A Company pension scheme exists for staff working in Germany and staff seconded abroad. For staff who joined the Group before 1995 the supplementary pension scheme for state employees (VBL) was initially retained as the Company’s pension scheme. Following collective agreements in 2003 to harmonise retirement benefits for ground and flight staff, the pension scheme for ground and flight staff as well as for cockpit staff under the terms of the 4 December 2004 wage settlement were also converted to an average salary plan. The retirement benefit commitment is now equal to that for staff who joined the Company after 1994. One pension component is earned every year based on an employee’s pay and age; retirement benefit is defined as the sum of accumulated pension components. Under IAS 19 these pension obligations are regarded as defined-benefit obligations and therefore taken into account for the amount of obligations and as expenses.
Flight staff are additionally entitled to a transitional pension arrangement covering the period between the end of their active in-flight service and the beginning of their statutory/Company pension plans. Benefits depend on the final salary before retirement (final salary plans).
Defined-contribution retirement benefit schemes also exist within the Group, funded entirely by contributions paid to an external pension provider. Lufthansa runs no financial or actuarial risks from these obligations. In 2011 contributions toward defined-contribution pension plans amounted to EUR 376m (previous year: EUR 358m).
Company pension schemes and transitional pension arrangements for Germany are funded by plan assets and the additional amounts by pension provisions. Obligations are measured annually using the projected unit credit method. In the 2004 financial year work began on building up plan assets to fund future pension payments and transfer them to the Lufthansa Pension Trust. The aim was to outsource the pension obligations in full within 10 to 15 years. In 2011 a further EUR 528m was transferred for staff, taking the total transferred to the pension trust to EUR 4,870m.
Additional external plan assets of EUR 102m exist to fund defined benefit obligations in Germany as of the reporting date. A total of EUR 55m was contributed to these plan assets in 2011.
Staff abroad are also entitled to retirement benefits and in some cases to health care based mainly on length of service and salary earned. As a rule, benefits are financed by means of external funds.
In the course of acquiring Swiss International Airlines in 2007, pension obligations, mainly statutory obligations, were also taken on. The retirement benefits are funded via pension funds known as collective foundations.