[18] Accruals for Pensions and Similar Commitments.

For certain groups of employees of the Group, post-employment benefit schemes are available. Schemes vary depending on the legal, economic, and tax environments of the respective country. They are primarily designed as defined benefit plans, but also as defined contribution plans. For defined benefit plans accruals for pensions and similar commitments are recorded for the net defined liability after taking account of amounts recognized as asset:

 

 

€k

 

Sept. 30, 2016

Sept. 30, 2015

Present value of unfunded obligations

55,863

45,619

Present value of funded obligations

498,615

276,861

Fair value of plan assets

–472,991

–240,373

Effect of the asset ceiling

201

0

Net defined benefit liability

81,688

82,107

Therein amount recognized as asset

898

1,155

Accruals for pensions and similar commitments

82,586

83,262

The over-funding (amount recognized as asset) of €898k (2014/2015: €1,155k) is presented under other non-current assets.

Defined benefit plans.

The significant defined benefit plans are arranged for employees in Germany, the Netherlands and in Switzerland. There are inter alia also defined benefit plans in the United Kingdom, Belgium and France. In Germany, post-employment benefit schemes are set up as employer funded pension plans as well as deferred compensation plans.

With regard to employment law, the employer funded pension commitments in Germany are based upon direct performance-related commitments in terms of defined contribution plans. Each beneficiary receives, depending on individual pay-scale grouping, contractual classification, or income level, different yearly contributions. The contribution is multiplied by an age factor appropriate to the current pension scheme and credited to the individual retirement account of the employee. The retirement accounts may be used up at retirement by either a one-time pay-off or payments of ten years’ installments at maximum. Insured events are disability, death and reaching of retirement age.

In the Netherlands, there is an average career salary plan, which is employer- and employee-financed and handled by an external fund. Insured events are disability, death and reaching of retirement age. In Switzerland, the post-employment benefit scheme stems from statutory provisions. The employees receive their pension payments as a function of contributions paid, a fixed interest rate and annuity factors. Insured events are disability, death and reaching of retirement age.

In June 2006, Wincor Nixdorf created plan assets according to IAS 19 as part of a Contractual Trust Arrangement (“CTA”), by transferring assets to a registered association (Wincor Nixdorf Pension Trust e. V.) in order to fund pension obligations to employees in Belgium, Germany, France and Switzerland. The association is investing in current and non-current assets; this way considering the maturity structure of the underlying pension obligations. The funding strategy is reviewed regularly by analyzing asset development as well as the current situation of the financial market. During fiscal 2015/2016, the CTA plan assets were funded with an additional €30,000k (2014/2015: €0k) in the form of cash.

In the Netherlands, the plan assets are currently invested in a company pension fund. A transfer to an industry-wide pension fund is planned for the next fiscal year. In addition, in Switzerland, external plan assets are invested with a country-specific retirement fund. The plan assets are subject to minimum funding requirements in Switzerland.

The weighted average duration of the defined benefit plans is 16 years (2014/2015: 10 years). The increase in the duration is due to the first-time inclusion of the pension plan of SecurCash Nederland B.V. in the Netherlands, which was acquired in fiscal 2015/2016.

The only considerable risk to which the plans expose Wincor Nixdorf Group is the capital market development. The latter is influencing the discount rate for the valuation of the defined benefit obligations as well as the return on plan assets.

Change in Defined Benefit Obligation.

 

€k

 

Sept. 30, 2016

Sept. 30, 2015

Present value of defined benefit obligation as of October 1

322,480

308,257

Current service cost

9,381

7,958

Past service cost

–4,499

–388

Effects from settlements

–431

–193

Interest cost

10,279

6,665

Effect of changes in demographic assumptions

–675

–166

Effect of changes in financial assumptions

82,983

4,367

Effect of experience adjustments

–2,509

2,024

Pension payments

–14,120

–9,605

Settlement payments from plan

–2,718

–585

Member contributions

2,451

1,566

Taxes and insurance premiums

–49

–81

Divestitures/transfers

154,926

–1,246

Exchange rate differences

–3,021

3,907

Present value of defined benefit obligation as of September 30

554,478

322,480

Change in Plan Assets.

 

€k

 

Sept. 30, 2016

Sept. 30, 2015

Fair value of plan assets as of October 1

240,373

231,561

Interest income

9,108

5,087

Return on plan assets (excluding interest income)

32,826

657

Member contributions

2,043

785

Employer contributions

4,695

1,867

Transfer to pension trust

30,000

0

Pension payments

–3,273

–700

Settlement payments from plan

0

–585

Taxes and insurance premiums

–962

–81

Divestitures/transfers

161,078

–1,246

Exchange rate differences

–2,897

3,028

Fair value of plan assets as of September 30

472,991

240,373

For fiscal 2016/2017, employer contributions to plan assets in the amount of €3,448k are expected.

Plan assets were invested in the following assets:

 

 

in %

 

Sept. 30, 2016

Sept. 30, 2015

Equity instruments

9.9

3.1

Debt instruments

46.0

30.9

Investment funds

12.1

22.4

Real estate funds

1.9

0.0

Assets held by insurance company

6.2

11.5

Real estate

4.1

6.0

Other capital investments

1.7

0.0

Short-term financial investments

18.1

26.1

Plan assets do not contain any own financial instruments. The real estate is primarily not used by the Group. Shares, debt instruments, investment funds, real estate funds and other investments have a quoted market price in an active market, whereas real estate and insurance contracts have not.

Effect of the Asset Ceiling.

 

€k

 

Sept. 30, 2016

Sept. 30, 2015

Effect of the asset ceiling as of October 1

0

0

Interest expense

10,638

0

Changes in asset ceiling (excluding interest expense)

293

0

Exchange rate differences

–10,730

0

Effect of the asset ceiling as of September 30

201

0

The effect of the asset ceiling results from the defined benefit plan acquired in the fiscal year in the Netherlands. In the wake of the acquisition of this pension plan, defined benefit obligations of €137,575k and plan assets of €148,213k have been added.

Net Defined Benefit Liability Reconciliation.

 

€k

 

Sept. 30, 2016

Sept. 30, 2015

Net defined benefit liability as of October 1

82,107

76,696

Pension expenses

6,466

8,955

Actuarial gains/losses

47,334

5,568

Changes in asset ceiling (excluding interest expense)

–10,730

0

Pension payments

–10,847

–8,905

Settlement payments from plan

–2,718

0

Member contributions

408

781

Employer contributions

–4,695

–1,867

Transfer to pension trust

–30,000

0

Divestitures/transfers

4,486

0

Exchange rate differences

–123

879

Net defined benefit liability as of September 30

81,688

82,107

Actuarial Assumptions.

With regard to the Group entities, the discount rate (weighted average) represents the significant actuarial assumption for the valuation of defined benefit obligations:

 

 

in %

 

Sept. 30, 2016

Sept. 30, 2015

Discount rate

1.2

2.0

Depending on the defined benefit plan, income and pension trends but also employee turnover assumptions are taken into consideration for the calculation of the defined benefit obligations. In addition, life expectancy assumptions based on current mortality tables are considered. The 2005G Heubeck Tables are used in Germany, the BVG 2015 tables in Switzerland and the AG2014HM projection tables in the Netherlands.

Sensitivity Analysis.

For Wincor Nixdorf Group, the sensitivity of the discount rate as the significant actuarial assumption has been identified on the lines of the determination of the present value of the defined benefit obligations. An increase or decrease in the assumed interest rate by 0.25 percentage points would have the following impact on the present value of the defined benefit obligations as of September 30, 2016:

 

 

€ million

 

Increase

Decrease

Change in discount rate by 0.25 percentage points

–20

22

Pension Expenses.

 

€k

 

2015/2016

2014/2015

Current service cost

9,381

7,958

Past service cost

–4,499

–388

Effects from settlements

–431

–193

Net Interest

1,460

1,578

Tax and administration costs

551

0

Pension expenses

6,462

8,955

Defined Contribution Plans.

Under defined contribution plans, an entity pays fixed contributions and does not assume any other obligations. The personnel expenses of the fiscal year include expenses for defined contribution plans in the amount of €24,863k (2014/2015: €27,215k).