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EMPLOYEE INDEMNITY LIABILITY
Employee indemnity liability refers only to Italian companies and is analysed as follows:
2014
2013 (*)
Opening balance
22
25
Personnel costs
-
-
Interest costs
-
1
Actuarial (gains)/losses recognised in equity
3
(1)
Disbursements
(1)
(3)
Total movements
2
(3)
Closing balance
24
22
(*) The previously published prior year consolidated financial statements have been restated following the adoption of IFRS 10 and IFRS 11. Further details can
be found in Section C. Restatement of comparative figures.
The net actuarial losses recognised at 31 December 2014
(Euro 3 million) mainly relate to the change in the associa-
ted economic parameters (the discount and inflation rates).
Under Italian law, the amount due to each employee accrues
with service and is paid when the employee leaves the
company. The amount due upon termination of employment
is calculated on the basis of the length of service and the
taxable remuneration of each employee. The liability
is adjusted annually for the official cost of living index
and statutory interest, and is not subject to any vesting
conditions or periods, or any funding obligation; there are
therefore no assets that fund this liability.
During 2014 the rate for the substitute tax paid by companies
on the revaluation of employee indemnity was raised from
11% to 17%. This has resulted in a decrease of Euro 0.4
million in the liability.
The benefits relating to this plan are paid to participants in
the form of capital, in accordance with the related rules. The
plan also allows partial advances to be paid against the full
amount of the accrued benefit in specific circumstances.
The main risk is the volatility of the inflation rate and the
interest rate, as determined by the market yield on AA
corporate bonds denominated in Euro. Another risk factor
is the possibility that members leave the plan or that higher
advance payments than expected are requested, resulting
in an actuarial loss for the plan, due to an acceleration of
cash flows.
The actuarial assumptions used to value employee
indemnity liability are as follows:
31 December 2014
31 December 2013
Interest rate
1.50%
3.00%
Expected future salary increase
2.00%
2.00%
Inflation rate
2.00%
2.00%
(in millions of Euro)