28. Retirement benefit plans

28. Retirement benefit plans

Defined contribution plans

We operate defined contribution systems for our qualifying employees (except for Belgium and France). The assets of the schemes are held separately from ours in designated pension plans. For defined contribution systems, we pay contributions to publicly or privately administered pension or insurance funds. Once the contribution is paid, we do not have any remaining obligation.

Defined benefit plans in Belgium

In view of the minimum returns guarantees, the Belgian plans classify as defined benefit plans. As at 31 December 2016 a net defined benefit obligation of €386.6 thousand was recorded, which decreased to a net defined benefit obligation of €169.4 thousand on 31 December 2017.

Actuarial gains and losses are recognized immediately in equity, with a charge or credit to other comprehensive income (OCI), in accordance with IAS 19R Employee Benefits. They are not recycled subsequently. Actuarial gains of €53.9 thousand were recognized through other comprehensive income (OCI) at the end of 2017 (2016: €389.9 thousand of actuarial losses). The contributions to those plans that were due by the employer for the year ended 31 December 2017 and the year ended 31 December 2016, amounted respectively to €964.0 thousand and €528.0 thousand, of which €64.0 thousand was paid after 31 December 2017 (2016: €42.5 thousand). No contributions were made by the employees.

The plan assets as on 31 December 2017 consisted of €2,554.7 thousand (2016: €1,788.7 thousand) individual insurance reserves, which benefit from a weighted average guaranteed interest rate of 2.41% (2016: 2.82%).

Defined benefit plans in France

We use two defined benefit plans for the employees of our French entity. The defined benefit plans are not supported by funds.

The chemical and pharmaceutical industry’s collective bargaining agreements require that our French entity pays a retirement allowance depending on the seniority of the employees at the moment they retire. The benefit obligations for these retirement allowances amounted to €2,046.8 thousand for 2017 (2016: €1,808.5 thousand). This increase was mainly due to changed actuarial assumptions (decrease of discount rate from 1.44% to 1.30%).

Additionally, there are also seniority premiums obligations in France. The provisions for these premiums amounted to €1,365.7 thousand on 31 December 2017 (on 31 December 2016: €1,324.9 thousand).

Total obligation included in the balance sheet related to the defined benefit plans amounted to €3,412.5 thousand on 31 December 2017 (2016: €3,133.4 thousand).

Actuarial gains and losses are recognized in equity, with a charge or credit to other comprehensive income (OCI), in accordance with IAS 19R Employee Benefits. They are not recycled subsequently. Actuarial losses of €93.9 thousand were recognized through other comprehensive income (OCI) at the end of 2017 (2016: €193.2 thousand of actuarial losses).

Total amounts due by the group to the pension plans in 2017 were €2.2 million (2016: €1.7 million).

Obligations included in the balance sheet

 

 

 

 

31 December

(thousands of €)

2017

2016

Present value of funded defined benefit obligation

2,724

2,175

Plan assets

(2,555)

(1,789)

Deficit / surplus

169

387

Present value of unfunded defined benefit obligation

3,412

3,133

Liability included in the balance sheet

3,582

3,520

The present value of the gross obligation developed as follows

 

 

 

(thousands of €)

2017

2016

Opening balance

5,308

3,757

 

 

 

Current service cost

863

649

Actual taxes on contributions paid

(87)

(48)

Interest cost

87

82

Benefits paid

(157)

(119)

Actuarial gains (–) or losses due to experience adjustments

(100)

500

Actuarial gains (–) or losses due to experience adjustments related to new financial assumptions

222

432

Actuarial gains (–) or losses due to experience adjustments related to new demographic assumptions

56

Closing balance

6,136

5,308

The fair value of the plan assets developed as follows

 

 

 

(thousands of €)

2017

2016

Opening balance

(1,788)

(1,064)

Interest income on plan assets

(41)

(32)

Actual administration costs

3

2

Contributions from employer

(748)

(411)

Actual taxes on contributions paid

87

48

Plan assets gain during the period

(68)

(332)

Closing balance

(2,555)

(1,788)

The expected rate of return on the plan assets is 1.7%.

The fair value of the plan assets is the fair market value of the plan assets. The fair value of the plan assets was calculated as the reduced lump sums (received from the plan administrators) actualized with the assumptions set (discount rate and mortality tables). The total plan assets are equal to the fair value of the plan assets increased with the financing fund.

Amounts recognized in profit or loss for defined benefit plans are as follows

 

 

 

 

Year ended 31 December

(thousands of €)

2017

2016

Current service cost

863

649

Interest cost

87

82

Interest income

(41)

(32)

Administration expenses

3

2

Revaluations of net liability / net asset

14

73

Total expense

926

773

Obligation included in the balance sheet reconciles as follows

 

 

 

(thousands of €)

2017

2016

Opening balance

3,520

2,693

Real employer contributions

(748)

(411)

Total expense recognized in the income statement

926

773

Re-measurement on the net defined benefit liability

40

583

Benefits paid

(157)

(119)

Closing balance

3,582

3,520

The most important actuarial assumptions are

 

 

 

 

31 December

(%)

2017

2016

Weighted average discount rate

1.48%

1.60%

Expected salary increase

2.50%

2.50%

Inflation rate

1.86%

1.75%

The discount rate was based on the Merrill Lynch yields for AA rated Eurozone corporate bonds (bonds with maturity dates which correspond with the commitments). In addition to the above table, we used mortality tables issued by Belgian and French national institutions for statistics applicable respectively for the Belgian and the French population.

Breakdown of defined benefit obligation by type of plan participants:

 

31 December

(number of participants)

2017

2016

Active plan participants

324

267

Breakdown of defined benefit obligation by type of benefits:

 

31 December

(thousands of €)

2017

2016

Retirement and death benefits

4,770

3,983

Other post-employment benefits

1,366

1,325

Major categories of plan assets: fair value plan of assets:

 

31 December

(thousands of €)

2017

2016

Equity

153

89

Debt

2,402

1,698

Sensitivity analysis on weighted average discount rate: effect on gross obligation

 

 

 

31 December

Obligation (thousands of €)

2017

Discount rate 0.98%

6,663

Discount rate 1.23%

6,393

Discount rate 1.48%

6,136

Discount rate 1.73%

5,895

Discount rate 1.98%

5,666

Sensitivity analysis on weighted average discount rate: effect on gross obligation

 

 

 

31 December

Obligation (thousands of €)

2016

Discount rate 1.10%

3,792

Discount rate 1.35%

3,661

Discount rate 1.60%

3,520

Discount rate 1.85%

3,419

Discount rate 2.10%

3,312