ENI SPA | CIK:0001002242 |

ifrs-full:DisclosureOfEmployeeBenefitsExplanatory

31 Provisions for employee benefits

Provisions for benefits upon termination of employment primarily related to a provisions accrued by Italian companies for employee retirement, determined using actuarial techniques and regulated by Article 2120 of the Italian Civil Code.

Pension funds are defined benefit plans provided by foreign subsidiaries located mainly in Nigeria, Germany and the United Kingdom. Benefits under these plans consist of payments based on seniority and the salary paid in the last year of service, or alternatively, the average annual salary over a defined period prior to the retirement.

Group companies provide healthcare benefits. Liability to these plans (FISDE and other foreign healthcare plans) and the current cost are limited to the contributions made by the Company for retired managers.

Other benefits primarily consisted of monetary and long-term incentive schemes to Group managers. Provisions for the monetary incentive scheme are assessed based on the estimated bonuses that will be granted to those managers who will achieve certain individual performance goals weighted with the likelihood that the Company delivers the planned profitability targets. The benefit has a three-year vesting period and incurs when the commitment arises towards Eni’s management, based on the achievement of corporate goals. The estimate is subject to adjustments in subsequent years based on the results achieved and the update of the result forecasted (above or below the target). This benefit is applied pro-rata temporis over the three-year period depending on the results of the performance parameters. Provisions for the long-term incentive scheme are assessed based on the estimated trends of a performance indicator as benchmarked against a group of international oil companies. Both of these incentive schemes normally vest over a three-year period.

Present value of employee benefits, estimated by applying actuarial techniques, consisted of the following:

Employee benefit plans included the liability attributable to joint venture partners operating in exploration and production activities of  €177 million (€60 million at December 31, 2016). Eni recorded a receivable for an amount equivalent to such liability.

Foreign defined benefit plans amounting to €409 million (€276 million at December 31, 2016) primarily related to pension plans for €334 million (€184 million at December 31, 2016).

Other employee benefit plans of  €207 million (€170 million at December 31, 2016) related to: (i) defined benefit plans for €13 million (€12 million at December 31, 2016) related to the Gas fund; and (ii) long-term benefit plans for €194 million (€158 million at December 31, 2016) of which deferred monetary incentive plans for €120 million (€99 million at December 31, 2016), jubilee awards for €22 million (€28 million at December 31, 2016), long-term incentive plan for €13 million (€14 million at December 31, 2016), isopensione €28 million and other long-term plans for €11 million (€17 million at December 31, 2016).

Costs charged to the profit and loss account consisted of the following:

Costs recognized in other comprehensive income consisted of the following:

Plan assets consisted of the following:

Plan assets are generally managed by external asset managers pursuing investment strategies, defined by Eni’s companies, with the aim of ensuring that assets are sufficient to pay the benefits. For this purpose, the investments are aimed at maximizing the expected return and limit the risk level through proper diversification.

The main actuarial assumptions used in the measurement of the liabilities at year-end and in the estimate of costs expected for 2018 consisted of the following:

The following is an analysis by geographical area related to the main actuarial assumptions used in the valuation of the principal foreign defined benefit plans:

The discount rate used was determined on the base of corporate bond yields (rating AA) in countries with a significant market, or in the absence, of government bond yields. The demographic tables adopted are those used by each country for the assessments of IAS 19. The inflation rate is consistent with the discount rate adopted determined based on the inflation rate implicit in the securities financial markets.

The effects of a possible change in the main actuarial assumptions at the end of the year are listed below:

The sensitivity analysis was performed based on the results for each plan through assessments calculated considering modified parameters.

The amount of contributions expected to be paid for employee benefit plans in the next year amounted to €123 million, of which €59 million related to defined benefit plans.

The following is an analysis by maturity date of the liabilities for employee benefit plans:

The weighted average duration of the liabilities for employee benefit plans was the following: