6.2 PENSION PLAN DEFICIT

This line item reflects the deficit relating to pension and other employee retirement benefit plans, including both defined benefit and defined contribution plans. The provision recognised in the consolidated statement of financial position as at 31 December 2017 amounted to EUR 66 million (31 December 2016: EUR 174 million). Of this amount, EUR 64 million (31 December 2016: EUR 172 million) relate to defined benefit plans of the Amey Group in the UK.

The accompanying table analyses the changes in Amey’s pension plan deficit. As the table shows, the main changes relate to the actuarial gains and losses (EUR 76 million) and the contributions made (EUR 39 million).

The Amey Group has nine defined benefit plans covering a total of 7,968 employees and five defined contribution plans covering 11,389 employees. The most significant changes in 2017 that led to a EUR 108 million reduction in the deficit were as follows:

• An impact of EUR 76 million arising from actuarial gains and losses which reduced the contribution to the pension plan deficit (a decrease in the related liability) recognised in equity. This improvement of EUR 76 million is explained in part from the perspective of obligations (EUR 31 million), broken down into a change in the demographic assumptions (EUR 23 million) and an improvement in future expectations due to lower inflation projections (EUR 26 million) and partially reduced by the worsening in the actuarial assumptions used due to a decrease in the discount rate (EUR -18 million). The actuarial improvement relating to assets (EUR 45 million) was due to the positive performance of the markets associated therewith. More details are provided in section a) of this Note.
• Contributions of EUR 39 million made by the Company to the pension plans, which reduced the pension plan deficit (a decrease in the related liability). The ordinary contributions amounted to EUR 4 million, while the extraordinary contributions aimed at improving the pension plan deficit totalled EUR 35 million.
• A negative impact of EUR -11 million on profit or loss, which increased the pension plan deficit (an increase in the related liability), as detailed in section b) of this Note.
• A positive impact of EUR 5 million due to the exchange rate effect, giving rise to a decrease in the deficit.

Also, although they did not have any effect on the pension plan deficit, there were curtailments and settlements as a result of the payment of obligations to employees, which therefore reduced the related obligation at year-end and gave rise to a reduction of the same amount in the plan assets. In 2017 these curtailments and settlements totalled EUR 37 million.

a) Actuarial gains and losses recognised in reserves

The effects of changes in the actuarial assumptions relating to the defined benefit pension plans of the Amey Group are recognised directly in equity and are summarised (before taxes) in the following table:

The main actuarial assumptions used to calculate the defined benefit pension plan obligations are summarised as follows:

The mortality assumptions used by the Amey Group to calculate its pension obligations are based on the actuarial mortality tables, with an estimated life expectancy of between 87 and 90 years.

The defined benefit pension plan assets stated at their fair value for 2017 and 2016 are summarised as follows:

b) Impact on profit or loss

The detail of the impact of the defined benefit pension plans on profit or loss is as follows:

c) Complete actuarial reviews

The Amey Group performs complete actuarial valuations every three years, depending on the plan, having completed the most recent reviews of all the plans in 2016 and 2017.

Based on these reviews, the extraordinary contributions to be made in the coming years have been maintained.

For 2018 the ordinary contributions agreed with the trustees will be EUR 4 million for ordinary contributions and EUR 15 million for extraordinary contributions.

d) Sensitivity analysis

Set forth below is a sensitivity analysis showing the impact on profit or loss and on equity of a change of 50 basis points in the discount rate.