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Notes to the Consolidated Financial Statements
%Heineken N.V. Report of the Report of the Financial Sustainability Other
Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
Principal actuarial assumptions as at the balance sheet date
Based on the significance of the Dutch and UK pension plans compared with the other plans, the table below
refers to the major actuarial assumptions for those two plans as at 31 December:
In
The Netherlands
UK1
2020
2019
2020
2019
Discount rate as at 31 December
0.5
0.9
1.4
2.1
Future salary increases
2.0
2.0
Future pension increases
0.2
0.5
3.0
2.9
Assumptions regarding future mortality rates are based on published statistics and mortality tables.
For the Netherlands, the rates are obtained from the 'AG-Prognosetafel 2020', fully generational. For the
UK, the future mortality rates are obtained by applying the Continuous Mortality Investigation 2019
projection model.
The weighted average duration of the defined benefit obligation at the end of the reporting period is 18 years.
HEINEKEN expects the contributions to be paid for the defined benefit plans for 2021 to be in line with 2020
excluding the one-off contribution of €80 million for the transitional plan of the Dutch pension fund.
Sensitivity analysis
As at 31 December, changes to one of the relevant actuarial assumptions that are considered reasonably
possible, holding other assumptions constant, would have affected the defined benefit obligation by the
following amounts:
2020
2019
Increase in
Decrease in
Increase in
Decrease in
Effect in millions of
assumption
assumption
assumption
assumption
Discount rate (0.5% movement)
(620)
689
(770)
884
Future salary growth (0.25% movement)
15
(13)
17
(16)
Future pension growth (0.25% movement)
378
(338)
365
(335)
Medical cost trend rate (0.5% movement)
6
(5)
6
(5)
Life expectancy (1 year)
438
(436)
393
(392)
Accounting estimates
To make the actuarial calculations for the defined benefit plans, HEINEKEN needs to make use of
assumptions for discount rates, future pension increases and life expectancy as described in this note.
The actuarial calculations are made by external actuaries based on inputs from observable market
data, such as corporate bond returns and yield curves to determine the discount rates used, mortality
tables to determine life expectancy and inflation numbers to determine future salary and pension
growth assumptions.
Accounting policies
Defined contribution plans
A defined contribution plan is a post-retirement plan for which HEINEKEN pays fixed contributions to
a separate entity. HEINEKEN has no legal or constructive obligation to pay further contributions if the fund
does not hold sufficient assets to pay out employees.
Defined benefit plans
A defined benefit plan is a post-retirement plan that is not a defined contribution plan. Typically, defined
benefit plans define an amount of pension benefit that an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service and compensation.
HEINEKEN's net obligation in respect of defined benefit pension plans is calculated separately for each plan
by estimating the amount of future benefits that employees have earned in return for their service in the
current and prior periods; those benefits are discounted to determine its present value. The fair value of any
defined benefit plan assets are deducted. The discount rate is the yield at balance sheet date on high-quality
credit-rated bonds that have maturity dates approximating to the terms of HEINEKEN's obligations and that
are denominated in the same currency in which the benefits are expected to be paid.
1 The UK plan is closed for future accrual, leading to certain assumptions being equal to zero.
For the other defined benefit plans, the following actuarial assumptions apply as at 31 December:
Africa, Middle East
Europe Americas Eastern Europe
In
2020
2019
2020
2019
2020
2019
Discount rate as at 31 December
0.2-0.8
0.3-0.9
6.9-12.0
6.8-14.0
0.5-8.0
0.9-12.4
Future salary increases
0.0-3.5
0.0-3.5
0.0-4.5
0.0-4.5
0.0-4.0
0.0-5.0
Future pension increases
0.0-1.5
0.0-1.5
0.0-3.5
0.0-3.6
0.0-1.2
0.0-2.9
Medical cost trend rate
0.0-4.5
0.0-4.5
0.0-15.1
0.0-13.1
0.0-0.0
0.0-0.0
