Page 121 - KELAG Annual Report 2019

Pensions 10.74 10.06
Defined benefit plans 19.41 17.90
Pension-related obligations 15.75 14.88
Severance payment obligations 9.66 9.53
Long-service awards 9.50 8.90
“Altersteilzeit” (special phased retirement scheme) 3.02 3.51
obligations

The cost of defined benefit plans and the present value of the pension obligation are determined
using actuarial valuations. An actuarial valuation involves making various assumptions that can
differ from actual developments in the future. These include the determination of the discount
rate, future salary increases, mortality rates and future pension increases. Due to the complexity
of the valuation, the underlying assumptions, and its long-term nature, a defined benefit
obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at
each reporting date.

The provision for long-service awards is measured in accordance with the same actuarial
assumptions as the provision for severance obligations. With the exception of the discount rate,
these assumptions also apply for the recognition of phased retirement obligations. Due to their
short duration, the phased retirement obligations are discounted at a rate of 0.00% (prior year:
0.30%).

Uncertainties also exist with respect to the interpretation of complex tax regulations, changes in
tax laws, and the amount and timing of future taxable income. Given the wide range of
international business relationships and the long-term nature and complexity of existing
contractual agreements, differences arising between the actual results and the assumptions
made, or future changes to such assumptions, could necessitate future adjustments to tax income
and expense already recorded.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilised. Significant management
judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and the level of future taxable income together with future tax
planning strategies (see Note 16).