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Allianz Annual Report 2013

D Consolidated Financial Statements 127 Consolidated Balance Sheets 128 Consolidated Income Statements 129 Consolidated Statements of Comprehensive Income 130 Consolidated Statements of Changes in Equity 131 Consolidated Statements of Cash Flows 134 Notes to the Consolidated Financial Statements Annual Report 2013    Allianz Group 223 account as appropriate. In the BPV generally the accruals after 2005 are wholly funded, whereas the grandfathered plan is funded to a minor extent. The assets, which are allocated to a trust (Methusalem Trust e.V.), are managed by a board of trustees. There is also a partly funded defined benefit pension plan for agents (VertreterVersorgungsWerk, VVW), which has been closed for new entrants since 31 December 2011. A part of the pension plan serves as a replacement for the compensatory claim of agents accord- ing to German Commercial Code (§ 89b). The pension amount guar- anteed is based on the individual agents’ insurance portfolio, which is regularly reassessed although there is no legal obligation. VVW is close to a final salary benefit and pension increases are broadly linked to inflation. For the AVK the annual minimum interest rate guaranteed is 1.75 % – 3.50 % depending on the date of joining the ­Allianz Group and for the BPV it is 2.75 %. Pension increases are guaranteed at least with 1 % p.a. Depending on legal requirements some pension increases are linked to inflation. The employee has a choice between lump sum payments and annuitiesonly in theAVK,whereas the other vehiclesprovide annuities. VVW entitled agents have the option to capitalize up to one third of the pension amount as a lump sum payment. The period in which a retirement pension can be drawn is usu- ally between age 60 and age 67. Disability benefits are granted prior to retirement in the event of an occurrence of a qualifying disability. In the case of death, a pension may be paid to dependents. Surviv- ing dependents normally receive 60 % (widow/widower) and 20 % (per child) of the original employee’s pension, in total not to exceed 100 %. Additionally, the ­Allianz Group offers a deferred compensation program, Pensionszusage durch Entgeltumwandlung (PZE), for active employees. Within some boundaries they convert at their dis- cretion parts of their gross income and receive in exchange a pension commitment of equal value. PZEs qualify almost as defined contribu- tion plans with minor risk exposure. United Kingdom The U.K. accounts for 8.3 % of the ­Allianz Group’s defined benefit obli- gation and 11.9 % of the ­Allianz Group’s plan assets. The U.K. operates a funded pension scheme, the ­Allianz Retire- ment and Death Benefits Fund. The trustee board is required by law to act in the best interests of members and is responsible for setting certain policies (e.g. investment and contribution policies) of the principal U.K. scheme. Contributions are made by both the employer and employees. The fund has a defined benefit pension section and a defined contribution section. The defined contribution section was estab- lished on 1 April 2001, from which date the defined benefit section was closed to new entrants. The defined benefit section provides final salary benefits. Pension increases are broadly linked to Retail Prices Index (RPI) inflation. From 1 July 2012, benefit changes were made to the defined ben- efit section. Following these benefit changes, increases to pension- ablepayarecapped atRPIand,in2015,thedefined benefitsectionwill close to future accrual and all members will switch to the defined contribution section. Switzerland Switzerland accounts for 5.1 % of the ­Allianz Group’s defined benefit obligation and 9.1 % of the ­Allianz Group’s plan assets. There are obligatory corporate pension plans in Switzerland, eli- gible for all employees. The plans are wholly funded through legally separate trustee administered pension funds with the trustee board being responsible for the investment of the assets and the risk man- agement. The plans are contribution-based and cover the risks of longevity, disability and death. Employees contribute only a small amount whereas the employer contributes for the complete risk cov- erage and a big part to the savings account. The interest rate is decid- ed annually by the board of the pension funds. For the mandatory part the minimum interest rate is regulated by law and reviewed annually (1.50 % in 2013). At retirement beneficiaries can choose between a lump sum payment, an annuity or a combination of both where the part which is not granted as a lump sum is converted to a fixed annuity according to the rules of the pension fund, taking legal requirements into account. If employees contract out of the ­Allianz Suisse pension plan, they have to take their vested pension capital (“Freizügigkeitsleis- tung”) to the next employer, which implies a small liquidity risk. Defined benefit plans IAS 19 revised in 2011 has to be applied retrospectively.1 Therefore all balance sheet and income statement items had to be restated as of 1 January 2013 and 1 January 2012. After the retrospective application the adapted amounts recognized in the ­Allianz Group’s consolidated balance sheets for defined benefit plans are as follows: Reconciliation of Defined Benefit Plans on the Balance Sheet € mn 2013 2012 Net amount recognized as of 1 January 8,010 5,493 Changes in the consolidated subsidiaries of the ­Allianz Group 6 26 Foreign currency translation adjustments (13) 13 Recognized expenses 661 497 Payments (642) (649) OCI recognition (before deferred taxes) (522) 2,630 Net amount recognized as of 31 December 7,500 8,010 thereof assets (94) (59) thereof liabilities 7,594 8,069 1 Please refer to note 4 Recently adopted and issued accounting pronouncements and changes in the presentation of the consolidated financial statements for further details.

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