 2,996 | 5,949 |
Tax payables | 1,639 | 1,339 |
Other liabilities | 4,762 | 4,532 |
Provision for other defined benefit plans | 2,505 | 2,602 |
Termination benefit liabilities | 41 | 90 |
Accrued interest expense | 351 | 374 |
Other accrued expenses | 583 | 317 |
Deferred expenses | 174 | 99 |
Deferred income for investment management services | 9 | 12 |
Miscellaneaus liabilities | 1,098 | 1,038 |
Total | 9,397 | 11,820 |
Provisions for defined benefit plan
The pension benefits of Generali Group’s employees are mainly in form of defined benefit plans and defined contribution plans.
As for defined benefit plans, participants are granted a defined pension benefits by the employers or via external entities.
The main defined benefits plans are concentrated in Germany, Austria and Switzerland, while in Italy the provision for Trattamento di fine rapporto (employee severance pay) matured until 1st January 2007 is included in the provisions for defined benefit plan for € 103 million.
(€ million) | 31.12.2012 | 31.12.2011 |
---|---|---|
Present value of defined benefit plan obligation | 5,436 | 4,685 |
Fair value of plan assets | -1,717 | -1,628 |
Status funded | 3,719 | 3,057 |
Net actuarial gains or (losses) not recognised | -1,155 | -350 |
Past service cost not recognised | 0 | 4 |
Net liability recognised in the Balance Sheet | 2,564 | 2,710 |
The funded status arising from the application of IAS 19 increased from € 3,057 million as at 31 December 2011 to € 3,719 million as at 31 December 2012.
The increase was mainly due to the increase of the present value of the defined benefit plan obligations, following the reduction of the discount rate applied in the “Project Unit Credit Method”(1)valuation.
For many of the Group’s defined benefit plans there are assets that are designated, but not legally segregated, to meet the pension defined benefit obligations. These are investments related to insurance policies issued by Generali Group insurers, or other investments owned by the Group entities. Consequently, in accordance with IAS 19 these are not recognised as plan assets and so cannot be deducted from the defined benefit obligations. However, to obtain the economic net liability for defined benefit plans these assets would have to be netted against the present value of the related pension obligations.
This is predominantly for Germany and Austria, where the Group retains about the 60% of the present value of defined benefit obligations. Moreover, in these countries, the pension guarantee associations, to the extent of the yearly contributions paid by the companies, are liable for the fulfilment of the pension commitments granted in case of companies insolvency.
The table below shows the defined benefit obligation and the net liability movements occurred during the financial year:
(€ million) | 31.12.2012 | 31.12.2011 |
---|---|---|
Defined benefit obligation as at 31 December previous year | 4,685 | 4,484 |
Foreign currency translation effects | 0 | 39 |
Current service cost | 96 | 93 |
Past service cost | -177 | 4 |
Interest expense | 188 | 193 |
Actuarial (gains) and losses | 920 | 84 |
Curtailments and settlements effect | -32 | 14 |
Contribution by plan participants | 20 | 12 |
Benefits paid | -235 | -237 |
Changes in consolidation scope | -29 | -1 |
Defined benefit obligation as at 31 December current year | 5,436 | 4,685 |
(€ million) |
31.12.2012 | 31.12.2011 |
---|---|---|
Fair value of plan assets as at 31 December previous year | 1,628 | 1,614 |
Foreign currency translation effects | 0 | 33 |
Expected return on plan assets | 67 | 67 |
Actuarial (gains) and losses | 70 | -52 |
Curtailments and settlements effect | -14 | 0 |
Employer contribution | 41 | 45 |
Contribution by plan participants | 20 | 12 |
Benefits paid | -73 | -89 |
Changes in consolidation scope | -21 | -1 |
Net liability as at 31 December current year | 1,717 | 1,628 |
The net defined benefit plans expense of the year recognised in the profit or loss account aroused from the following items:
(€ million) | 31.12.2012 | 31.12.2011 |
---|---|---|
Current service cost | 96 | 93 |
Interest expense | 188 | 193 |
Expected return on plan assets | -67 | -67 |
Net actuarial losses recognised in the period | 50 | -43 |
Past service cost | -177 | 3 |
Curtailments and settlements effect | -23 | -1 |
Net expense recognised in the income statement | 68 | 177 |
Gains classified in “past service cost” are referred to plan amendments occurred during the period that reduced vested benefits related to past services and therefore were immediately recognized as negative past service costs in the profit or loss.
The table below shows the net defined benefit plans liability movements occurred during the financial year:
(€ million) | 31.12.2012 | 31.12.2011 |
---|---|---|
Net liability as at 31 December previous year | 2,710 | 2,681 |
Foreign currency translation effects | 0 | 2 |
Net expense recognised in the income statement | 68 | 177 |
Contributions and benefits payed | -206 | -149 |
Changes in consolidation scope | -8 | -1 |
Net liability as at 31 December current year | 2,564 | 2,710 |
The defined benefit plans’ weighted-average asset allocation by asset category is as follows:
(%) |
31.12.2012 | 31.12.2011 |
---|---|---|
Bonds | 49.8 | 54.6 |
Equities | 20.3 | 16.9 |
Rael estates | 2.8 | 11.7 |
Investment fund units | 15.7 | 7.4 |
Other investments | 11.3 | 9.3 |
Total | 100.0 | 100.0 |
The assumptions used in the actuarial calculation of the defined benefit obligations and the related periodic pension cost are based on the best estimates of each companies granting defined benefit plans. The main weighted-average hypotheses considered for the value definition of defined benefits plans obligations – other than the Italian “trattamento di fine rapporto” – are summarized in the following table, for the main operating areas:
% |
Eurozone | Switzerland | ||
---|---|---|---|---|
31.12.2012 | 31.12.2011 | 31.12.2012 | 31.12.2011 | |
Discount rate | 3.2 | 4.9 | 1.8 | 2.5 |
Expected long-term rate of return on plan assets | 4.3 | 4.4 | 3.5 | 3.7 |
Rate of salary increase | 2.9 | 3.0 | 1.7 | 1.9 |
Rate of pension increase | 2.0 | 2.0 | 0.0 | 0.0 |
Starting from 1 January 2013 the amended IAS 19 will be effective. This standard, in comparison with the version adopted for the 2012 consolidated financial statements, includes amendments deeper described in the paragraph “IAS 19 – Amendments to IAS 19 – Employee benefits” in the Basis of presentation and accounting principles included in the section “Notes to the Consolidated Financial Statements”.
The main amendment is the elimination of the “corridor” option for the off-balance sheet recognition of gains or losses arising from the re-measurement of obligations related with defined benefit plans and with assets servicing these plans. The application of the aforementioned amendment would result in the recognition in Other Comprehensive Income of unrecognised actuarial losses, which amounted to € - 1,155 million at 31/12/2012 before policyholders’ participation and taxes; attributable to the observed decrease of discount rates used to determine the present values of those liabilities.
(1) Refer to paragraph 6.4 – Other liabilities in Accounting principles section