107 Notes to the Consolidated Financial Statements (continued) Inflation risk Life expectancy Principal actuarial assumptions as at the balance sheet date - - Sensitivity analysis Heineken NV. Report of the Report of the Financial Sustainability Other Annual Report 2016 Introduction Executive Board Supervisory Board Statements Review Information Some of the pension obligations are linked to inflation. Higher inflation will lead to higher liabilities, although in most cases caps on the level of inflationary increases are in place to protect the plan against extreme inflation. The majority of the plan assets are either unaffected by or loosely correlated with inflation, meaning that an increase in inflation will increase the deficit. HEINEKEN provides employees in the Netherlands with an average pay pension plan, whereby indexation of accrued benefits is conditional on the funded status of the pension fund. In the UK, inflation is partly managed through the use of a mixture of inflation-linked derivative instruments. These instruments match 41% of the inflation-linked liabilities (2015: 39%). The majority of the plans' obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans' liabilities. This is particularly significant in the UK plan, where inflation-linked increases result in higher sensitivity to changes in life expectancy. In 2015, the Trustee of SNPP implemented a longevity hedge to remove the risk of a higher increase in life expectancy than anticipated for current pensioners. Based on the significance of the Dutch and UK pension plans compared with the other plans, the table below only includes the major actuarial assumptions for those two plans as at 31 December: The Netherlands UK* In 2016 2015 2016 2015 Discount rate as at 31 December 1.5 2.3 2.7 3.9 Future salary increases 2.0 2.0 Future pension increases 0.4 0.9 3.1 3.0 The UK plan closed for future accrual, leading to certain assumptions being equal to zero. For the other defined benefit plans, the following actuarial assumptions apply at 31 December: Europe Americas Africa, Middle East Eastern Europe In 2016 2015 2016 2015 2016 2015 Discount rate as at 31 December 0.6-6.8 0.8-2.3 7.0-7.6 7.0 1.5-15.5 12.0 Future salary increases 0.0-3.5 0.0-3.5 0.0-4.5 4.5 0.0-5.0 7.5 Future pension increases 0.0-1.5 0.0-1.2 0.0-3.5 3.5 0.0-3.5 3.0 Medical cost trend rate 0.0-4.5 0.0-4.5 0.0-5.0 5.1 0.0-5.0 4.5 Assumptions regarding future mortality rates are based on published statistics and mortality tables. For the Netherlands, the rates are obtained from the AG-Prognosetafel 2016', fully generational. Correction factors from Towers Watson are applied on these rates. For the UK, the future mortality rates are obtained by applying the Continuous Mortality Investigation 2014 projection model with an assumed long term rate of 1.5% p.a. to the Self-Administered Pension Schemes Series 2 (year of birth) tables with a 112% (male)/109% (female) weighting for pensioners and a 105% (male)/106% (female) weighting for non-pensioners. The weighted average duration of the defined benefit obligation at the end of the reporting period is 18 years. HEINEKEN expects the 2017 contributions to be paid for the defined benefit plans to be in line with 2016. Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below: 31 December 2016 31 December 2015 Effect in millions of EUR Increase in assumption Decrease in assumption Increase in assumption Decrease in assumption Discount rate (0.5% movement) (695) 798 (677) 771 Future salary growth (0.25% movement) 23 (22) 21 (20) Future pension growth (0.25% movement) 332 (309) 300 (292) Medical cost trend rate (0.5% movement) 5 (4) 6 (5) Life expectancy (1 year) 300 (301) 287 (290) Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.

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