25. Staff termination benefits and other defined benefit plans - 105,298 thousand euros

At 31 December 2012, said item totalled 105,298 thousand euros (104,776 thousand euros as at 31 December 2011) and represents termination and other benefits payable to employees on retirement or termination of employment.

This item includes the defined benefit obligation ‘tariff subsidies for pensioners’; therefore, the calculation method is based on the projected unit credit method, which measures the company’s liability on the basis of the average present value of future staff service, the average present value reproportioned according to service already provided by the employee at the time of calculation compared to that corresponding to the time of payment for such service. By contrast, staff termination benefits and tariff subsidies for employees are considered defined-contribution obligations and so calculated according to actuarial criteria.

The following table shows the change in actuarial liabilities during the year.

€/thousand 31.12.2012 31.12.2011 Increase/ (Decrease)
Termination benefits      
   - Staff termination benefits 69,727 70,640 (912)
   - Monthly bonuses 7,041 6,575 465
   - Long-term incentive plans (LTIPs) 3,635 2,346 1,289
Post-employment benefits      
   - Tariff subsidies 24,895 25,216 (320)
TOTAL 105,298 104,776 521

The change reflects: (i) allocations for the period of 15,474 thousand euros, (ii) resignations during the period resulting from the implementation of ACEA, ACEA Ato2 and ACEA Distribuzione voluntary redundancy procedures, (iii) reinstatement of employees returning from the business unit rented to Marco Polo (1,846 thousand euros).

With respect to the choice of the discounting rate, with regard to the current highly volatile situation in the financial markets and meetings held on the topic in December at the Italian National Order of Actuaries, the rate applied has been identified, in agreement with the Group, in line with IAS 19 and with the same methodology as was used for previous valuations, referring to the government bonds market (Italian government bonds expiring in beyond ten years), which in Italy is largely “denser” than the market of corporate securities with high credit ratings.

  December 2012
Discount rate 4.25%
Rate of return growth (average) 1.6%
Long-term inflation 2.0%

With regard to the valuation of Group employee benefits (staff termination benefits, monthly bonuses, tariff subsidies for current and retired employees) according to IAS 19, it was deemed appropriate to conduct a sensitivity analysis that could demonstrate the impact of possible alternative measurement scenarios on the income statement.

For this purpose, we concentrated exclusively on the discount rate, and repeated the actuarial calculations based on a rate decreased by one percentage point compared to the rate used in the financial statements, therefore a rate of 3.25%. Sensitivity analyses were not conducted on other variables such as, for example, the inflation rate.

Repeating the IAS 19 assessments at 3.25% and on the basis of the application of the corridor method that the Group uses to account for Actuarial Gains/Losses, the consolidated income statement would have recorded approximately 60 thousand euros in higher costs, gross of the Group’s Unrecognised Actuarial Gains. That amount would be cancelled out in light of the presence of the Group’s Unrecognised Actuarial Gains.