BPCE_REGISTRATION_DOCUMENT_2017

FINANCIAL REPORT IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2017

Note 9

Employee benefits

9.1

PAYROLL COSTS

Fiscal year 2017

Fiscal year 2016

in millionsof euros

Wagesand salaries

(6,416)

(6,185)

Costs ofdefined-contributionplans

(690)

(717)

Other socialsecuritycosts and payroll-based taxes

(2,628)

(2,564)

Profit-sharing and incentiveschemes

(593)

(559)

TOTALPAYROLLCOSTS

(10,327)

(10,025)

The Employment and CompetitivenessTax Credit (CICE) is deducted from payroll costs. It came to € 120 million in respect of fiscal year 2017 ( € 103 million for 2016). The use of this tax is presentedin section 6 “Social, environmental and societal information” of the registration document. 9.2 Groupe BPCE grants its staff a variety of employee benefits. The Banque Populaire banks’ private supplementary pension plan, managed by Caisse Autonome de Retraite des Banques Populaires (CAR-BP),covers the pensionbenefitsderivingfrom the closureof the Banque Populaire banks’ banking pension scheme at December 31, 1993. The pension plans managed by CAR-BP are partially covered by an insurance policy for annuities paid to beneficiaries having passed a referenceage and for obligations related to youngerbeneficiaries. Annuities paid to beneficiaries having passed the reference age are managed with the insurer’s general pension assets. These general assets are reserved for this insurer’s pension obligations and their composition is adjusted to predictable payment schedules. They consist predominantlyof bonds so that the insurer can implementthe capital guaranteethat it is requiredto give on assets of this type. The insurer is responsible for managing the fund’s assets and liabilities. Other obligations are managed in a unit-linked diversified fund, i.e. with no specific guarantee provided by the insurer. The fund is managedaccordingto a strategicallocationapproach,predominantly focused on fixed income products (60%, with more than 95% of this bucket comprised of government bonds), but also with exposure to equities (40% of which 20% in the euro zone). This allocation is established with the aim of optimizing the portfolio’s expected performances,subject to a level of risk overseen and measured using several criteria. The corresponding asset/liability reviews are performed yearly and presented to CAR-BP’s Technical, Financial and Risk Commission and for information purposes to the Groupe BPCE Liabilities Monitoring Committee. The relatively dynamic allocation EMPLOYEE BENEFITS

applied is made possible by the time frame in which the amounts are used and by the regulation mechanisms specific to the financial oversight of the system. The “closed”(retainedbenefits)pensionplan of the Caisses d’Epargne, previously managed by Caisse Générale de Retraite des Caisses d’Epargne (CGRCE), is now incorporated within Caisse Générale de Prévoyance des Caisses d’Epargne (CGP). The rights were crystallized at the plan’s closing date of December 31, 1999. The strategic guidelines for managing retained benefits plan funds for the Caisses d’Epargneare decided by the CGP’s Board of Directorson the basis of asset/liability reviews presented beforehand to a Joint Management Committee. Groupe BPCE’s Liabilities Monitoring Committee also receivedthese reviewsfor informationpurposes.The plan is subjectto severalconstraintsand targetson which strategicchoicesrealizedare based: a risk of a provision in the event of inadequate return on plan ● assets (provision for financial risks); a risk of insufficient assets; ● the aimof beingable to revaluepensionsregularly. ● Bonds represent a predominantportion of the plan’s assets; in a bid to manage interest rate risk, the CGP matches projected liabilities flows on the assets side of the balance sheet. Due to liabilities constraints,assets must be held over the long term in order to have a durationas close as possibleto that of the correspondingliabilities.A significant proportion of inflation-indexedbonds is held due to the decision to revalue annuities annually. The annuities nonetheless remain the prerogativeof the CGP’s Boardof Directors. The CAR-BP and CGP-CE plans are recorded under “Supplementary pension benefits andother”. Other employee benefits also include: pensions and other post-employmentbenefits such as retirement ● indemnities and other benefits granted toretirees; other benefits such as long-service awards and other long-term ● employee benefits.

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Registration document 2017