26. Employee benefits
| In millions of EUR | 2006 | 2005 |
| Present value of unfunded obligations | 309 | 291 |
| Present value of funded obligations | 2,734 | 2,830 |
| Total present value of obligations | 3,043 | 3,121 |
| Fair value of plan assets | (2,397) | (2,268) |
| Present value of net obligations | 646 | 853 |
| Less: Unrecognised actuarial losses | (78) | (285) |
| Recognised liability for defined benefit obligations | 568 | 568 |
| Other long-term employee benefits | 97 | 96 |
| 665 | 664 | |
Plan assets consist of the following:
| In millions of EUR | 2006 | 2005 |
| Equity securities | 968 | 937 |
| Government bonds | 955 | 867 |
| Properties and real estate | 199 | 177 |
| Other plan assets | 275 | 287 |
| 2,397 | 2,268 |
Liability for defined benefit obligations
Heineken makes contributions to a number of defined benefit plans that provide pension benefits for employees upon retirement in a number of countries being mainly: the Netherlands, Greece, Austria, Germany, Italy, France, Spain and Nigeria. In other countries the pension plans are defined contribution plans and/or similar arrangements for employees.
Other long-term employee benefits mainly relate to long-term bonus plans, termination benefits and jubilee benefits.
Movements in the liability for defined benefit obligations
| In millions of EUR | 2006 | 2005 |
| Net liability at 1 January | 568 | 634 |
| Changes in consolidation and reclassification | (1) | (29) |
| Effect of movements in exchange rates | (2) | 5 |
| Benefits paid | (97) | (138) |
| Expense recognised in the income statement | 100 | 96 |
| Net liability at 31 December | 568 | 568 |
Movements in plan assets
| In millions of EUR | 2006 | 2005 |
| Fair value of plan assets at 1 January | 2,268 | 2,250 |
| Effect of movements in exchange rates | (3) | (1) |
| Contributions paid into the plan | 111 | 44 |
| Benefits paid | (97) | (138) |
| Expected return on plan assets | 118 | 113 |
| Fair value of plan assets at 31 December | 2,397 | 2,268 |
Expense recognised in the income statement
| In millions of EUR | 2006 | 2005 |
| Current service costs | 84 | 82 |
| Interest on obligation | 125 | 131 |
| Expected return on plan assets | (118) | (112) |
| Effect of any curtailment or settlement | 9 | (5) |
| 100 | 96 | |
Principal actuarial assumptions at the balance sheet date
| Western and Central & Eastern Europe | Americas | Africa/ Middle East |
Asia Pacific |
|||||
| 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |
| Discount rate at 31 December | 2.5-6 | 2.5-6.5 | 5.5-6.5 | 5.5-6.5 | 4.5-15 | 4.5-19 | 3.5-13 | 3.5-13 |
| Expected return on plan assets at 1 January | 3.5-6.6 | 3.5-6.6 | 6.5 | 5.25 | 6.5 | 5 | 3.5-11 | 3.5-11 |
| Future salary increases | 1.5-8 | 1.5-8 | 0.5-5 | 0.5-5 | 3-14 | 3-17 | 3-8 | 3.5-8 |
| Future pension increases | 1-2.5 | 1-3.5 | 3.5 | 3.5 | 2 | 2 | 8 | 8 |
| Medical cost trend rate | 1.5 | 1.5 | 5 | 5 | – | – | – | – |
Assumptions regarding future mortality are based on published statistics and mortality tables.
The overall expected long-term rate of return on assets is 5.9 per cent. The return is based exclusively on historical returns, without adjustments.
