This excerpt taken from the PT 20-F filed Jun 30, 2005.
2. Other Employee Benefits
As referred to in Note 3.g), PT Comunicações and PT SI are liable for the payment of post retirement health care benefits to employees and their eligible relatives.
The actuarial valuations for these plans prepared by an independent actuary, as of December 31, 2004, used the projected unit credit method and considered the following assumptions and rates:
Disability table: Swiss Reinsurance Company
Turnover of employees: Nil
Based on this study, the accumulated post retirement health care benefit obligation of PT Comunicações and PT SI as of December 31, 2004 and 2003 was Euro 701,797,100 and Euro 688,763,000, respectively. The reconciliation between the post retirement health care obligations and the liability recorded in the balance sheet at December 31, 2004 and 2003 is presented below:
corresponds to the estimated average working life of active employees. During 2004 and 2003 the movements in the caption "Actuarial losses, net" were as follows:
A summary of the components of the net periodic post retirement health care cost for the years ended December 31, 2004 and 2003, is presented below:
Curtailment costs were recorded in the caption "Work Force Reduction Program Costs".
During 2004, the contribution made to PT-ACS, net of the contributions from the SNS (Note 3.g)), amounted to Euro 29,777,489 and were recorded as a reduction to the accrued post retirement liability (Note 30.3).
As of December 31, 2004, the accrued post retirement health care liabilities include Euro 95,088 relating to healthcare liabilities of Brasilcel's subsidiaries (Note 30.3).