31. Provisions for post-employment benefits plans and similar obligations

€ million

30/9/2020

30/9/2021

Provisions for post-employment benefits plans (employer’s commitments)

403

389

Provisions for indirect commitments

24

20

Provisions for voluntary pension benefits

0

0

Provisions for post-employment benefits plans

92

91

 

519

500

Provisions for obligations similar to pensions

31

32

 

550

531

Provisions for post-employment benefits plans consist of commitments primarily related to benefits defined by the provisions of company pension plans. These take the form of defined benefit plans directly from the employer (employer’s commitments) and defined benefit plans from external pension providers (benevolent funds in Germany and international pension funds). The external providers’ assets serve exclusively to finance the pension entitlements and qualify as plan assets. The benefits under the different plans are based on performance and length of service.

The most important performance-based pension plans are described in the following.

Germany

METRO grants many employees in Germany retirement, disability and surviving dependant’s benefits. New commitments are granted in the form of ‘defined benefit’ commitments in the meaning of IAS 19 (contribution-oriented commitments pursuant to German company pension law), which comprise a payment contribution component and an employer-matching component. Contributions are paid to a pension insurance from which benefits are paid out when the insured event occurs. A provision is recognised for entitlements not covered by pension insurance.

In addition, there are various pension schemes closed for new entrants, which usually provide for lifetime pensions from the start of the pension or from the time the disability is recognised. Benefits are largely defined as fixed payments or on the basis of set annual increases. In special cases, benefits are calculated in consideration of accrued statutory pension entitlements. The commitments provide for surviving dependant’s benefits of varying sizes, depending on the benefits the former employee received or would have received in case of disability.

There are also deferred compensation contracts with the Hamburger Pensionskasse (Hamburg pension fund).

Netherlands

In the Netherlands, there is a defined benefit pension plan that provides disability and death benefits in addition to retirement benefits. The amount of the benefits depends on the pensionable salary per year of service. Benefits are funded through a pension fund whose decision-making bodies (management board, as well as administration, finance and investment committee) include employer and employee representatives. The fund’s management board has responsibility for asset management. The pension fund’s investment committee exists for this purpose. In line with statutory minimum funding requirements, the pension fund’s management board must ensure that commitments are covered by assets at all times. In case of underfunding, the pension fund’s management board may take different measures to compensate for deficient cover. These measures include the requirement for additional contributions by the employer and curtailments in employee benefits.

The pension plan was closed with effect from 1 January 2021 for new entrants and future increases in pension entitlements. It will be replaced by a Collective Defined Contribution (CDC) plan for future entitlements.

United Kingdom

In July 2012, the former METRO GROUP sold its wholesale business in the United Kingdom to Booker Group PLC. Pension commitments were not part of the sale. Since the date of the disposal, only vested benefits and current pensions from service years at the former METRO GROUP have existed. In accordance with legal stipulations, the vested interests must be adjusted for inflation effects. The commitments are covered by assets which are managed and invested by a corporate trustee. A major share of these commitments was fully funded through a buy-in. A major share of these commitments was fully funded through a buy-in. The management board of this corporate trustee consists of employer and employee representatives. In any case, the trustee must ensure that benefits can be paid at all times in the future. This is regulated on the basis of statutory minimum financing requirements. In case of underfunding, the trustee may require additional employer contributions to close the funding gap.

Belgium

For METRO companies in Belgium, there are both retirement pensions and capital commitments; the amount depends on the pensionable length of service and pensionable income. In addition, groups of employees are granted interim allowances. In principle, benefits are funded through group insurance contracts that are subject to Belgian regulatory law. Additional retirement plans are reported cumulatively under ‘Other countries’.

The following table provides an overview of the present value of defined benefit obligations by METRO countries as well as material obligations:

€ million

30/9/2020

30/9/2021

Germany

484

476

Netherlands

555

686

United Kingdom

254

268

Belgium

79

72

Other countries

130

129

 

1,502

1,631

The plan assets of METRO are distributed between the following countries:

€ million

30/9/2020

30/9/2021

Germany

97

100

Netherlands

695

729

United Kingdom

255

268

Belgium

54

53

Other countries

25

25

 

1,126

1,175

The above commitments are valued on the basis of actuarial calculations in accordance with relevant provisions of IAS 19. The basis for the measurement is the legal and economic circumstances prevailing in each country.

The following assumptions regarding the material parameters were used in the actuarial measurements:

 

30/9/2020

30/9/2021

%

Germany

Netherlands

United Kingdom

Belgium

Germany

Netherlands

United Kingdom

Belgium

Actuarial interest rate

1.20

1.40

1.30

1.20

1.40

1.60

1.60

1.40

Pension trend

1.50

0.70

2.20

2.00

1.60

1.80

3.00

2.00

As in , METRO used generally recognised methods to determine the actuarial interest rate. With these, the respective actuarial interest rate based on the yield of investment grade corporate bonds is determined as of the closing date taking account of the currency and maturity of the underlying obligations. The actuarial interest rate for the Eurozone and the UK is based on the results of a method applied in a uniform manner across the group. The interest rate for this is set on the basis of the returns of high-quality corporate bonds and the duration of commitments. In countries without a liquid market of suitable corporate bonds, the actuarial interest rate was determined on the basis of government bond yields.

Aside from the actuarial interest rate, the pension trend represents another key actuarial parameter. In Germany, the rate of pension increases is derived directly from the inflation rate insofar as pension adjustments can be determined on the basis of the increase in the cost of living. In international companies, pension adjustments are also generally determined on the basis of the inflation rate.

The other parameters are not relevant for the measurement of pension obligations.

The impact of changes in fluctuation and mortality assumptions was analysed for major plans. As of 30 September 2021, the mortality rates for the German group companies are based on the 2018 G tables from Prof. Dr Klaus Heubeck.

The actuarial measurements outside of Germany are based on country-specific mortality tables. The resulting effects of fluctuation and mortality assumptions have been deemed immaterial and are not listed as a separate component.

The results of a sensitivity analysis for the key measurement parameters with respect to the present value of pension entitlements are presented below. The actuarial interest rate and the pension trend were identified as key parameters with an impact on the present value of pension entitlements. The sensitivity analysis used the same methods as were applied in the previous year. The analysis considered changes in parameters that are considered possible within reason. The selection of the respective spectrum of possible changes in parameters is based on historical multi-year observations.

The following illustrates the impact of an increase/decrease in the actuarial interest rate by 100 basis points or an increase/decrease in the pension trend by 25 basis points. For interpretation of the values, it should be noted that the obligations in the Netherlands and the United Kingdom are covered by life insurance policies to a large extent and that the plan assets also regularly show a compensating sensitivity with regard to the development of the general interest rate level.

 

 

30/9/2020

30/9/2021

€ million

 

Germany

Netherlands

United Kingdom

Belgium

Germany

Netherlands

United Kingdom

Belgium

Actuarial interest rate

Increase by 100 basis points

−56

−108

−40

−4

−59

−141

−43

−3

Decrease by 100 basis points

73

149

52

6

76

196

54

5

Pension trend

Increase by 25 basis points

12

16

7

0

13

21

5

0

Decrease by 25 basis points

−11

−16

−7

0

−12

−20

−6

0

Changes in the present value of defined benefit obligations have developed as follows:

€ million

2019/20

2020/21

Present value of defined benefit obligations

 

 

As of the beginning of the period

1,516

1,502

Recognised under

39

39

interest expenses

20

20

current service cost

29

19

past service cost (incl. curtailments and changes)

−10

0

settlement expenses

0

0

Recognised outside of profit or loss under ‘remeasurement of defined benefit pension plans’ in other comprehensive income

−40

137

Actuarial gains/losses from

 

 

changes in demographic assumptions (−/+)

−13

−3

financial assumptions (−/+)

−20

131

experience-based correction (−/+)

−7

9

Other effects

−13

−46

Benefit payments (incl. tax payments)

−47

−53

Contributions from plan participants

9

5

Change in consolidation group/transfers

0

−13

Assumption of debt with regard to former employees of the hypermarket business

39

0

Currency effects

−14

15

As of end of period

1,502

1,631

Changes in parameters on the basis of actuarial calculations led to a total increase in the present value of defined benefit obligations of €128 million (2019/20: decrease of €33 million). Most of the effects result from the increase in the applied actuarial interest rates.

The weighted average term of defined benefit commitments for the countries with material pension obligations amounts to:

Years

30/9/2020

30/9/2021

Germany

16

17

Netherlands

23

24

United Kingdom

18

18

Belgium

6

6

Other countries

11

11

The present value of defined benefit obligations can be broken down as follows based on individual groups of eligible employees:

%

30/9/2020

30/9/2021

Active members

32

31

Former claimants

39

41

Pensioners

29

28

The granting of defined benefit pension entitlements exposes METRO to various risks. These include general actuarial risks resulting from the measurement of pension commitments (for example, interest rate risks) as well as capital and investment risks related to plan assets.

With a view to the funding of future pension payments from indirect commitments and a stable actuarial reserve, METRO primarily invests plan assets in low-risk investment forms. The funding of direct pension commitments is secured through operating cash flow at METRO.

The of plan assets by asset category can be broken down as follows:

 

30/9/2020

30/9/2021

 

%

€ million

%

€ million

Fixed-interest securities

40

447

39

462

Shares, funds

23

260

25

291

Real estate

4

42

3

41

Other assets

33

377

33

381

 

100

1,126

100

1,175

Fixed-interest securities, shares and funds are regularly traded in active markets. As a result, the relevant market prices are available. The asset category ‘fixed-interest securities’ only includes investments in investment grade corporate bonds, government bonds and mortgage-backed bonds (investment grade). Risk within the category ‘shares, funds’ is minimised through geographic diversification.

The majority of real estate assets are invested in real estate funds.

Other assets essentially comprise receivables from first-class insurance companies in Germany, Belgium and the United Kingdom.

The actual return on plan assets amounted to €51 million in the reporting period (2019/20: €56 million).

For financial year 2021/22, the company expects employer payments to external pension providers totalling approximately €9 million and employee contributions of €4 million in plan assets, with contributions in the Netherlands, Belgium and Germany accounting for the major share of this total. Expected contributions from payment contribution commitments in Germany are not included in expected payments.

The fair value of plan assets developed as follows:

€ million

2019/20

2020/21

Change in plan assets

 

 

Fair value of plan assets as of beginning of period

1,066

1,126

Recognised under

16

15

Interest income

16

15

Recognised outside of profit or loss under ‘remeasurement of defined benefit pension plans’ in other comprehensive income

41

35

Gains/losses from plan assets excl. interest income (+/−)

41

35

Other effects

3

−1

Benefit payments (incl. tax payments)

−26

−29

Settlement payments

0

0

Employer contributions

22

11

Contributions from plan participants

9

5

Change in consolidation group/transfers

0

−4

Assumption of debt with regard to former employees of the hypermarket business

6

0

Currency effects

−8

16

Fair value of plan assets as of end of period

1,126

1,175

The financing status developed as follows:

€ million

30/9/2020

30/9/2021

Financing status

 

 

Present value of defined benefit obligations

1,502

1,631

less the fair value of plan assets

1,126

1,175

Asset adjustment (asset ceiling)

141

43

Net liability/assets

517

499

thereof recognised under provisions

(519)

(500)

thereof recognised under net assets

(2)

(1)

At one Dutch company, plan assets exceeded the value of commitments as of the closing date. Since the company cannot draw any economic benefits from this overfunding, the balance sheet amount was reduced to €0 in line with IAS 19.64 (b).

The change in the asset ceiling was largely recognised directly in equity as a revaluation effect of €−100 million (2019/20: revaluation effect of €−80 million) in other comprehensive income.

The pension expenses of the direct and indirect post-employment benefits plan commitments can be broken down as follows:

€ million

2019/20

2020/21

Current service cost1

28

19

Net interest expenses2

6

7

Past service cost (incl. curtailments and changes)

−10

0

Settlements

0

0

Other pension expenses

2

0

Pension expenses

26

26

1

Netted against employees’ contributions.

2

Included therein: interest effect from the adjustment of the asset ceiling.

The total loss to be recognised outside of profit or loss in the other comprehensive income amounts to €2 million in financial year 2020/21. This figure is comprised of the effect from the change in actuarial parameters in the amount of €128 million and the experience-based adjustments of €9 million. This was offset by the return on plan assets of €35 million and the change in the effect of the asset ceiling in the Netherlands of €100 million.

In addition to expenses from defined benefit commitments, expenses for payments to external pension providers relating to defined contribution pension commitments of €83 million in financial year 2020/21 (2019/20: €78 million) were recorded. These figures also include payments to statutory pension insurance.

The provisions for obligations similar to pensions essentially comprise commitments from employment anniversary allowances, death benefits and partial retirement plans. Provisions amounting to €32 million (30/9/2020: €31 million) were allocated for these commitments. The commitments are valued on the basis of actuarial expert opinions. The valuation parameters used for this purpose are generally determined in the same way as for the post-employment benefits plans.

Previous year
Period of 12 months that is usually cited as a reference for statements in the annual report and refers to the financial year preceding the reporting year.
Glossary
Fair value
Recognised fair value that would be received in return for the disposal of an asset or paid for the assignment of a debt in an ordinary transaction conducted between market participants on the assessment date.
Glossary