BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

IFRS CONSOLIDATED FINANCIAL STATEMENTS OF GROUPE BPCE AS AT DECEMBER 31, 2020

These benefitsare calculatedusing the same actuarialmethod as that applied for defined-benefit pension plans. The accounting method differs in terms of revaluationdifferences on actuarial liabilities, which are recorded under expenses. Termination benefits are granted to employees on • termination of their employment contract before the normal retirement date, either as a result of a decision by the Group to terminate a contract or a decision by an employee to terminate a contract in exchange for a severance package. They are covered by a provision. 8.1 Payroll costs include all personnel expenses and the associated social security contributions and taxes. They include expenses for employee benefits and share-based payments. PAYROLL COSTS

Termination benefits that are not expected to be paid within the 12 months following the balance sheet date are discounted to present value. Share-based payments include payments in equity instruments or cashwhere the amountof the cash payment is indexed to the share price. A personnelexpenseis systematicallyrecordedfor an amount equal to the fair value of the benefit awarded,spread over the period over which the rights are acquired.

Information on employees by category is presented in Chapter 2, “Non-financial performance disclosures.”

Fiscal year 2020

Fiscal year 2019

in millions of euros

Wages and salaries

(6,325)

(6,692)

Expenses for defined-benefit and defined-contribution pension plans and other long-term employee benefits

(728)

(681)

Other social security costs and payroll-based taxes

(2,421)

(2,585)

Profit sharing and incentive schemes

(555)

(597)

TOTAL PAYROLL COSTS

(10,029)

(10,555)

EMPLOYEE BENEFITS 8.2 Groupe BPCE grants its staff a variety of employee benefits. The Banques Populaires private supplementary pension plan, managed by Caisse Autonome de Retraite des Banques Populaires (CAR-BP), covers the pension benefits deriving from the closure of the Banques Populaires banking pension scheme at December 31, 1993. The pension plans managed by CAR-BP are partially covered by insurance for annuities paid to beneficiaries over a certain age, and for obligations in respect of beneficiaries below this age. The annuities paid to beneficiaries over the reference age are managed under the insurer’s (CNP) general pension plan. The assets in this general plan are reserved for the insurer’s pension obligations and their composition is adjusted in line with foreseeable payment trends. They mostly comprise fixed income instruments so as to enable the insurer to apply the capital guarantee that it is obliged to provide for this type of assets. The insurer is responsible for the fund’s asset/liability management. Other obligations are managed in a diversified fund managed as a unit-linked policy and are not covered by any particular guarantee from the insurer. The management of these obligations is based on a target strategic allocation that mostly invests in debt instruments (60%, over 95% of which are government bonds), but which also includes equity investments (40%, with 20% invested in the euro zone). The allocation is adjusted to optimize the portfolio’s expected performance, subject to a risk constraint comprising many criteria. The corresponding asset/liability reviews are performed each year and are presented to the CAR-BP Technical, Financial and Risk Committee and to the Groupe BPCE Employee Benefits Monitoring Committee for information. The relatively aggressive asset allocation is made possible by the long-term investment

horizon and by the regulation mechanisms integrated in the plan’s financial management system. The Caisses d’Epargne’s former private supplementary pension plan (a retained-benefit plan), previously managed by Caisse Générale de Retraite des Caisses d’Epargne (CGRCE), is now incorporated within Caisse Générale de Prévoyance des Caisses d’Epargne (CGP). Beneficiaries’ rights were maintained on the date of the plan’s closure, on December 31, 1999. The strategic guidelines for the management of the Caisses d’Epargne retained-benefit plan are set by the CGP Board of Directors based on asset/liability reviews submitted first to a Joint Investment Committee. The Groupe BPCE Employee Benefits Monitoring Committee also receives the reviews for information purposes. The bond allocation is a decisive component of the plan’s assets. To manage interest rate risk, the CGP is obliged to replicate expected payouts with equivalent assets via a matching process. Liability constraints require the holding of long-term assets to ensure the duration is as close as possible to the duration of liabilities. The wish to be able to review annuities on an annual basis, which is decided by the CGP Board of Directors, means the portfolio holds a large portion of inflation-indexed bonds. The CAR-BP and CGP plans are presented under “Supplementary pension benefits and other”. Other employee benefits include: pensions and other post-employment benefits such as • end-of-career awards and other benefits granted to retirees; other benefits such as long-service awards and other • long-term employee benefits.

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE