25. Pension provisions and similar obligations

Within the Aurubis Group, retirement benefits for employed persons are provided on the basis of both defined benefit plans and defined contribution plans.

The majority of the pension benefit systems in the Aurubis Group are based on defined benefit plans in Germany and the US. These represent individual contractual direct obligations on the one hand. On the other hand, the Group provides benefits in the form of defined benefit obligations within collective plans. Both funded and unfunded plans exist.

In Germany, the Group provides eligible employees with pension benefits as well as disability and surviving dependent benefits. These are provided to a great extent through pension and support funds whose assets may solely be utilized to satisfy the Aurubis Group’s pension obligations.

Generally, the amount of the pension benefit per qualified year of service is determined as a percentage of a pensionable salary. In Germany, pensions are reviewed every three years and adjusted, where necessary, in a manner corresponding to the price index development.

Furthermore, a subsidiary in the US grants employees pension, health care and life insurance benefits for the period after retirement under specific conditions related to age and duration of employment with the company. These pension benefits are based on collective agreements that only apply to unionized employees.

These represent lifelong pension benefits whose level depends on the duration of employment. The amount of the benefits does not depend on the salary.

Health care benefits are provided after the employee leaves the company until an established minimum age.

While the pension plans are mainly financed through the specific assets of a separate pension fund, there is no separate fund for the health care and life insurance benefits provided in the US.

Within the Group, actuarial reports were obtained for all pension obligations. The reports take uniform group-wide accounting policies into consideration, while nevertheless reflecting special country-specific circumstances.

In addition to the mortality tables published by Prof. Dr. Klaus Heubeck (“Richttafeln 2005G”), the following market discount rates, salary and pension trends were used to calculate the pension obligations in Germany:

    T 071
     
  9/30/2015 9/30/2014
     
Discount rate 2.40 % 2.40 %
Expected salary trend 3.00 % 3.00 %
Expected pensions trend 1.80 % 1.80 %

A discount rate of 4.06 % (previous year: 3.93 %) was taken as a basis for the measurement of the pension provision of Aurubis Buffalo, Inc., Buffalo. Income and pension trends are not relevant for the calculation of the pension obligations of the US subsidiary.

The net pension provision recognized in the consolidated statement of financial position for defined benefit plans as at September 30, 2015 and September 30, 2014 is as follows:

    T 072
     
in € thousand 9/30/2015 9/30/2014
     
Present value of pension obligations 542,981 555,673
of which funded 417,974 431,929
– Fair value of plan assets 321,209 325,034
     
Net carrying amount on September 30 221,772 230,639
     
of which: disclosed as assets 0 0
of which: disclosed as liabilities 221,772 230,639
      
Certain prior-year figures have been adjusted as at 9/30/2014 (see Changes in accounting and measurement methods due to new standards and interpretations).

The net liability for benefit obligations, taking into account separate reconciliations for the present value of the defined benefit obligation as well as the plan assets, is derived as follows:

Development of the present value of the pension obligations

    T 073
     
in € thousand 2014/15 2013/14
     
Present value of unfunded benefit obligations 123,744 66,464
Present value of funded benefit obligations 431,929 405,685
Present value of the pension obligations as at 10/1 555,673 472,149
Current service cost 11,595 9,128
Past service cost 0 500
Loss from settlements 130 412
Interest cost on the pension obligations 14,474 16,596
Remeasurements (251) 82,622
Actuarial gains/losses from demographic assumptions 3,609 1,455
Actuarial gains/losses from financial assumptions (979) 79,456
Actuarial gains/losses from adjustments
based on experience
(2,881) 1,711
Benefits paid (22,176) (21,086)
Payments for settlements (25,422) (9,626)
Exchange rate difference 8,958 4,978
     
= Present value of the pension obligations as at 9/30 542,981 555,673
      
Certain prior-year figures have been adjusted as at 9/30/2014 (see Changes in accounting and measurement methods due to new standards and interpretations).

The present value of the defined benefit pension obligation includes € 66,539 thousand (previous year: € 76,629) in obligations for a US subsidiary, € 16,881 thousand (previous year: € 14,632) of which relates to health care and life insurance benefits.

The loss from settlements results from the transfer of obligations from the defined benefit pension plans of the US subsidiary to an external insurance company.

Development of the plan assets

    T 074
     
in € thousand 2014/15 2013/14
     
Fair value of the plan assets as at 10/1 325,034 314,390
Interest income 8,853 11,323
Remeasurement effects 16,472 4,486
Benefits paid (16,477) (15,488)
Payments for settlements (25,422) (5,894)
Contributions made by employer 5,782 12,035
Exchange rate difference 6,967 4,182
     
Fair value of the plan assets as at 9/30 321,209 325,034

Development of the net liability

    T 075
     
in € thousand 2014/15 2013/14
     
Net liability as of 10/1 230,639 157,759
Current service cost 11,595 9,128
Past service cost 0 500
Loss from settlements 130 412
Net interest result 5,621 5,273
Remeasurement effects (16,723) 78,136
Benefits paid (5,699) (5,598)
Payments for settlements 0 (3,732)
Employer contributions to the plan (5,782) (12,035)
Exchange rate difference 1,991 796
     
Net liability as at 9/30 221,772 230,639
      
Certain prior-year figures have been adjusted (see Changes in accounting and measurement methods due to new standards and interpretations).

The remeasurement effects are directly recorded in other comprehensive income and are disclosed under generated group equity. The net interest result is disclosed under interest expense. In contrast, the other components of the pension expenses (current and past service cost and the loss deriving from settlements) are recorded in personnel expenses.

In Germany, the defined benefit plans are primarily administered through processes in operation within the pension fund and the benefit fund. In this context, the pension fund is overseen by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

Regulations related to the pension fund’s capital investment portfolio are established by the “Ordinance on the Investment of Restricted Assets of Insurance Undertakings (Investment Ordinance)”. The Investment Ordinance regulates the permitted quantitative distribution and mix of capital investments for the pension fund. A large portion of the pension fund’s assets are invested in special funds. The contributions are calculated in accordance with the current technical business plan.

The risk capital investments (equity instruments and debt instruments with a rating lower than investment grade) may account for a maximum of 35 % of the carrying amount of the coverage assets. At 25 % of the coverage assets’ carrying amount, the real estate rate was fully exhausted. Derivatives are primarily used for hedging purposes. The risk of longevity is taken into account by the actuary, after performing a review, by adjusting the biometric parameters, where necessary.

The benefit funds are also oriented to the Investment Ordinance with respect to permitted capital investments. The contributions are within the range of the tax-related possibilities.


In the US, the defined benefit plan is financed by outsourced fund assets. The investment strategy in the US aims at a distribution of the plan assets comprising 60 % shares and 40 % fixed rate securities. In order to avoid an uncontrollable risk concentration, investment in other asset classes (e.g. commodities, real estate, venture capital) is not permitted.

The plan assets in the Group are made up as follows:

    T 076
     
in € thousand 9/30/2015 9/30/2014
     
Cash and cash equivalents 10,030 17,719
Equity instruments 56,623 62,915
Debt instruments 126,792 132,713
Real estate 119,160 96,782
Reinsurance 2,875 2,475
Other current net assets 5,729 12,430
     
Total plan assets 321,209 325,034

The plan assets include neither internal financial instruments nor real estate used internally. The equity and debt instruments held via security funds are allocated to their corresponding investment classes in the overview.

Market prices are generally available for the equity instruments as a result of their respective quotations on an active market. The fair value of € 56,623 thousand (previous year: € 62,915 thousand) includes € 27,054 thousand (previous year: € 36,405 thousand) for plan assets for a US subsidiary.

The debt instruments are also regularly traded on an active market. The fair value of € 126,792 thousand (previous year: € 132,713 thousand) includes € 18,210 thousand (previous year: € 24,811 thousand) for plan assets for a US subsidiary.

Real estate is held directly and is located exclusively in Germany. There is no active market from which market prices can be derived.

The Company is subject to various risks in connection with the defined benefit plans. The Company is subject to the general actuarial risks in particular, such as the risk of longevity and the risk of interest rate changes.

Sensitivity analysis

The following sensitivity analysis shows the effect of changes in the parameters on the fair value of the defined benefit obligations. Each change in a significant actuarial assumption was analyzed separately, i.e. if one parameter varied, the other parameters remained constant.

          T 077
           
    Effect on obligation
    9/30/2015 9/30/2014
in € thousand Change
in para-
meter
Increase Decrease Increase Decrease
           
Actuarial
interest rate
+/– 50
basis points
(40,804) 45,396 (41,712) 46,508
Expected salary
development
+/– 50
basis points
9,057 –9,513 9,534 (9,857)
Expected
pension development
+/– 50
basis points
27,133 (25,783) 27,638 (26,114)
Life
expectancy
+/–
1 year
22,021 (23,125) 22,753 (23,801)
            
Certain prior-year figures have been adjusted as at 9/30/2014 (see Changes in accounting and measurement methods due to new standards and interpretations).

The following duration terms are expected for undiscounted pension payments in the future:

    T 078
     
in € thousand 9/30/2015 9/30/2014
     
Less than 1 year 21,532 21,898
Between 1 and 5 years 93,859 99,372
More than 5 years 752,505 757,859
     
Total 867,896 879,129
     
Certain prior-year figures have been adjusted as at 9/30/2014 (see Changes in accounting and measurement methods due to new standards and interpretations).

The weighted average duration of obligations from defined benefit plans as at September 30, 2015 is 16.2 years (previous year: 16.1 years).

The expense for defined contribution pension plans amounted to €­­ 22,670 thousand in the year reported (previous year: € 25,268 thousand). These include both voluntary commitments and the employer’s contribution made by the Group to statutory pension schemes.