2019 Universal registration document and annual financial report - BNP PARIBAS226

4 Consolidated finanCial statements for the year ended 31 deCemBer 2019

4

Notes to the financial statements

Note 7 SALARIES AND EMPLOYEE BENEFITS

7.a SALARY AND EMPLOYEE BENEFIT EXPENSE

In millions of euros Year to

31 Dec. 2019 Year to

31 Dec. 2018

Fixed and variable remuneration, incentive bonuses and profit-sharing 12,992 12,403

Employee benefit expense 4,021 3,665

Payroll taxes 540 549

TOTAL SALARY AND EMPLOYEE BENEFIT EXPENSE 17,553 16,617

7.b POST-EMPLOYMENT BENEFITS IAS 19 distinguishes between two categories of plans, each handled differently depending on the risk incurred by the entity. When the entity is committed to paying a fixed amount, stated as a percentage of the beneficiary s annual salary, for example, to an external entity handling payment of the benefits based on the assets available for each plan member, it is described as a defined-contribution plan. Conversely, when the entity s obligation is to manage the financial assets funded through the collection of contributions from employees and to bear the cost of benefits itself or to guarantee the final amount subject to future events, it is described as a defined-benefit plan. The same applies, if the entity entrusts management of the collection of premiums and payment of benefits to a separate entity, but retains the risk arising from management of the assets and/or from future changes in the benefits.

Main Defined-contribution pension plans for Group entities

The BNP Paribas Group has implemented over the past few years a wide campaign of converting defined-benefit plans into defined-contribution plans.

Thus, in France, the BNP Paribas Group pays contributions to various nationwide basic and top-up pension schemes. BNP Paribas SA and certain subsidiaries have set up a funded pension plan under a company- wide agreement. Under this plan, employees will receive an annuity on retirement in addition to the pension paid by nationwide schemes.

Since defined-benefit plans have been closed to new employees in most countries outside France, they are offered the benefit of joining defined- contribution pension plans.

The amount paid into defined-contribution post-employment plans in the year ended 31 December 2019 was EUR 676 million, compared with EUR 612 million in the year ended 31 December 2018.

The breakdown by major contributors is determined as follows:

Contribution amount In millions of euros

Year to 31 Dec. 2019

Year to 31 Dec. 2018

France 343 334

Italy 67 63

UK 54 50

USA 50 40

Germany 5 4

Turkey 32 30

Others 125 91

TOTAL 676 612

In Italy, the plan introduced by BNL is funded by employer contributions (4.2% of salaries) and employee contributions (2% of salaries). Employees can also make additional voluntary contributions.

In the United Kingdom, the employer contributes 12% of salaries for the majority of employees; employees can make additional voluntary contributions.

In the US, the bank matches the voluntary contributions made by employees, within certain limits.