PERNOD RICARD - Universal Registration Document 2019-2020
6. CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
30.06.2019
30.06.2020
Medical expenses and other employee benefits
Medical expenses and other employee benefits
Actuarial assumptions in respect of the expense for the period
Pension commitments
Pension commitments
Discount rate
2.78%
3.40%
2.35%
2.98%
Average rate of increase in annuities
3.29% Not applicable
3.26% Not applicable
Average salary increase
2.60%
3.16%
2.63%
3.05%
Expected increase in medical expenses Initial rate
Not applicable
6.22% Not applicable
6.06%
Final rate
Not applicable
4.61% Not applicable
4.69%
Actuarial assumptions at 30.06.2020 (pension and other commitments) By region
Other non-Eurozone countries
Eurozone countries
United Kingdom United States
Canada
Discount rate
1.53%
2.55%
2.87%
1.08%
3.59%
Average rate of increase in annuities
3.29% Not applicable Not applicable
1.55%
1.85%
Average salary increase
2.19%
2.98%
3.00%
2.37%
2.08%
Expected increase in medical expenses Initial rate
5.50%
6.18%
5.18%
3.50% Not applicable
Final rate
5.50%
4.50%
4.50%
3.50% Not applicable
The obligation period-related discount rates used within the Eurozone are as follows: short-term rate (3-5 years): 0.5% to 1%; medium-term rate (5-10 years): 1% to 1.25%; long-term rate (more than 10 years): 1.00% to 1,50%.
Discount rates are determined by reference to the yield at the balance sheet date on premium category corporate bonds (if available), or on government bonds, with maturities similar to the estimated duration of the benefit obligations. The expected rate of return on assets corresponds to the discount rate, in accordance with the IAS 19 standard.
The sensitivity of the debt to changes in the discount rate is shown in the table below:
Medical expenses and other employee benefits
Pension commitments
Total
€ million
Commitments at 30.06.2020
5,440
145
5,584
Commitments at 30.06.2020 with a 0.5% decrease in the discount rate
5,910
154
6,064
Commitments at 30.06.2020 with a 0.5% increase in the discount rate
5,024
136
5,160
The impact of a change in the rate of increase in medical expenses would be as follows:
Impact of a change
In respect of post-employment medical coverage € million
With current rate
1% increase
1% decrease
On the present value of the benefit obligations at 30.06.2020
114
12
(10)
Expense for FY20
5
0
0
195
Pernod Ricard Universal Registration Document 2019-2020
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