Notes to the Consolidated Financial Statements (continued)
26. Employee benefits
Report of the
Report of the
Annual Report 2016
In millions of EUR
Present value of unfunded defined benefit obligations
Present value of funded defined benefit obligations
Total present value of defined benefit obligations
Fair value of defined benefit plan assets
Present value of net obligations
Asset ceiling items
Recognised liability for defined benefit obligations
Other long-term employee benefits
HEINEKEN makes contributions to defined benefit plans that provide pension benefits for employees upon retirement in a number of countries.
The defined benefit plans in the Netherlands and the UK combined cover 88.0% of the total defined benefit plan assets (2015: 88.4%), 84.1%
of the present value of the defined benefit obligations (2015: 83.9%) and 61.2% of the present value of net obligations (2015: 55.2%) as at
31 December 2016.
HEINEKEN provides employees in the Netherlands with an average pay pension plan based on earnings up to the legal tax limit. Indexation of
accrued benefits is conditional on the funded status of the pension fund. HEINEKEN pays contributions to the fund up to a maximum level agreed
with the Board of the pension fund and has no obligation to make additional contributions in case of a funding deficit. In 2016, HEINEKEN's cash
contribution to the Dutch pension plan was at the maximum level. The same level is expected to be paid in 2017.
HEINEKEN's UK plan (Scottish Newcastle pension plan 'SNPP') was closed to future accrual in 2010 and the liabilities thus relate to past service
before plan closure. Based on the triennial review finalised in early 2016, HEINEKEN has renewed the funding plan (until 31 May 2023) including
an annual Company contribution of GBP37.5 million in 2017, thereafter increasing with GBP1.7 million per year. Deficit payments as of 2019 will
be reviewed and may be replaced following the next triennial valuation which will take place in 2019. As at 31 December 2016, the IAS 19 present
value of the net obligations of SNPP represents a GBP581 million (EUR 679 million) deficit. No additional liability has to be recognised as the net
present value of the minimum funding requirement does not exceed the net obligation.
Other countries where HEINEKEN offers a defined benefit plan to (former) employees include: Austria (closed in 2007 to new entrants), Belgium,
France, Greece (closed in 2014 to new entrants), Ireland (closed in 2012 to all future accrual), Jamaica (to be closed in 2017 to all future accrual),
Mexico (plan changed to hybrid defined contribution for majority of employees in 2014), Nigeria (closed to new entrants in 2007), Portugal, Spain
(closed to management in 2010) and Switzerland.
The vast majority of benefit payments are from pension funds that are held in trusts (or equivalent); however, there is a small portion where
HEINEKEN meets the benefit payment obligation as it falls due. Plan assets held in trusts are governed by Trustee Boards composed of HEINEKEN
representatives and independent and/or member representation, in accordance with local regulations and practice in each country. The relationship
and division of responsibility between HEINEKEN and the Trustee Board (or equivalent) including investment decisions and contribution schedules
are carried out in accordance with the plan's regulations.
In other countries, retirement benefits are provided to employees via defined contribution plans.
Other long-term employee benefits mainly relate to long-term bonus plans, termination benefits, medical plans and jubilee benefits.