Changes in Underlying Parameters

Changes in the underlying parameters relate primarily to currency exchange rates and the interest rates used to calculate pension obligations.

The exchange rates for major currencies against the euro varied as follows:

Exchange Rates for Major Currencies

 

 

 

 

 

 

 

 

 

 

 

 

Closing Rate

 

Average Rate

€1

 

 

Dec. 31, 2014

Sep. 30, 2014

Sep. 30, 2015

 

First Nine Months 2014

First Nine Months 2015

BRL

Brazil

 

3.22

3.08

4.48

 

3.10

3.48

CAD

Canada

 

1.41

1.41

1.50

 

1.48

1.40

CHF

Switzerland

 

1.20

1.21

1.09

 

1.22

1.06

CNY

China

 

7.54

7.73

7.12

 

8.36

6.96

GBP

United Kingdom

 

0.78

0.78

0.74

 

0.81

0.73

JPY

Japan

 

145.23

138.11

134.69

 

139.55

134.73

MXN

Mexico

 

17.87

17.00

18.98

 

17.78

17.31

RUB

Russia

 

72.34

49.77

73.24

 

47.96

65.69

USD

United States

 

1.21

1.26

1.12

 

1.36

1.11

The most important interest rates used to calculate the present value of pension obligations are given below:

Discount Rate for Pension Obligations

 

 

 

 

 

 

 

 

 

Dec. 31, 2014

 

June 30, 2015

 

Sep. 30, 2015

 

 

%

 

%

 

%

Germany

 

2.00

 

2.30

 

2.20

United Kingdom

 

3.60

 

3.80

 

3.80

United States

 

3.70

 

4.10

 

4.00

The data selection criteria used to determine the discount rate in the eurozone were modified at the beginning of 2015. The item “Remeasurements of the net defined benefit liability for post-employment benefit plans” contains gains resulting from the rise in market interest rates. The modification of the data selection criteria had an effect of €0.7 billion. The discount rate obtained by applying the previous data selection criteria would have been lower by 20 basis points as of September 30, 2015. The change in the way the discount rate is determined reduces the net pension expense for the 2015 fiscal year by €17 million. As before, the underlying bond portfolio consists entirely of high-quality corporate bonds with a minimum AA or AAA rating. It does not include government-guaranteed or covered bonds.