Econocom - 2020 annual report

06 consolidated financial statements

notes to the consolidated financial statements

Provisions for pensions 17. and other post-employment benefit obligations. Description of pension plans 17.1.

Post-employment benefits are granted under defined contribution plans or defined benefit plans. DEFINED CONTRIBUTION 17.1.1. PLANS A defined contribution plan is a plan under which the Group pays fixed contributions to an external entity that is responsible for the plan’s administrative and financial management. The employer is therefore free of any subsequent obligation as the agency is in charge of paying employees the amounts to which they are entitled (basic Social Security pension plan, supplementary pension plans). Special case: Pensions plans in Belgium The Belgian “Vandenbroucke Law” states that employers must guarantee a minimum return on employee contributions. All Belgian defined contribution plans are therefore treated as defined benefit plans in accordancewith IFRS. As from 1 January 2016, the Group has been required to guarantee a minimum return for contributions paid in. The return depends on the yield on Belgian 10-year government bonds but should be between 1.75% and 3.25%. There will be no distinction made between employer and employee contributions. Employers are exposed to a financial risk as a result of this guaranteed minimum return for defined contribution plans in Belgium, since they have a legal obligation to pay additional contributions if the plan does not have sufficient assets to pay all benefits relating to past service costs.

These plans are classified and accounted for as IAS 19 defined benefit plans. DEFINED BENEFIT PLANS 17.1.2. Defined benefit plans are characterised by the employer’s obligation to its employees. Provisions are therefore accrued to meet this obligation. The defined benefit obligation is calculated using the projected unit credit method, which uses actuarial assumptions as regards salary increases, retirement age, mortality, employee turnover and the discount rate. Changes in actuarial assumptions, or the difference between these assumptions and actual experience, result in actuarial gains or losses. These are recognised in other comprehensive income for the period in which they occur, in accordance with the Group’s accounting principles. For the Group, defined benefit post- employment plans primarily concern the benefits described below: severance pay in France: • lump-sum benefits calculated ▶ according to the employee’s years of service and his/her average compensation over the last 12 months prior to his/her departure, the calculation is based on inputs ▶ defined by the Human Resources Department in France in November each year, the calculated amount is set aside ▶ under provisions in the balance sheet;

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2020 annual report