26. Post-Employment Benefits

The amounts recognized in the balance sheet are determined as follows:

in thousands of EUR

31 December 2014

31 December 2013

Present value of benefit obligation

169,746

104,870

Fair value of plan assets

- 153,591

- 98,435

Net position

16,155

6,435

Present value of unfunded obligation

69,694

48,206

Provision in the balance sheet

85,849

54,641

The most recent actuarial valuations were performed in December 2014.

The funded defined benefit obligation relates mainly (by over 95%) to the pension plan (old age pension, survivors’ pension and orphans’ pension) of the employees in The Netherlands. The Dutch pension plan is insured with Nationale Nederlanden. The unfunded plans relate to pension promises made to German employees already employed with Apollo prior to 1994 (2014: €51.9 million; 2013 €37.7 million), the Italian Tratamento di Fine Rapporto program (2014: €6.2 million; 2013: €1.5 million) and an end-of-employment plan for French employees (2014: €9.0 million; 2013: €6.8 million).

The increase in the post-employment benefits provision is mainly caused by the decrease in the discount rates used.

The amounts recognized in the Income Statement are as follows:

in thousands of EUR

Notes

2014

2013

Current service costs

5,253

5,876

Interest expense

1,854

1,660

Administrative costs

270

27

Total defined benefit costs

7

7,377

7,563

In 2015 the Group expects to pay an employer contribution into the defined benefit pension plans of €7,169, excluding the effect of possible changes to the employee base.

The movement in the defined benefit obligation over the year was as follows:

in thousands of EUR

Present value
of obligation

Fair value of
plan assets

Total

At 1 January 2013

149,975

- 95,017

54,958

Current service costs

5,876

-

5,876

Interest expense/ (income)

5,008

- 3,348

1,660

Acquisitions

-

-

-

Employee contributions

2,014

- 2,014

-

Employer contributions

-

- 3,913

- 3,913

Experience adjustments

2,916

-

2,916

Change in financial assumptions

- 9,376

-

- 9,376

Plan amendments and curtailments

- 421

-

- 421

Settlements

-

176

176

Return on plan assets, excluding amounts in interest

-

3,862

3,862

Benefits paid

- 2,689

1,819

- 870

Exchange effect

- 227

-

- 227

At 31 December 2013

153,076

- 98,435

54,641

Current service costs

5,253

-

5,253

Interest expense/ (income)

5,761

- 3,907

1,854

Acquisitions

4,190

-

4,190

Employee contributions

2,720

- 2,720

-

Employer contributions

-

- 2,908

- 2,908

Experience adjustments

- 1,059

-

- 1,059

Change in financial assumptions

71,286

-

71,286

Change in demographic assumptions

847

-

847

Plan amendments and curtailments

-

-

-

Return on plan assets, excluding amounts in interest

-

- 49,143

- 49,143

Benefits paid

- 3,191

3,191

-

Reclassification

641

269

910

Exchange effect

- 84

62

- 22

At 31 December 2014

239,440

- 153,591

85,849

Assumptions

The principal actuarial assumptions used were as follows:

2014

2013

Discount rate

2.2%

3.6%

Expected return on plan assets

2.1%

3.6%

Future salary increases

2.9%

3.0%

Future inflation

2.0%

2.0%

The difference between the discount rate and the expected return on plan assets is caused by the weighted impact of funded and unfunded plans.

The most recent available mortality tables have been used in determining the pension liability. Experience adjustments have been made. The assumptions are based on historical experiences. The expected return on plan assets is based on the expected return on high-quality corporate bonds.

A 1% increase in the discount rate used to calculate the defined benefit obligation would result in a 17% decrease in the defined benefit obligation. An increase of 0.25% in salary would result in an increase of 3% in the defined benefit obligation. +1 year in life expectancy would result in a slight increase of 4% in the defined benefit obligation. An increase of 1% in inflation would result in an 18% increase in the defined benefit obligation.

The above sensitivity analyses are based on there being a change in one assumption while all other assumptions remain constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognized within the statement of financial position. 

Plan assets are comprised as follows:

in thousands of EUR

2014

2013

Equities

259

23,194

Debt instruments

2,621

73,971

Other

150,711

1,270

Total

153,591

98,435

The plan assets ‘other’ category mainly represents the valuation of the pension rights of the Dutch pension plan built up with Nationale Nederlanden. Until 2013 the assets of the Dutch pension plan were invested in individual equity and debt instruments.

The expected maturity of the undiscounted pension and post-employment benefits is:

in thousands of EUR

2014

2013

Less than 1 year

3,513

2,199

Between 1 and 2 years

4,037

3,235

Between 2 and 5 years

13,231

8,966

Over 5 years

549,551

549,180

Total

570,332

563,580