Groupe Renault - 2020 Universal Registration Document

388 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 04 CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS PROVISIONS FOR PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFIT OBLIGATIONS NOTE 19 Pension and benefit plans 19 - A - Pensions and other long-term employee benefit obligations essentially concern active employees. These benefits are covered either by defined-contribution plans or defined-benefit plans. Defined-contribution plans The Group makes earnings-related payments, in accordance with local custom, to the national organizations responsible for paying pensions and similar financial benefits. There is no actuarial liability concerning these pension arrangements. The total expense for defined-contribution plans was €415 million in 2020 (€603 million in 2019). Defined-benefit plans The accounting treatment of defined-benefit plans is described in note 2-S, and involves establishment of provisions. These plans concern: indemnities payable upon retirement or departure, in application P of legislation or agreements in certain countries such as France and Turkey; supplementary pensions providing employees with contractual P income; the countries applying this type of plan are in Europe ( e.g. the United Kingdom, France, Germany, the Netherlands, and Switzerland); other long-term benefits, chiefly long-service awards and flexible P holiday entitlements. Defined-benefit supplementary pension plans are generally covered by contracts with pension funds or insurance companies. In such cases, the obligations and assets are valued separately. The difference between the obligation and the fair value of the assets held to fund it may indicate underfunding or overfunding. In the event of underfunding, a provision is booked. In the event of overfunding, an asset is recognized subject to certain conditions. Principal defined-benefit plans of the Group obligations for France are entirely covered by provisions, and account for most of the Group’s liabilities for retirement indemnities. In France, the Group’s retirement indemnities result from agreements negotiated with each French entity and employee representatives. They are based on employees’ salaries and length of service; payment is conditional on being in the Company’s employment at the time of retirement. Retirement benefit The Group’s most significant supplementary pension plan is in the United Kingdom, where two defined-benefit pension plans are managed as part of a dedicated pension fund comprising two compartments: one concerns Automotive subsidiaries (excluding AVTOVAZ) and the other RCI Financial Services Ltd., together covering 1,716 people. This plan has been closed to new members since 2004, and no further rights have been earned under it since December 31, 2019. All employees benefit from a defined-contribution pension plan from January 1, 2020. Underfunding at December 31, 2020 is valued at £65 million for the fund compartment dedicated to the Automotive (excluding AVTOVAZ) segment and £14 million for the fund compartment dedicated to RCI Financial Services Ltd. This pension fund (a trust) is a legal entity in its own right. It is administered by a Board of Trustees with equal representation for the participating companies and their current and former employees. The fund is governed by local regulations, which set the minimum funding requirements that can lead to additional contributions being made by the Group. After the last three-yearly valuation in 2018, the Group made a commitment to cover the funding shortfall by 2027 through payments amounting to £5 million maximum per year. The asset investment policy is defined for each section of the fund by a supervisory body which examines the performance of investments quarterly. The risks associated with these plans are the usual risks (lower future returns on fund assets, a decline in the equities markets, longer life expectancy for beneficiaries, a rise in inflation, etc .). Main changes in the Group’s defined-benefit plans At December 31, 2020, an amount of €108 million was reclassified from retirement indemnities to provisions for restructuring, for employees who will benefit from the Collective Contractual Separation plan. At December 31, 2019, the Group terminated the defined-benefit top-up pension plan that was set up in France in 2004, entailing the loss of the corresponding rights for its beneficiaries (members of the Group’s Executive Committee who had been with the Group for at least five years, including two years in the Executive Committee). Main actuarial assumptions used to calculate provisions and other data for the most significant plans 19 - B - Main actuarial assumptions and actual data for the Group’s retirement indemnities in France December 31, 2020 December 31, 2019 Renault s.a.s Other Renault s.a.s Other Retirement age 60 to 65 60 to 67 60 to 65 60 to 67 Discount rate* 0.31% 0.2% to 2% 0.79% 0.1% to 2% Salary increase rate 2.2% 1% to 3% 2.5% 1% to 3% Duration of plan 13 years 6 to 20 years 13 years 6 to 20 years Gross obligation €1,191 million €187 million €1,158 million €189 million The rates used to value the Group’s obligations in France vary between companies depending on the maturities of obligations. The benchmark for the discount rate is the * zero-coupon rate plus the average spread curve for issuers rated AA as published by Reuters.