LOREAL_Registration_Document_2017

3 L'Oréal’s corporate social, environmental and societal responsibility* L’ORÉAL’S CORPORATE SOCIAL, ENVIRONMENTAL AND SOCIETAL POLICIES

Overview of the Pension and Employee Benefit schemes in France Pension schemes In order to supplement the pensions provided for by the compulsory French social security pension scheme, the ARRCO or the AGIRC (mandatory French supplementary pension schemes), L’Oréal has implemented the following supplementary pension schemes: Defined contribution scheme (RCD L’Oréal) In September 2003, L’Oréal set up a “defined contribution pension scheme”. Since 1 January 2015, all categories of employees are the beneficiaries of this scheme, which is financed jointly by L’Oréal and the employee, and which makes it possible for everyone to create pension savings, with a contribution on Bracket A as from 2015, it being specified that the

remuneration subject to contributions is capped at six times the French annual social security ceiling. As of 1 January 2016, the contributions have been increased on Brackets A, B and capped at half of Bracket C. This scheme grants entitlement to the payment to the beneficiary retiree, after he/she has applied for his/her pension entitlements from the compulsory French social security pension scheme, of a Life Annuity as well as, after his/her death, the payment to the spouse and/or ex-spouse(s) of a Surviving Spouse Pension, if this option was chosen at the time of triggering of the annuity. The Life Annuity is calculated on the basis of the capital formed by the contributions paid and the financial income on such contributions at the end of the employee’s career. The employer’s commitment is limited to the payment of the contributions stipulated.

Focus France

SUMMARY TABLE FOR L’ORÉAL’S DEFINED CONTRIBUTION PENSION SCHEME (RCD L’ORÉAL)

31.12.2017

31.12.2015 31.12.2016

€ millions

Number of members

12,747

13,770

14,885

TOTAL NET CONTRIBUTIONS

13.5

19.6

22.8

Defined benefit pension schemes L’Oréal has also set up several differential or additional defined benefit schemes with conditional entitlements, in order to take into account the important developments impacting these schemes and with the aim of arriving at a coherent system between the different pension schemes that exist in the Company. The “Supplementary pension scheme for Former senior managers” ( Retraite supplémentaire des Retraités Anciens Cadres Dirigeants ) concerns retirees who have held the responsibilities of senior managers (within the meaning of Article L. 212-15-1 of the French Labour code) for a minimum of 10 years, hired or promoted to this position as from 1 January 2016, and who end their career in the Company. This is an additional defined benefit pension scheme which grants entitlement to payment of a life annuity. The reference salary taken into account for calculation of the rights is the fraction of the salary which exceeds six times the French annual social security ceiling. The basis for calculation of the supplementary pension is the average of the revalued reference salaries for the best three full years of activity out of the seven calendar years prior to the end of their career. The supplementary pension would be 1.36% of the calculation base per year of service within the Group, up to a maximum of 25 years. Any retiree who so wishes will be able to choose an option of a surviving spouse pension. Access to the “Retirement Income Guarantee for former senior managers” ( Garantie de Ressources des Retraités Anciens Cadres Dirigeants ) was closed on 31 December 2015. This scheme, created on 1 January 2001, was open to former L’Oréal senior managers who, in addition to fulfilling the requirement of having ended their career with the Company, met the condition of having had the status of senior manager

within the meaning of Article L. 3111-2 of the French Labour code for at least ten years at the end of their career. This scheme provides entitlement to payment to the beneficiary retiree of a Life Annuity, as well as, after his/her death, payment to the beneficiary’s spouse and/or ex-spouse(s) of a Surviving Spouse Pension and, to the children, of an Orphan Pension, subject to the children fulfilling certain conditions. The calculation base for the Income Guarantee is the average of the salaries for the best three years out of the seven calendar years prior to the end of the senior manager’s career at L’Oréal. The Income Guarantee is calculated based on the beneficiary’s number of years of professional service in the Company, assessed at the date of the end of his/her career at L’Oréal, and limited to a maximum of 25 years, each year leading to a steady, 1.8% gradual increase in the level of the Guarantee. At that date, the gross Income Guarantee may not exceed 50% of the calculation base for the Income Guarantee, or exceed the average of the fixed part of the salaries for the three years used in the calculation base. A gross annuity and gross Lump Sum Equivalent are then calculated, taking into account the sum of the annual pensions accrued on the date when the beneficiary applies for his/her pension as a result of his/her professional activity and on the basis of a beneficiary who is 65 years of age. The Life Annuity is the result of the conversion into an annuity at the beneficiary’s age on the date he/she applies for his/her pension of the gross Lump Sum Equivalent, less the amount of all payments due as a result of termination of the employment contract, excluding any paid notice period and paid holiday, and less all salaries paid under any early retirement leave, if such Lump Sum Equivalent is the result of these operations. Around 340 senior managers are eligible for this scheme, subject to their fulfilment of all the conditions after having ended their career with the Company.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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