SNY » Topics » 3-b Pensions and post retirement benefits

This excerpt taken from the SNY 20-F filed Apr 3, 2007.

3-b Pensions and post retirement benefits

 

The following table presents the reconciliation of the net liability from IFRS to U.S. GAAP:

 

(€ million)

  

Pensions &

other long term

benefits

2006

   

Other post-

employment

benefits

2006

 

Net liability under IFRS

   3,552     284  

Difference in unrecognized elements

   (523 )   (41 )

Minimum liability adjustment

   348     —    
            

Net obligation under U.S. GAAP before adoption of SFAS 158

   3,377     243  
            

Adjustments due to the adoption of SFAS 158

   230     22  
            

Net liability under U.S. GAAP after adoption of SFAS 158

   3,607     265  
            

 

Under U.S. GAAP, the Group accounts for its pension and post-employment benefit plans in accordance with SFAS 87, “Employers’ Accounting for Pensions” and SFAS 106, “Employers’ Accounting for Postretirement Benefits” and, as of December 31, 2006, SFAS 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”. Due to the adoption of SFAS 158, all actuarial gains and losses, past service costs and any remaining transition obligations for pensions were recognized as of December 31, 2006 in the balance sheet, against equity, net of deferred tax.

 

Under U.S. GAAP, an additional minimum pension liability was required when, as a result of unamortized actuarial losses, prior service costs and transition obligations, the accrued liability was lower than the excess of the accumulated benefit obligation over the fair value of the plan assets. The adoption of SFAS 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” removes this specific requirement as of December 31, 2006.

 

Under IFRS, the Group adopted in 2006, with retrospective application, the option in an amendment to IAS 19 to recognize the actuarial gains and losses on post-employment benefits in the balance sheet, through the Statement of Recognized Income and Expense, net of deferred tax. Actuarial losses recognized under IFRS as a liability, before tax, amounted to €796 million as of December 31, 2005, and to €401 million as of December 31, 2004.

 

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Table of Contents

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Year ended December 31, 2006

 

As of December 31, 2005 and 2004, the differences between IFRS and U.S. GAAP recorded in equity relate primarily to actuarial gains and losses in excess of the additional minimum liability, as determined under SFAS 87. As of December 31, 2006 after the adoption of SFAS 158, such difference relates primarily to the past service costs recognized in the balance sheet under U.S. GAAP but not under IFRS.

 

Under U.S. GAAP, actuarial gains and losses are still amortized using the “corridor” method. Under this method, actuarial gains and losses equal to less than 10% of the greater of the amount of the future obligation or the fair value of plan assets are not amortized. Actuarial gains and losses above this 10% threshold are recognized in the income statement over the expected remaining service period of the employees or over the life expectancy if all or almost of the plan’s participants are inactive.

 

Under IFRS, because of the retrospective adoption of the above-mentioned amendment to IAS 19, no amortization of actuarial gains and losses for post-employment benefits is recognized in the income statement.

 

The income statement adjustment mainly relates to the amortization of actuarial gains and losses under U.S. GAAP, amounting to €34 million in 2006 (2005: €14 million; 2004: €11 million), which is not reflected in the income statement under IFRS. Also in 2006 a negative adjustment of €8 million was recorded in the income statement in connection with the recognition of the old-age part time provision (Altersteilzeit) which was already fully recognized under IFRS and which was accounted for following the guidance provided by EITF 05-05, “Accounting for Early Retirement or Post-employment Programs with Specific Features (Such as Terms Specified in Altersteilzeit Early Retirement Arrangements)” under U.S. GAAP.

 

This excerpt taken from the SNY 20-F filed Mar 31, 2006.

4-b Pensions and post retirement benefits

 

The following table analyses the amounts recognized in the Group’s U.S. GAAP condensed consolidated balance sheet as of December 31, 2005 and 2004:

 

(in millions of euros)


   Pensions and
Retirement
Indemnities


    Post-retirement
Benefits Other
Than Pensions


   2005

    2004

    2005

   2004

Amounts recognized in the balance sheet

                     

Prepaid benefit costs

   (3 )   (52 )   —      —  

Accrued benefit liability

   3,627     3,019     192    172

Intangible asset

   (29 )   (42 )   —      —  

Accumulated other comprehensive income

   (511 )   (128 )   —      —  
    

 

 
  

Net amount recognized

   3,084     2,797     192    172
    

 

 
  

 

The aggregate benefit obligation for domestic plans with benefit obligations in excess of plan assets as of December 31, 2005 amounted to €1,849 million (€1,745 million as of December 31, 2004) and the fair value of plan assets to €53 million (€57 million as of December 31, 2004). For foreign plans, the benefit obligation amounted to 7,253 million as of December 31, 2005 (€6,213 million as of December 31, 2004) and the fair value of assets to €5,218 million (€4,402 million as of December 31, 2004). The aggregate pension accumulated benefit obligation for domestic plans with accumulated benefit obligations in excess of plan assets amounted to €1,780 million and for foreign plans to €6,952 million as of December 31, 2005 with a fair value of assets amounting to €55 million for domestic plans and €5,077 million for foreign plans.

 

EXCERPTS ON THIS PAGE:

20-F
Apr 3, 2007
20-F
Mar 31, 2006
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