2018 Registration document and annual fi nancial report - BNP PARIBAS 237
4CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
4
Notes to the fi nancial statements
BNP Paribas Fortis senior managers are covered by a top-up pension plan, paying a lump sum based on the number of years of service and fi nal salary. This plan is pre-funded at 96% as at 31 December 2018 (97% at 1 January 2018) through insurance companies. Since 1 January 2015, senior managers benefi t from a defi ned-contribution scheme.
The other employees benefit as well from the defined-contribution scheme.
Since there is a legal obligation for the employer to guarantee a minimum return on fi nancial assets invested under defi ned-benefi t pension plans, a provision was recognised for these defi ned-contribution schemes, as this guarantee is not entirely covered by the insurance company.
In France, BNP Paribas pays a top-up banking industry pension arising from rights acquired to 31 December 1993 by retired employees and active employees in service at that date. At 31 December 2018, the Group s residual obligations for these employees were recognised on the balance sheet in full.
The defi ned-benefi t plans previously granted to some Group senior managers have all been closed to new employees and converted into top- up type schemes. The amounts allocated to residual benefi ciaries, subject to their presence within the Group at retirement, were fi xed when these schemes were closed. At 31 December 2018, 110% of these pension plans were funded through insurance companies (118% at 31 December 2017).
In the United Kingdom, defi ned-benefi t pension plans (pension funds) still exist but are closed to new employees. Under these plans, the defi ned pension is generally based on fi nal salary and number of years of service. Pension schemes are managed by independent management bodies (Trustees). At 31 December 2018, obligations for all UK entities were 115% covered by fi nancial assets, compared with 107% at 31 December 2017.
In Switzerland, liabilities relate to top-up pension plans based on the principle of defi ned-contribution schemes with guaranteed returns, paying an annuity under pre-defi ned terms. These schemes are managed by a foundation. At 31 December 2018, obligations were 89% covered by fi nancial assets, compared with 90% at 31 December 2017.
In the United States, defi ned-benefi t pension plans are based on annual vesting rights to a lump sum comprising a pension expressed as a percentage of annual salary and paying interest at a pre-defi ned rate. These plans are closed to new entrants and have offered almost no new vesting rights since 2012. At 31 December 2018, the obligation was 83% covered by fi nancial assets, (71% at 31 December 2017).
In Germany, liabilities are mainly related to defi ned-benefi t pension plans, closed to new employees. Under these plans, the defi ned pension is generally based on the number of years of service and fi nal salary. They offer the payment of an annuity under pre-defi ned terms. At 31 December 2018, the obligation was 59% covered by financial assets, (58% at 31 December 2017).
In Turkey, the pension plan replaces the national pension scheme (these obligations are measured based on the terms of the eventual transfer to the Turkish State) and offers guarantees exceeding the minimal legal requirements. At the end of 2018, obligations under this plan are fully funded by financial assets held with an external foundation; these fi nancial assets exceed the related obligations, but this surplus is not recognised as an asset by the Group.
Other post-employment benefits Group employees also receive various other contractual post-employment benefits, such as indemnities payable on retirement, determined according to minimal legal requirements (Labour Code, collective agreements) or according to specifi c company-level agreements.
In France, the obligations for these benefits are funded through a contract held with a third-party insurer. At 31 December 2018, this obligation was 100% covered by fi nancial assets, compared with 98% at 31 December 2017.
In other countries, the gross obligations of the Group related to these benefi ts are mainly concentrated in Italy. They are representative of rights vested up to 31 December 2006, when pension reforms changed Italian termination indemnity schemes into defi ned-contribution plans.
