AmazonScience/document-haystack

1Funding2Various external pension trusts are maintained to fund the majority of the Group’s defined 3benefit plan obligations. The Group’s funding principle is to maintain coverage of the defined 4benefit obligation by plan assets within a range of 80% to 100% of the obligation, subject to 5meeting any local statutory requirements. The Group has also determined that certain plans 6should remain unfunded, although their funding approach is subject to periodic review, e. g. 7when local regulations or practices change. Obligations for any unfunded plans are accrued 8on the balance sheet.9For externally funded defined benefit plans local minimum funding requirements may apply. 10However, for defined benefit plans in Germany which are externally funded by a Contractual 11Trust Agreement, no regulatory minimum funding requirements exist. In most countries the 12Group expects to receive an economic benefit from any plan surpluses of plan assets 13compared to defined benefit obligations, typically by way of reduced future contributions. 14Given the broadly fully funded position and the investment strategy adopted in the Group’s 15key funded defined benefit plans, any minimum funding requirements that may apply are not 16expected to impact the Group's liquidity position. The Group considers not re-claiming 17benefits paid from the Group’s assets as an equivalent to making cash contributions into the 18external pension trusts during the year. 19Since 2022, the funding status for pension plans in Germany and Luxembourg moved into 20surplus due to significant market movements. The Group has claimed 21€ 12 million in 2023 22and € 14 million in 2022 from the trust accounting for all the benefits paid from the Group’s 23assets on behalf of the trust.24Actuarial Methodology and Assumptions2531 December is the measurement date for all plans. All plans are valued by independent 26qualified actuaries using the projected unit credit method. 27The key actuarial assumptions applied in determining the defined benefit obligations at 2831 December are presented below in the form of weighted averages.29Applied actuarial assumptions3031 Dec 2023 31 Dec 202231Germany32EMEA 33(excluding 34Germany) APAC Germany35EMEA 36(excluding 37Germany) APAC38Discount rate (in %) 3.33 1.75 4.06 3.80 2.63 3.6139Rate of price inflation (in %) 2.33 1.52 1.60 2.63 1.86 1.6040Rate of nominal increase in future 41compensation levels (in %) 2.51 1.91 4.81 2.82 2.20 4.2542Rate of nominal increase for pensions in 43payment (in %)2.79 0.55 N/A 2.97 0.77 N/A44Assumed life expectancy at age 65:45For a male aged 65 at measurement date 21.4 21.9 N/A 21.3 21.8 N/A46For a female aged 65 at measurement date 23.6 23.8 N/A 23.6 23.7 N/A47For a male aged 45 at measurement date 22.7 23.8 N/A 22.6 23.6 N/A48For a female aged 45 at measurement date 24.7 25.5 N/A 24.7 25.4 N/A49Mortality tables applied modified 50Richttafeln51Heubeck522018G53Country54specific55tables56N/A modified 57Richttafeln58Heubeck592018G60Country61specific62tables63N/A64For the Group’s most significant plans the discount rate used at each measurement date is 65set based on a high-quality corporate bond yield curve – sourced from reputable third-party 66index and data providers and rating agencies – reflecting the timing, amount and currency of 67the future expected benefit payments for the respective plan. 68The price inflation assumptions in the Eurozone are set with reference to market measures of 69inflation based on inflation swap rates in those markets at each measurement date. For other 70countries, the price inflation assumptions are typically based on long-term forecasts by 71Consensus Economics Inc. 72The assumptions for the increases in future compensation levels and for increases to pension 73payments are developed separately for each plan, where relevant. Each is set based on the 74price inflation assumption and reflecting the Group’s reward structure or policies in each 75market, as well as relevant local statutory and plan-specific requirements.76Mortality assumptions can be significant in measuring the Group’s obligations under its 77defined benefit plans. These assumptions have been set in accordance with current best 78estimate in the respective countries. Future potential improvements in longevity have been 79considered and included where appropriate. 80         81To our 82Shareholders83Summarised 84Management Report85Consolidated 86Financial Statements Compensation Report Corporate Govern-87ance Statement88Supplementary 89Information DWS 2023 Annual Report90 91Additional Notes92116 19 – Employee Benefits