24. PENSION LIABILITIES AND SIMILAR OBLIGATIONS
The Company maintains several defined benefit and defined contribution plans for its employees both in Germany and at its foreign subsidiaries, which provide for old age, disability, and survivors’ benefits. The measurement dates for the domestic and foreign benefit plans are principally December 31. Individual benefit plans have also been established for members of the Executive Board. The accrued liabilities on the balance sheet for pension and other similar obligations at December 31 consists of the following:
| |
2004 |
2003 |
| €(000) |
€(000) |
| Domestic benefit plans |
5,368 |
5,044 |
| Foreign benefit plans |
22,315 |
13,129 |
| Employee financed plans |
109,079 |
77,768 |
| Other pension and similar obligations |
2,928 |
1,594 |
| |
139,690 |
97,535 |
Domestic Benefit Plans
The Company’s domestic defined benefit plans provide participants with pension benefits that are based on the length of service and compensation of employees.
The change of the benefit obligation and the change in plan assets for the domestic plans are as follows:
|
2004 |
2003 |
| €(000) |
€(000) |
| Change in benefit obligation |
|
|
| Benefit obligation at beginning of year |
30,349 |
28,351 |
| Service costs |
301 |
409 |
| Interest costs |
1,587 |
1,624 |
| Settlement |
0 |
-300 |
| Actuarial gain/loss |
1,609 |
502 |
| Benefits paid |
-610 |
-237 |
| Benefit obligation at end of year |
33,236 |
30,349 |
|
|
|
| Change in plan assets |
|
|
| Fair value of plan assets at beginning of year |
25,761 |
23,658 |
| Actual return on plan assets |
199 |
1,175 |
| Employer contributions |
2,186 |
2,162 |
| Benefits paid |
-492 |
-1,049 |
| Assets transferred to defined contribution plan |
-118 |
-185 |
| Fair value of plan assets at end of year |
27,536 |
25,761 |
|
|
|
| Funded status |
5,700 |
4,588 |
| Unrecognized transition assets |
-490 |
-532 |
| Unrecognized net actuarial loss |
-7,239 |
-4,694 |
| Net amount recognized |
-2,029 |
-638 |
|
|
|
Amounts recognized in the consolidated
balance sheets: |
|
|
| Accrued benefit liability |
5,368 |
5,044 |
| Intangible assets |
-25 |
-29 |
| Accumulated other comprehensive income |
-7,372 |
-5,653 |
| Net amount recognized |
-2,029 |
-638 |
The following weighted average assumptions were used for the actuarial valuation of the Group’s domestic pension benefit obligation as of the respective measurement date:
|
2004 |
2003 |
2002 |
| % |
% |
% |
| Discount rate |
5.0 |
5.3 |
5.8 |
| Rate of compensation increase |
2.7 |
3.9 |
3.9 |
The components of net periodic benefit cost of the Group’s domestic benefit plans for the years ended December 31 are as follows:
|
2004 |
2003 |
2002 |
| €(000) |
€(000) |
€(000) |
| Service cost |
301 |
409 |
561 |
| Interest cost |
1,587 |
1,624 |
1,631 |
| Expected return on plan assets |
-1,638 |
-1,529 |
-1,399 |
| Net amortization |
545 |
484 |
456 |
|
795 |
988 |
1,249 |
The weighted average assumptions used for determining the net periodic pension cost for the Group’s domestic pension plans for 2004, 2003, and 2002, were as follows:
|
2004 |
2003 |
2002 |
| % |
% |
% |
| Discount rate |
5.3 |
5.8 |
6.6 |
| Expected return on plan assets |
6.0 |
5.9 |
6.5 |
| Rate of compensation increase |
3.9 |
3.9 |
4.0 |
SAP’s investment strategy in Germany is to invest all contributions into stable insurance policies. The expected rate of return on plan assets for the Group’s domestic benefit plans is calculated by reference to the expected returns achievable on the insured policies given the expected asset mix of the policies.
|
