PSA - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 Notes to the Consolidated Financial Statements at 31 December 2019

EMPLOYEE BENEFITS EXPENSE

NOTE 7

PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS 7.1. In additionto pensionbenefitspaid in accordancewith the laws and regulationsof the countries in which they operate, Group companiesare liable for the paymentof supplementarypensions and retirementbonuses. These benefits are paid under defined contribution and defined benefit plans. For definedcontributionplans,contributionsmadeduringthe year are expensed.

In the eventof changein the benefitsconferredby a pensionplan, the effects of changes are recognised in full in the income statementof the period in which they are incurred,in “Operating income”under“Pastservice cost”. For eachdefinedbenefitplan, the Grouprecordsa provisionin an amountequalto the projectedbenefitobligationless the fair value of theplan assets. Thesepensionsurplusesconstitutedby the Groupare recognised in the balance sheet according to the IFRIC 14 interpretation. The net cost of defined benefit pension plans for the period thereforecorresponds to thesum of the following: Theservicecostandpastservicecost(recognised in “Operating n income”); The accretionexpenseof the net commitmentof the returnon n plan hedgingassets (in other financial income and expenses). These two components(accretionand return on assets) are determinedbased on thediscountrate of commitments. Otheremployeebenefitobligationsrecognised in the statementof financial position concern: long-service awards payableby Frenchandforeignsubsidiaries; n healthcare costs paid by certain subsidiaries in the United n States. PeugeotCitroënDS entrantssinceMay 2002.At 31 December2019, 17,100 beneficiarieswere covered by these plans, including2,400 active employees, 5,600 former employees not yet retired and 9,100retiredemployees.The plansguaranteea replacementrate of up to 66%of the employee’sfinal salaryof the PeugeotCitroënDS Automotivesegment’sstaff. In Germany, the main defined benefit plan relates to Opel AutomobileGmbH covering beneficiaries in these companies at 31 December 2019 in the formof: the retirement bonuses provided for by collective bargaining n agreements; the supplementary pension plan covering 16,600 employees, n 1,700 former employees not yet retired and 600 retired employees. In FaureciaGroup,in France,all managerialemployeeswith a salary in tranche C are granted a defined benefit pension scheme. This schemeenablesa yearlyacquisitionof a rent basedon the tranche C part of the salary. ExecutiveCommitteememberswho have an employmentcontractwithFaureciaSE or anyof its subsidiariesalso benefitfroma definedbenefitpensionschemefor Frenchmembers and definedcontributionpensionschemefor foreignmembers,the schemes having been approved by the Board of Directors on 11 February 2015. In order to comply with the PACTE law from 22 May2019and its notificationof 3 July2019transposingDirective 2014/50/EU,these two definedbenefitschemeshave been closed, the rights acquired in these schemes being frozen as of 31 December 2019.

In accordancewith IAS 19- EmployeeBenefits , obligationsunder defined benefit plans are measured by independent actuaries using the projected unit credit method. The main assumptions underpinning the measurement of the commitment are the retirementdate,wageincreasesand staffturnover,and a discount rate andan inflation rate. The projectedbenefitobligationis measuredtwice a year for the mainplans,at mid-yearand at year-end,and everythreeyearsfor the other plans, except when more frequent valuations are necessaryto take into accountchangesin actuarialassumptions or significantchanges indemographic statistics. Changes in actuarial assumptionsand experienceadjustments– correspondingto the effects of differences between previous actuarialassumptionsandwhathas actuallyoccurred– giverise to actuarial gains and losses. These actuarial gains and losses are recorded under “Consolidatedcomprehensiveincome”, and are not recyclable in the incomestatement. Plan descriptions A. Groupemployeesin certaincountriesare entitledto supplementary pensionbenefitspayableannuallyto retirees,or retirementbonuses representingone-off payments made at the time of retirement. Thesebenefitseitherare paidunderdefinedcontributionor defined benefit plans. The Group’s only obligation under defined contribution plans is to pay fixed contributions into the fund concerned.The paymentsare recognisedin income (loss) for the year. Payments under defined benefit plans concern primarily France,the United Kingdom andGermany. In France, the existing defined benefit plans covering almost exclusively thePeugeot CitroënDS employees concern: the retirement bonuses provided for by collective bargaining n agreements; the portion of the top-hat pension scheme for engineers and n managementpersonnelthat was not transferredto an external fund in2002 andguarantees an aggregate replacement ra e from all plans of up to 60% of the employee’sfinal salary (currently covering 2,400 retired employees); the pensionplan set up by the formersubsidiaryof the Chrysler n group in France (Talbot),which was closed to new entrants in 1981 andcovers11,100retiredemployeesat end-2019; the closedCitroënsupplementaryplan (ACC)that covered4,100 n retiredemployees at end-2019. In the United Kingdom, the Group has four trustee-administered definedbenefitplansfor the PeugeotCitroënDS andOpelVauxhall Automotive segments. These plans have been closed to new

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT