Note 15 Provisions for employee benefits

Post-employment benefits

Prompted by the deterioration of the funding ratio in 2008, ABP introduced a recovery plan in 2009. At the start of each year ABP evaluates the progress of the recovery on the basis of the actual funding ratio at the end of the preceding year. The policy funding ratio was 114% at the end of 2023; the current funding ratio is 112%, while the contribution rate for the retirement and dependants’ pension was 27.9% of pensionable pay in 2023. The contribution rate for the retirement and dependants’ pension will be 27.0% in 2024. The contribution rate for the ABP incapacity pension (AOP) was 0.8% in 2023.

Alliander’s relative share in the ABP pension scheme based on numbers of participants is approximately 0.4%. The pension contributions payable for the multi-employer plans in 2024 are expected to total €107 million (of which an expected €75 million will be borne by Alliander).

In addition to the multi-employer pension plans in the Netherlands, Alliander has two defined benefit plans relating to subsidiaries in Germany, although these are not of material importance. These plans are accounted for in accordance with the amended IAS 19. This means that, with effect from 2013, actuarial gains and losses and remeasurements are recognised directly. Because of the small amounts involved, however, this is not visible in the consolidated financial statements. The post-employment benefits provision totalled €1 million at the end of 2023 (2022: €1 million), made up as follows:

Other long-term employee benefits

Alliander offers a number of other long-term employee benefits. The provision covers the following types of benefit:

• Long-term sickness benefits: this benefit covers the obligation to continue paying all or part of an employee’s salary during the first two years of sick leave;

• Incapacity benefits: Alliander bears the risk for benefits payable under the Work and Income (Ability to Work) Act (WIA); the relevant provision covers the obligations towards Alliander employees who become wholly or partially unfit for work;

• Unemployment benefits: Alliander is the risk-bearer within the meaning of the Unemployment Act (WW); if an Alliander employee becomes unemployed, the unemployment benefit is borne by Alliander for a period of between three months and 38 months, depending on the employee’s employment history; and

• Long-service benefits: the long-service benefits scheme covers long-service benefits payable on attaining 25 and 40 years of service. Employees born before 1 January 1963 retain the entitlement to the benefit after retiring. Also, the 50-year long-service benefit will continue for five years as from 1 January 2020.

Termination/reorganisation benefits

This provision covers payments and/or supplements to benefits paid to employees whose employment contract has been or probably will be terminated. These benefits and supplements are based on the Social Plan operated by Alliander and individual arrangements. The Social Plan is periodically renegotiated and agreed. In 2023, an amount of €2 million was drawn down from the reorganisation provision (2022: €3 million). The provision for employment termination payments and reorganisations totalled €2 million at year-end 2023 (2022: €4 million).

Movements in provisions for long-term employee benefits

The following table shows the movements in the provisions for post-employment benefits, other long-term employee benefits and the termination benefits/restructuring provision.

Movements in provisions for employee benefits

Assumptions

The main assumptions used in determining the provisions are given below:

Short-term employee benefits

Short-term employee benefits relate to all liabilities in respect of employees - other than the current portion of long-term employee benefits - that are expected to be settled within 12 months after the balance sheet date. Short-term employee benefits include salaries still to be paid, accrued holiday entitlement, bonuses and other employee benefit expenses still to be paid. This item amounted to €34 million at year-end 2023 (2022: €25 million). The increase of €9 million mainly relates to the increase in the provision set aside for accrued holiday entitlement and holiday allowances (€9 million).