Coverage of the Company’s pension plans
Terna offers its employees voluntary supplementary pension coverage with a defined contribution. Specifically, senior managers may join the Fondenel pension fund , which provides for contributions from both the manager and the Company. In both cases, the contribution varies according to the date of hiring and the date the manager first joined a supplementary pension fund. The other employees (blue-collar workers, white-collar workers, and junior managers) may join the Fopen pension fund. In addition to the pension plans, the employees of the Italian companies receive other payments that have the characteristics of defined benefits.
In particular:
- while they are employed, contracts provide for all employees to receive a “loyalty bonus” upon completing their 25th and 35th years of service at the Company;
- when their employment is terminated, all employees are entitled to receive a termination bonus (TFR). Senior managers hired or appointed before February 28, 1999 receive an allowance in lieu of notice (ISP) and production workers, office staff, and junior managers already employed as of July 24, 2001 receive an additional month’s pay (IMA);
- when their employment is terminated, senior managers are entitled to supplementary health care (ASEM);
- employees hired by June 30, 1996 are granted a discount on the electricity consumed for domestic use (electricity discount).
The composition of and changes during the period in the TFR and other employee-related provisions of the Parent Company, Terna, to which all employees refer, as of December 31, 2009 are shown in the following table:
| In millions of euros | Dec. 31, 2008 | Provision | Interest cost | Utilisations and other movements |
Dec. 31, 2009 |
|---|---|---|---|---|---|
| Benefits during employment | |||||
| Loyalty bonus | 5.1 | 0.2 | 0.2 | -0.6 | 4.9 |
| Total | 5.1 | 0.2 | 0.2 | -0.6 | 4.9 |
| Benefits due at termination | |||||
| of employment | |||||
| Termination bonus (TFR) | 74.4 | 11.2 | 3.2 | -17.3 | 71.5 |
| Additional month’s pay (IMA) | 7.4 | 0.4 | 0.4 | -0.9 | 7.3 |
| Allowances in lieu and similar benefits | 3.5 | 0 | 0.1 | -0.3 | 3.3 |
| Total | 85.3 | 11.6 | 3.7 | -18.5 | 82.1 |
| Benefits subsequent to employment | |||||
| Electricity discount | 51.9 | 1.2 | 1.5 | -27.9 | 26.7 |
| ASEM (health care) | 11.6 | 0 | 0.3 | -0.5 | 11.4 |
| Total | 63.5 | 1.2 | 1.8 | -28.4 | 38.1 |
| Total | 153.9 | 13 | 5.7 | -47.5 | 125.1 |
Amounting to €125.1 million as of December 31, 2009 (€153.9 million as of December 31, 2008), this item recorded a decrease of €28.8 million with respect to the previous year, which was essentially due to the reversal from the electricity discount provision (€26.8 million, €19.4 million net of the tax effect) following the agreement with Enel Distribuzione, which re-determined the correct number of retirees entitled to the benefit.
The costs regarding liabilities for employee benefits recorded in the income statement break down as follows:
| In millions of euros | TFR | Indemnities in lieu and similar benefits |
IMA | Loyalty | ASEM | Electricity discount |
Total |
|---|---|---|---|---|---|---|---|
| Dec. 31, 2008 | 74.4 | 3.5 | 7.4 | 5.1 | 11.6 | 51.9 | 153.9 |
| Current cost | 0.0 | 0.1 | 0.3 | 0.2 | 0.2 | 0.9 | 1.7 |
| Amortisation of actuarial gains and losses | 0.0 | -0.3 | 0.1 | 0.0 | -0.5 | 0.4 | -0.3 |
| Financial expense | 3.2 | 0.1 | 0.4 | 0.2 | 0.3 | 1.5 | 5.7 |
| Disbursements and transfers | -6.1 | -0.1 | -0.9 | -0.6 | -0.2 | -1.2 | -9.1 |
| Reversal following agreement with Enel Distribuzione | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -26.8 | -26.8 |
| Dec. 31, 2009 | 71.5 | 3.3 | 7.3 | 4.9 | 11.4 | 26.7 | 125.1 |
The main assumptions made in the actuarial estimate of the employee benefit liabilities are the following:
| Percentage figures | 2009 | 2008 |
|---|---|---|
| Discount rate | 4.1% | 4.8% |
| Rate of increase of personnel costs | 2.0%-4.0% | 2.0%-5.0% |
| Rate of increase of healthcare expense | 3.0% | 3.0%-4.0% |