Provisions for pensions and similar obligations

The company pension plan consists of defined contribution and defined benefit plans. In the reporting period, €10 million (previous year: €11 million) was paid into defined contribution plans.

In early November 2008, €1,398 million in assets was transferred to the trust RWE Pensionstreuhand e.V. to externally finance parts of the corporate pension plan via contractual trust arrangements (CTA). Since the transferred assets are classified as plan assets as defined by IAS 19, provisions for pensions and similar obligations were netted out against the transferred assets as of December 31, 2008. As a result, provisions for pensions and similar obligations declined accordingly.

Provisions for defined benefit plans are determined using actuarial methods. The following assumptions are applied:

The expected return on plan assets was determined depending on the specific asset categories. The expected return on investments in equities reflects the long-term average performance observed for the industries and geographical markets involved, taking into account the current composition of the equity portfolio. The expected return on fixed-interest securities was derived from appropriately selected trading prices and indices, in accordance with recognized methods. The expected return on real estate was calculated on the basis of marketing possibilities determined by contractual obligations and local market conditions.

Provisions for pensions are broken down as follows:

Disregarding taxes, cumulative actuarial gains and losses amounted to -€5,181 million as of December 31, 2008 (Dec 31, 2007: -€3,866 million).

The actual return on plan assets amounted to -€1,372 million (previous year: €190 million).

The past service costs recognized in 2007 stemmed principally from the increase in the statutory retirement age, due to amendment of the German law on the minimum pensionable age. This amendment resulted in a reduction of the period of pension benefit payments taken as a basis for the pension provisions, as employees in the RWE Group must generally draw a statutory pension to be eligible for a company pension. Past service costs Glossary were affected by a plan curtailment during the year under review.

Since 2005, the present value of pension claims, the fair value of plan assets and the deficit of the plan have developed as follows:

For the reporting period and the previous years, the following experience adjustments were made to the present values of the pension claims and the fair values of the plan assets:

Experience adjustments to the present values of pension claims represent part of the actuarial gains or losses arising on the pension claims for the year in question. Experience adjustments to the fair values of plan assets are to be equated with the actuarial gains or losses arising on the plan assets for the year in question.

Payments for defined benefit plans are expected to amount to €207 million in fiscal 2009.