18 Pensions and Similar Obligations

The Group has obligations both from defined contribution and defined benefit pension plans. The benefits are provided pursuant to the legal, fiscal and economic conditions in each respective country.

Defined Contribution Plans
The total expense for defined contribution plans amounted to € 39 million in 2007 (2006: € 42 million). All other pension plans are defined benefit plans, which are partly funded by plan assets.

Defined Benefit Plans
Given the diverse Group structure, different defined benefit plans exist, comprising both pension payments and widow’s and orphan’s pensions as well as other post-employment benefits for employees and members of the Executive Board. These plans are partly funded.

The actuarial valuations of the defined benefit plans are made at the end of each reporting period. The assumptions for employee turnover and mortality are based on empirical data, the latter for Germany on the 2005 G version of the mortality tables of Dr. Heubeck. The actuarial assumptions in Germany and in other countries are not materially different.

As of January 1, 2005, due to application of the amendment to IAS 19 “Employee Benefits” issued in December 2004, the Group recognizes actuarial gains or losses of defined benefit plans arising during the financial year immediately outside the income statement in the statement of recognized income and expense. The actuarial gain recognized in the statement of recognized income and expense for 2007 was € 18 million (2006: € 2 million). The cumulative recognized actuarial losses amounted to € 12 million (2006: € 30 million).  see also Note 21

Of the total pension expenses, an amount of € 12 million (2006: € 7 million) relates to employees in Germany. Contributions to post-employment benefit plans for employees living in Germany for the year ending December 31, 2008, are expected to amount to € 7 million. The pension expense is recorded within the operating expenses whereas the production-related part thereof is recognized within the cost of sales.

The calculations of recognized assets and liabilities from defined benefit plans are based upon statistical and actuarial calculations. In particular, the present value of the defined benefit obligation is impacted by assumptions on discount rates used to arrive at the present value of future pension liabilities and assumptions on future increases in salaries and benefits. Furthermore, the Group’s independent actuaries use statistically based assumptions covering areas such as future participant plan withdrawals and estimates on life expectancy. The actuarial assumptions used may differ materially from actual results due to changes in market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants and other changes in the factors being assessed. These differences could impact the assets or liabilities recognized in the balance sheet in future periods.

Contributions into the plan are only paid by the employer. In 2008, the expected payments into the plan amount to € 1 million. The plan assets are invested in several pension funds. The return on plan assets is in conformity with the current strategy of the pension funds. In 2007, the actual return on plan assets was € 7 million (2006: € 2 million).