BPCE - 2018 Registration document

FINANCIAL REPORT IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2018

EMPLOYEE BENEFITS 8.2 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 pension benefits deriving from the closure of the Banque Populaire banks’ banking pension scheme at December 31, 1993. The pension plans managed by CAR-BP are partially covered by insurance for annuities paid to beneficiaries over a certain age, and for obligations in respect of beneficiaries below this age. The annuities paid to beneficiaries over the reference age are managed under the insurer’s (CNP) general pension plan. The assets in this general plan are reserved for the insurer’s pension obligations and their composition is adjusted in line with foreseeable payment trends. They mostly comprise fixed income instruments so as to enable the insurer to apply the capital guarantee that it is obliged to provide for this type of assets. The insurer is responsible for the fund’s asset/liability management. Other obligations are managed in a balanced fund managed as a unit-linked policy and are not covered by any particular guarantee from the insurer. The management of these obligations is based on a target strategic allocation that also mostly invests in debt instruments (60%, over 95% of which are government bonds), but which also includes equity investments (40%, with 20% invested in the euro zone). The allocation is adjusted to optimize the portfolio’s expected performance, subject to a risk constraint comprising many criteria. The corresponding asset/liability reviews are performed each year and are presented to the CAR-BP Technical, Financial and Risk Committee and to the Groupe BPCE Employee Benefits Monitoring Committee for information. The relatively aggressive asset allocation is made possible by the long-term investment horizon and by the regulation mechanisms integrated in the plan’s financial management system.

The Caisses d’Epargne’s former private supplementary pension plan (a retained-benefit plan), 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). Beneficiaries’ rights were crystallized on the date of the plan’s closure, on December 31, 1999. The strategic guidelines for the management of the Caisses d’Epargne retained-benefit plan are set by the CGP Board of Directors based on asset/liability reviews submitted first to a Joint Investment Committee. The Groupe BPCE Employee Benefits Monitoring Committee also receives the reviews for information purposes. The pension plan is subject to several constraints and objectives which impact the strategic choices made: the risk of a need for provisioning in case of insufficient returns; ● the risk of insufficient assets; ● the wish to be able to regularly review pension payments. ● The bond allocation is decisive (88% primarily invested in government bonds) in the plan’s assets. To manage interest rate risk, the CGP is obliged to replicate expected payouts with equivalent assets via a matching process. Liability constraints require the holding of long-term assets to ensure the duration is as close as possible to the duration of liabilities. The wish to be able to review annuities on an annual basis, which is decided by the CGP Board of Directors, means the portfolio holds a large portion of inflation-indexed bonds. The CAR-BP and CGP plans are presented under “Supplementary pension benefits and other”. Other employee benefits include: pensions and other post-employment benefits such as retirement ● indemnities and other benefits granted to retirees; other benefits such as long-service awards and other long-term ● employee benefits.

5

8.2.1

Analysis of assets and liabilities recorded in the balance sheet

Post-employment defined-benefit plans

Other long-term employee benefits

Supplementary pension benefits and other

End-of-career awards

Long-service awards

12/31/2018

Other

12/31/2017

in millions of euros Actuarial liabilities

7,153 (7,200) (559) 1,147

896

266 (10)

205

8,520 (7,723) (593) 1,147 1,351

9,057 (7,766)

Fair value of plan assets

(513)

Fair value of reimbursement rights Effect of ceiling on plan assets

(34)

(632)

813

Net amount reported on the balance sheet Employee benefit commitments recorded in the balance sheet

541

349

256

205

1,472

1,099

383

256

205

1,944

2,104

Plan assets recorded in the balance sheet*

559

34

593

632

Mostly recorded on the assets side of the balance sheet under “Accrued income and other assets”. *

Actuarial liabilities represent the Group’s obligation in respect of beneficiaries. They are calculated by independent actuaries using the projected unit credit method based on demographic and financial assumptions that are reviewed on a regular basis and at least once a year.

When these plans are funded by assets meeting the definition of plan assets, the amount of the provision corresponds to actuarial liabilities less the fair value of these assets. Surplus plan assets are recorded under assets, as are assets that do not meet the definition of plan assets.

327

Registration document 2018