[29] Retirement benefit obligation

The retirement benefit obligation is recognised for obligations to provide current and future post-employment benefits. Post-employment benefit plans are classified as either defined benefit plans or defined contribution plans, depending on the substance of the plan as derived from its principal terms and conditions.

Defined contribution plans

In the case of defined contribution pension plans, the Group pays contributions to government or private pension insurance providers based on statutory or contractual provisions, or on a voluntary basis. The Group does not enter into any obligations above and beyond the payment of contributions to an external pension fund. The amount of future pension benefits is based solely on the amount of the contributions paid by the employer (and in some cases the beneficiaries themselves) to the external pension fund, including income from the investment of these contributions. The total expense arising from defined contribution plans amounted to €64.2 million in 2015 (2014: €58.3 million). Of this total, contributions paid by employers into government-run schemes came to €56.3 million (2014: €52.4 million). The defined contribution plan expense is reported within the functional costs.

Defined benefit plans

In the case of defined benefit plans, the beneficiaries are granted a specific benefit by the Group or an external pension fund. Due to future salary increases, the benefit entitlement at the retirement age of the beneficiary is likely to be higher than the amount granted as at the reporting date. Pensions are often adjusted after an employee reaches retirement age. The amount of the Group’s obligation, which is defined as the actuarial present value of the obligation to provide the level of benefits currently earned by each beneficiary, is expressed as the present value of the defined benefit obligation (DBO) including adjustments for future salary and pension increases.

The KION Group currently grants pensions to almost all employees in Germany and a number of foreign employees. These pensions consist of fixed benefit entitlements and are therefore reported as defined benefit plans in accordance with IFRS. As at 31 December 2015, the KION Group had set up defined benefit plans in 13 countries. For all of the significant defined benefit plans within the Group, the benefits granted to employees are determined on the basis of their individual income, i.e. either directly or by way of intermediate benefit arrangements. The largest of the KION Group’s defined benefit plans – accounting for 91.1 per cent of the global defined benefit obligation (31 December 2014: 91.2 per cent) – are in Germany and the United Kingdom.

Germany

In Germany, the pension benefits granted under the 2001 pension benefit conditions and 2002 pension benefit conditions depend on employees’ length of service and gross annual remuneration (pension component entitlement). The pension component is calculated by multiplying a certain percentage by an age-dependent annuitisation factor. The contribution rate is 3.4 per cent (2001 pension benefit conditions) or 2.0 per cent (2002 pension benefit conditions) of the gross remuneration that an employee earns in the computation period. Employees receive the pension entitlement that they have earned in the form of a monthly retirement pension or invalidity benefit or, in the event of their death, the entitlement is paid to their surviving dependants in the form of a widow’s / widower’s pension or orphans’ pension. Members of the Executive Board and other executives are predominantly covered by individual pension plans. For details of the pension entitlements of KION GROUP AG Executive Board members, please refer to the information in note [45]. The amount of the benefits paid to executives depends on the type of entitlement. Under the ‘old’ individual pension plans, executives were entitled to a certain percentage of income as their pension benefit. By contrast, the employer-funded entitlement under the ‘new’ individual pension plans consists of two components: a fixed basic pension and a variable top-up pension through which annual components are earned within a defined contribution system. Both components depend on the seniority of the executive.

In addition, employees in Germany are able to pay part of their salary into a company pension plan, for which KION provides a defined minimum interest rate to enable employees to build up their personal pension provision. The pension benefits consist of retirement, invalidity and surviving dependants’ benefits. Each contribution made is converted into a capital component on the basis of a guaranteed minimum interest rate of 3.0 per cent and depending on the age of the employee. The capital components acquired each calendar year are added up to give the pension capital. When an insured event occurs, the pension capital is converted into an ongoing life-long pension or a one-off capital payment.

In Germany, the KION Group also helps employees to build up their own pension provision with an additional matching contribution for those employees who pay part of their salary into the KION pension plan. The additional matching contribution received by executives is 50.0 per cent of the amount they defer in a calendar year, although the absolute amount of this contribution is limited to a certain percentage of income (ranging from 2.5 per cent to a maximum of 5.0 per cent). All other employees who participate in the company pension scheme receive up to 0.4 per cent of their gross remuneration.

Some of the KION Group’s pension obligations in Germany are financed by way of contractual trust arrangements (CTAs), which qualify as plan assets within the meaning of IAS 19. The trustees are required to follow a defined investment strategy and guidelines. There are no statutory minimum funding requirements. In the event of the Company’s insolvency, the company pension scheme in Germany is to a large extent protected by law by the insolvency protection scheme (Pensions-Sicherungs-Verein Versicherungsverein auf Gegenseitigkeit, PSVaG).

United Kingdom

In the United Kingdom, defined benefit pension obligations predominantly relate to two plans. The defined benefits include not only a life-long retirement pension but also surviving dependants’ benefits. The amount of the pension depends on employees’ length of service and final salary.

The two plans were closed to new employees more than ten years ago. Each plan is monitored by its own board of trustees, which oversees the running of the plan as well as its funded status and the investment strategy. The members of the board of trustees comprise people appointed by the company involved and selected plan beneficiaries.

Under UK law, the board of trustees is obliged to have a valuation of the plan carried out at least every three years. In connection with the 2012 valuation of the pension plans for the employees of the KION Group’s UK companies, the Company and the trustees of the pension funds agreed on a calculation method in May 2014, according to which the deficit for the two remaining pension plans amounted to €8.6 million as at 1 July 2013. On this basis, the KION Group agreed with the trustees that it would pay approximately the equivalent of €5.0 million in 2015 and €2.5 million in 2016 in order to reduce the deficit. However, these payments are subject to the condition that the annual review of the pension plans’ funding position continues to reveal a deficit. If a payment would result in the pension plans being overfunded, the KION Group would be exempt from its payment obligation in that year.

The trustees of the two plans were also granted collateral in rem in the form of charges on the real estate of Group companies in the UK and flexible collateral in respect of the rental fleets of UK dealers within a maximum overall limit of approximately €24.4 million (2014: €23.2 million). The term of this collateral is limited to five years (1 July 2018), and the overall limit will not be reduced by payments made by the KION Group. The likelihood of the guarantee being used is deemed low in view of the position of the individual companies with regard to their current and future financial and earnings situations.

Other countries

Furthermore, significant asset volumes are invested in external pension funds with restricted access in Switzerland and the Netherlands. Decisions on additions to plan assets take into account the change in plan assets and pension obligations. They also take into account the statutory minimum coverage requirements and the amounts deductible under local tax rules.

Measurement assumptions

In accordance with IAS 19 (‘Employee Benefits’), pension provisions are recognised to cover obligations arising from the current and future pension entitlements of active and (after the vesting period has expired) former employees of the KION Group and their surviving dependants. The discount rate used to calculate the defined benefit obligation at each reporting date is determined on the basis of current capital market data and long-term assumptions about future salary and pension increases in accordance with the best estimate principle. These assumptions vary depending on the economic conditions affecting the currency in which benefit obligations are denominated and in which fund assets are invested, as well as capital market expectations.

Benefit obligations are calculated on the basis of current biometric probabilities as determined in accordance with actuarial principles. The calculations also include assumptions about future employee turnover based on employee age and years of service and about the probability of retirement. The defined benefit obligation is calculated on the basis of the significant weighted-average assumptions as at the reporting date shown in > TABLE 071.

Assumptions underlying provisions for pensions and other postemployment benefits

071

 

Germany

UK

Other

 

2015

2014

2015

2014

2015

2014

Discount rate

2.35%

2.20%

3.75%

3.55%

1.61%

1.79%

Salary increase rate

2.75%

2.75%

4.25%

4.25%

2.50%

2.49%

Pension increase rate

1.75%

1.75%

3.13%

3.18%

0.42%

0.42%

The assumed discount rate is determined on the basis of the yield as at the reporting date on AA-rated, fixed-interest senior corporate bonds with maturities that match the expected maturities of the pension obligations. Pension obligations in foreign companies are calculated on a comparable basis taking into account any country-specific requirements.

Future increases in salaries are estimated on an annual basis taking into account factors such as inflation and the overall economic situation.

The biometric mortality rates used in the calculation are based on published country-specific statistics and empirical values. Since 31 December 2009, the modified Heubeck 2005 G mortality tables have been used in Germany as the biometric basis; the modified tables include a somewhat higher life expectancy for males than the unmodified tables. The S1NA CMI 2013 (standard mortality tables for self-administered pension schemes (SAPS) based on normal health) with a long-term trend of 1.25 per cent p.a. is applied to the two defined benefit plans in the United Kingdom.

The actuarial assumptions not listed in > TABLE 071, such as employee turnover, invalidity, etc., are determined in accordance with recognised forecasts in each country, taking into account the circumstances and forecasts in the companies concerned.

The significant weighted-average assumptions shown in > TABLE 072 were applied to the calculation of the net interest cost and the cost of benefits earned in the current year (current service cost).

Assumptions underlying for pensions expenses

072

 

Germany

UK

Other

 

2015

2014

2015

2014

2015

2014

Discount rate

2.20%

3.60%

3.55%

4.40%

1.79%

2.95%

Salary increase rate

2.75%

2.75%

4.25%

4.16%

2.49%

2.44%

Pension increase rate

1.75%

1.75%

3.18%

3.53%

0.42%

0.48%

Differences between the forecast and actual change in the defined benefit obligation and changes in related assets (known as remeasurements) are recognised immediately in other comprehensive income in accordance with IAS 19. This serves to ensure that the pension liability in the statement of financial position is the present value of the defined benefit obligation.

In the case of externally financed pension plans, this present value of the defined benefit obligation is reduced by the fair value of the assets of the external pension fund (plan assets). If the plan assets exceed the present value of the defined benefit obligation (net assets), a corresponding asset is recognised in accordance with IAS 19. IAS 19.64 in conjunction with the supplementary explanatory information in IFRIC 14 states that the recognition of an asset for an excess of plan assets is only permitted if the company concerned, in its function as the employer, gains economic benefits in the form of reductions in future contributions to the plan or in the form of refunds from the plan. If the present value of the defined benefit obligation is not covered by the plan assets, the net obligation is reported under the retirement benefit obligation.

In two defined benefit plans in the United Kingdom, plan assets exceed the present value of the defined benefit obligation. Stipulations limiting the asset to be recognised in the statement of financial position do not apply.

Statement of financial position

The change in the present value of the defined benefit obligation (DBO) is shown in > TABLE 073.

Changes in defined benefit obligation

073

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Present value of defined benefit obligation as at 01/01/

809.6

588.1

438.4

422.1

120.8

95.7

1,368.8

1,106.0

Group changes

–53.2

–53.2

Exchange differences

23.7

30.5

5.2

1.0

28.9

31.5

Current service cost

29.0

19.1

1.1

1.1

4.7

3.1

34.7

23.4

Past service cost (+) and income (–) from plan amendments

3.4

0.1

–0.1

–0.9

–0.1

2.6

Past service cost (+) and income (–) from curtailments

–4.2

–4.2

Interest expense on defined benefit obligation

17.7

21.3

16.3

18.7

2.2

2.8

36.2

42.7

Employee contributions

2.9

3.2

1.0

0.9

3.9

4.1

Pension benefits directly paid by company

–14.0

–12.9

–1.6

–1.6

–15.6

–14.4

Pension benefits paid by funds

–0.5

–0.2

–19.0

–18.9

–4.3

–2.2

–23.8

–21.4

Liability transfer out to third parties

–0.2

–0.4

–0.0

–0.2

–0.5

Remeasurements

–14.9

188.0

–19.9

38.0

0.2

22.0

–34.6

247.9

Present value of defined benefit obligation as at 31/12/

829.7

809.6

440.5

438.4

124.0

120.8

1,394.2

1,368.8

thereof unfunded

342.6

334.4

0.0

33.4

33.6

376.1

368.1

thereof funded

487.0

475.2

440.5

438.4

90.5

87.2

1,018.1

1,000.7

The DBO in the other countries was predominantly attributable to subsidiaries in Switzerland (2015: €57.2 million; 2014: €48.7 million) and the Netherlands (2015: €33.1 million; 2014: €38.4 million).

The plan curtailments in the reporting year are the result of income in the Netherlands arising in connection with an agreement reached with the employee representatives. The employees in the Netherlands switched to a defined contribution plan on 1 January 2016.

The components of the remeasurements are listed in > TABLE 078.

The change in the fair value of plan assets is shown in > TABLE 074.

Changes in plan assets

074

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Fair value of plan assets as at 01/01/

73.6

65.0

455.5

441.6

73.8

61.7

603.0

568.3

Group changes

–56.5

–56.5

Exchange differences

24.5

31.8

4.4

0.8

28.8

32.6

Interest income on plan assets

1.7

2.1

17.1

19.6

1.3

1.7

20.1

23.4

Employee contributions

2.9

3.2

1.0

0.9

3.9

4.1

Employer contributions

1.1

1.0

5.1

2.4

2.3

2.2

8.5

5.6

Pension benefits paid by funds

–0.5

–0.2

–19.0

–18.9

–4.3

–2.2

–23.8

–21.4

Liability transfer out to third parties

–0.1

–0.1

–0.1

–0.1

Remeasurements

1.1

2.6

–15.9

35.5

0.8

8.8

–14.0

46.9

Fair value of plan assets as at 31/12/

79.8

73.6

467.2

455.5

79.4

73.8

626.4

603.0

Employees in Germany paid a total of €2.9 million (2014: €3.2 million) into the KION pension plan in 2015.

In 2015, employer contributions in the United Kingdom, which amounted to €5.1 million, included one-off payments of €5.0 million (2014: €1.4 million) into pension funds on the basis of contractual agreements. In Germany, one-off payments of €0.6 million (2014: €0.6 million) were also made to a German CTA for the other members of the KION GROUP AG Executive Board.

The payments expected for 2016 amount to €23.2 million (2015: €22.6 million), which includes expected employer contributions of €6.9 million to plan assets (2015: €7.3 million) and expected direct payments of pension benefits amounting to €16.3 million (2015: €15.3 million) that are not covered by corresponding reimbursements from plan assets. According to local valuation rules, there continue to be gaps in the coverage of two defined benefit pension plans in the United Kingdom, as a result of which the expected employer contributions for 2016 include one-off payments amounting to €2.5 million in line with the agreements reached with the trustees.

The reconciliation of funded status and net defined benefit obligation to the amounts reported in the consolidated statement of financial position as at 31 December is shown in > TABLE 075.

Funded status and net defined benefit obligation

075

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Present value of the partially or fully funded defined benefit obligation

–487.0

–475.2

–440.5

–438.4

–90.5

–87.2

–1,018.1

–1,000.7

Fair value of plan assets

79.8

73.6

467.2

455.5

79.4

73.8

626.4

603.0

Surplus (+) / deficit (–)

–407.2

–401.6

26.7

17.2

–11.2

–13.3

–391.7

–397.8

Present value of the unfunded defined benefit obligation

–342.6

–334.4

–0.0

–33.4

–33.6

–376.1

–368.1

Net liability (–) / net asset (+) as at 31/12/

–749.9

–736.0

26.7

17.2

–44.6

–47.0

–767.8

–765.8

Reported as ‘retirement benefit obligation’

–749.9

–736.0

–3.6

–4.5

–44.6

–47.0

–798.0

–787.5

Reported as ‘Other non-current assets’

30.2

21.6

30.2

21.6

As a result, the funding ratio (ratio of plan assets to the present value of the defined benefit obligation) in the KION Group was 44.9 per cent (2014: 44.0 per cent).

The change in the retirement benefit obligation reported in the statement of financial position is shown in > TABLE 076.

Changes in retirement benefit obligation

076

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Balance as at 01/01/

736.0

523.1

4.5

2.9

47.0

34.1

787.5

560.1

Exchange differences

0.3

0.3

0.8

0.2

1.1

0.4

Total service cost

29.0

22.5

0.0

0.5

2.2

29.4

24.7

Net interest expense

16.0

19.2

0.2

0.1

0.9

1.1

17.1

20.4

Pension benefits directly paid by company

–14.0

–12.9

–1.6

–1.6

–15.6

–14.4

Employer contributions to plan assets

–1.1

–1.0

–0.3

–0.2

–2.3

–2.2

–3.7

–3.4

Liability transfer out to third parties

–0.1

–0.3

–0.0

–0.1

–0.4

Remeasurements

–16.0

185.4

–1.0

1.4

–0.6

13.2

–17.6

200.0

Balance as at 31/12/

749.9

736.0

3.6

4.5

44.6

47.0

798.0

787.5

Statement of cash flows

In the case of obligations not covered by external assets, payments to beneficiaries are made directly by the Company and therefore have an impact on cash flow from operating activities. If the benefit obligations are backed by external assets, the payments are made from existing plan assets and have no effect on the Company’s cash flow. Instead, any contributions made to the external pension fund by the Company result in a cash outflow for operating activities.

During the reporting year, pension benefits of €39.4 million (2014: €35.8 million) were paid in connection with the main pension entitlements in the KION Group, of which €15.6 million (2014: €14.4 million) was paid directly by the Company and €23.8 million (2014: €21.4 million) was paid from plan assets. Cash contributions to plan assets in 2015 amounted to €8.5 million (2014: €5.6 million). Furthermore, pension benefit payments totalling €0.1 million (2014: €0.4 million) were transferred to external pension funds.

Income statement

In accordance with IAS 19, actuarial computations are performed for benefit obligations in order to determine the amount to be expensed in each period in accordance with fixed rules. The expenses recognised in the income statement for pensions and similar obligations consist of a number of components that must be calculated and disclosed separately.

The service cost is the new pension entitlement arising in the financial year and is recognised in the income statement. It is calculated as the present value of that proportion of the expected defined benefit obligation when the pension is paid attributable to the year under review on the basis of the maximum length of service achievable by each employee.

Past service cost arises if there is a change to the pension entitlement and it is recognised immediately in full.

The net interest cost/income, which is calculated by multiplying the net liability (present value of the defined benefit obligation minus plan assets) or the net assets (if the plan assets exceed the present value of the defined benefit obligation) by the discount rate at the start of the year, is also recognised in the income statement.

The breakdown of the net cost of the defined benefit obligation (expenses less income) recognised in the income statement for 2015 is shown in > TABLE 077.

Cost of defined benefit obligation

077

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Current service cost

29.0

19.1

1.1

1.1

4.7

3.1

34.7

23.4

Past service cost (+) and income (–) from plan amendments

3.4

0.1

–0.1

–0.9

–0.1

2.6

Past service cost (+) and income (–) from curtailments

–4.2

–4.2

Total service cost

29.0

22.5

1.1

1.2

0.5

2.2

30.5

26.0

Interest expense on defined benefit obligation

17.7

21.3

16.3

18.7

2.2

2.8

36.2

42.7

Interest income on plan assets

–1.7

–2.1

–17.1

–19.6

–1.3

–1.7

–20.1

–23.4

Net interest expense (+) / income (–)

16.0

19.2

–0.8

–1.0

0.9

1.1

16.2

19.3

Total cost of defined benefit obligation

45.0

41.7

0.3

0.3

1.4

3.3

46.7

45.3

The KION Group’s net financial income/expenses includes a net interest cost of €16.2 million (2014: €19.3 million). All other components of pension expenses are recognised under functional costs.

The actual total return on plan assets in 2015 was €6.1 million (2014: €70.3 million).

Other comprehensive income (loss)

The breakdown of the remeasurement of the defined benefit obligation recognised in the statement of comprehensive income in 2015 is as follows: > TABLE 078

Accumulated other comprehensive income (loss)

078

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Accumulated other comprehensive income / loss as at 01/01/

–300.1

–114.8

–44.4

–44.1

–27.8

–14.4

–372.3

–173.3

Group changes

5.3

5.3

Exchange differences

–2.4

–3.1

–0.9

–0.1

–3.3

–3.2

Gains (+) and losses (–) arising from remeasurements of defined benefit obligation

14.9

–188.0

19.9

–38.0

–0.2

–22.0

34.6

–247.9

thereof effect of changes in demographic assumptions

–0.2

0.0

–0.2

0.0

–0.4

thereof effect of changes in financial assumptions

25.3

–194.4

14.4

–37.8

–1.6

–21.8

38.1

–254.0

thereof experience adjustments

–10.5

6.4

5.5

0.1

1.4

–0.0

–3.6

6.4

Gains (+) and losses (–) arising from remeasurements of plan assets

1.1

2.6

–15.9

35.5

0.8

8.8

–14.0

46.9

Accumulated other comprehensive income / loss as at 31/12/

–284.2

–300.1

–42.8

–44.4

–28.0

–27.8

–355.0

–372.3

Composition of plan assets

The plan assets of the main pension plans consist of the following components: > TABLE 079

Fair value of plan assets

079

 

Germany

UK

Other

Total

in € million

2015

2014

2015

2014

2015

2014

2015

2014

Securities

22.7

25.7

87.9

83.8

8.7

10.1

119.3

119.7

Fixed-income securities

23.9

28.4

376.8

368.3

15.6

12.0

416.4

408.7

Real estate

5.3

4.8

4.4

4.3

9.7

9.1

Insurance policies

44.0

43.9

44.0

43.9

Other

27.8

14.6

2.5

3.4

6.6

3.6

36.9

21.6

Total plan assets

79.8

73.6

467.2

455.5

79.4

73.8

626.4

603.0

thereof total assets that do not have a quoted price in active markets

9.0

9.0

47.9

44.7

56.9

53.7

Insurance policies

44.0

43.9

44.0

43.9

Other

9.0

9.0

3.8

0.9

12.8

9.9

The plan assets do not include any real estate or other assets used by the KION Group itself.

Sensitivity analysis

The present value of the defined benefit obligation is based on the significant assumptions detailed in > TABLE 071 above. If one assumption were to vary and the other assumptions remained unchanged, the impact on the present value of the defined benefit obligation would be as shown in > TABLE 080.

Sensitivity defined benefit obligation

080

in € million

 

2015

2014

Discount rate

Increase by 1.0 percentage point

–220.8

–218.3

Reduction by 1.0 percentage point

294.6

290.6

Salary increase rate

Increase by 0.5 percentage point

16.2

17.2

Reduction by 0.5 percentage point

–17.4

–17.9

Pension increase rate

Increase by 0.25 percentage point

38.7

39.5

Reduction by 0.25 percentage point

–37.1

–35.7

Life expectancy

Increase by 1 year

47.8

44.7

The sensitivity analysis shown in > TABLE 080 is not representative of an actual change in the present value of the defined benefit obligation because variations in the significant assumptions are unlikely to occur in isolation as, to some extent, the assumptions are interrelated. Sensitivity is determined using the same methods (projected unit credit method) as for the measurement of the obligation recognised in the consolidated statement of financial position as at 31 December 2015.

Future pension benefit payments

The pension benefit payments shown in > TABLE 081 are forecast for the next ten years for the defined benefit pension entitlements in existence as at 31 December 2015. The expected pension benefits break down into future benefits to be paid directly by the employer (for 2016: €16.3 million) and future benefits to be paid from existing plan assets (for 2016: €23.0 million).

Expected payments for pension benefits

081

in € million

Germany

UK

Other

Total

2016

15.8

19.9

3.7

39.3

2017

16.6

20.6

4.4

41.5

2018

17.6

21.3

4.1

42.9

2019

18.8

21.4

5.0

45.3

2020

20.4

21.5

5.1

47.0

2021 to 2025

127.6

109.7

26.1

263.4

As at the reporting date, the average duration of the defined benefit obligation, weighted on the basis of the present value of the defined benefit obligation, was 22.2 years in Germany (2014: 21.7 years), 14.5 years in the United Kingdom (2014: 13.6 years) and 16.8 years in the other countries (2014: 17.1 years).

Risks

The funding ratio, the defined benefit obligation and the associated costs depend on the performance of financial markets. The return on plan assets is assumed to equal the discount rate, which is determined on the basis of the yield earned on AA-rated, fixed-interest senior corporate bonds. If the actual return on plan assets falls below the discount rates applied, the net obligation arising out of the pension plans increases. The amount of the net obligation is also particularly affected by the discount rates, and the current low level of interest rates – especially in the eurozone – is resulting in a comparatively large net obligation.

The plan assets are predominantly invested in corporate bonds and inflation-linked UK government bonds, particularly in the United Kingdom. The market risk attaching to plan assets – above all in the case of equities – is mitigated by defining an investment strategy and investment guidelines and constantly monitoring the assets’ performance. Moreover, a downward trend on financial markets could have a significant effect on minimum funding requirements, some of which apply outside Germany.

The KION Group also bears the full risk of possible future pension adjustments resulting from changes in longevity and inflation.

Payroll-based contributions to the KION pension plan made by employees in Germany are invested in fund units. If the actual returns on these fund units fall below the interest rate of 3.0 per cent that has been guaranteed to participating employees, the KION Group’s personnel expenses rise.