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

Provisions for post-employment benefits plans in the amount of €324 million (30/9/2022: €332 million) 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 dependants’ 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 was closed with effect from 1 January 2021 for new entrants and future increases in pension entitlements and, since then, has been replaced by a collective defined contribution (CDC) plan for future entitlements.

In addition to retirement benefits, the defined benefit pension plan provides disability and death benefits whose amount depends on the pensionable salary per year of service. Benefits are funded through a country-specific pension fund.

The financing status of the present value of defined benefit obligations developed as follows:

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:

As in previous years, 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 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 2023, the mortality rates for the German group companies are based on the 2018 G tables provided by Heubeck-Richttafeln-GmbH.

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.

If the other assumptions had remained constant, the changes to the relevant actuarial assumptions considered reasonably possible as of the closing date would have affected the defined benefit obligation by the amounts shown in the following.

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

Changes in parameters on the basis of actuarial calculations led to a total change in the present value of defined benefit obligations by €6 million (2021/22: €−432 million). In the previous year, the transfer of plan assets to an insurance company included in the benefit payments as part of a buyout led to a reduction in the present value of defined benefit obligations of €217 million.

The present value of defined benefit obligations is largely attributable to Germany in the amount of €358 million (30/9/2022: €358 million) and the Netherlands in the amount of €453 million (30/9/2022: €453 million).

The weighted average term of defined benefit obligations is 13 years in Germany (30/9/2022: 14 years), 18 years in the Netherlands (30/9/2022: 19 years) and 9 years in the other countries (30/9/2022: 9 years).

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

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 fair value of plan assets developed as follows:

The plan assets are largely attributable to Germany in the amount of €112 million (30/9/2022: €107 million) and the Netherlands in the amount of €552 million (30/9/2022: €569 million).

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

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 insurance companies in Germany.

The actual loss from the plan assets amounts to €3 million in the reporting period (2021/22: loss of €207 million). For financial year 2023/24, the company expects employer payments to external pension providers totalling approximately €5 million and employee contributions of €4 million in plan assets, with contributions in Germany accounting for the major share of this total.

At 1 Dutch company, the plan asset value 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 outside of profit or loss as a remeasuring effect of €−22 million (2021/22: remeasuring effect of €73 million) in other comprehensive income.

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

A loss of €9 million was recognised outside of profit or loss in other comprehensive income in financial year 2022/23. This figure is comprised of the effect from the change in actuarial parameters in the amount of €6 million, experience-based corrections of €−7 million, the loss in plan assets of €30 million, the change in the effect of the asset ceiling in the Netherlands of €−22 million and the effect from hyperinflation in the amount of €2 million.

In addition to expenses from defined benefit commitments, expenses for payments to external pension providers relating to defined contribution pension commitments of €86 million in financial year 2022/23 (2021/22: €82 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 €27 million (30/9/2022: €28 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.