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Employee Benefits
 12 Months Ended
Dec. 31, 2019
Text block [abstract]  
Employee Benefits
18. Employee Benefits
An analysis of the net liability and net period cost for employee benefits is as
follows
:
 
 
  
At December 31,
 
 
  
2018
 
  
2019
 
Mexico
  
 
Ps.   85,517,190
 
  
 
Ps. 116,537,660
 
Puerto Rico
  
 
13,986,596
 
  
 
13,228,592
 
Brazil
  
 
5,666,694
 
  
 
9,503,738
 
Europe
  
 
12,705,926
 
  
 
12,827,318
 
Ecuador
  
 
448,608
 
  
 
409,750
 
 
  
 
 
 
  
 
 
 
Total
  
 
Ps. 118,325,014
 
  
 
Ps. 152,507,058
 
 
  
 
 
 
  
 
 
 
 
 
  
For the year ended December 31
 
 
  
2017
 
  
2018
 
  
2019
 
Mexico
  
 
Ps. 11,586,065
 
  
 
Ps. 12,046,208
 
  
 
Ps. 12,788,464
 
Puerto Rico
  
 
776,238
 
  
 
686,067
 
  
 
747,755
 
Brazil
  
 
735,855
 
  
 
579,432
 
  
 
511,964
 
Europe
  
 
385,689
 
  
 
619,039
 
  
 
2,526,957
 
Ecuador
  
 
152,335
 
  
 
58,354
 
  
 
34,425
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
 
Ps. 13,636,182
 
  
 
Ps. 13,989,100
 
  
 
Ps. 16,609,565
 
 
  
 
 
 
  
 
 
 
  
 
 
 
The defined benefit obligation (DBO) and plan assets for the pension and other benefit obligation plans, by country, are as follows:
 
 
 
At December 31
 
 
 
2018
 
 
2019
 
 
 
DBO
 
 
Plan Assets
 
 
Effect of asset
celling
 
 
Net employee
benefit liability
 
 
DBO
 
 
Plan Assets
 
 
Effect of asset
celling
 
 
Net employee
benefit liability
 
Mexico
 
 
Ps. 247,997,060
 
 
 
Ps. (163,404,418)
 
 
 
Ps.                 
 
 
 
Ps.   84,592,642
 
 
 
Ps. 280,602,176
 
 
 
Ps. (164,910,346)
 
 
 
Ps.                 
 
 
 
Ps. 115,691,830
 
Puerto Rico
 
 
35,220,889
 
 
 
(21,234,293)
 
 
   
 
 
13,986,596
 
 
 
35,803,893
 
 
 
(22,575,301)
 
 
   
 
 
13,228,592
 
Brazil
 
 
18,795,315
 
 
 
(19,032,411)
 
 
 
5,087,543
 
 
 
4,850,447
 
 
 
21,412,097
 
 
 
(18,815,174)
 
 
 
4,428,021
 
 
 
7,024,944
 
Europe
 
 
4,477,042
 
 
   
 
   
 
 
4,477,042
 
 
 
4,538,543
 
 
   
 
   
 
 
4,538,543
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
Ps. 306,490,306
 
 
 
Ps. (203,671,122)
 
 
 
Ps. 5,087,543
 
 
 
Ps. 107,906,727
 
 
 
Ps. 342,356,709
 
 
 
Ps. (206,300,821)
 
 
 
Ps. 4,428,021
 
 
 
Ps. 140,483,909
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Below is a summary of the actuarial results generated for the pension and retirement plans as well as the medical services in Puerto Rico and Brazil; the pension plans and seniority premiums related to Telmex; the pension plan, the service awards plan and severance in Austria corresponding to the years ended December 31, 2017, 2018 and 2019:
 
 
  
At December 31, 2017
 
 
  
DBO
 
 
Plan Assets
 
 
Effect of asset
celling
 
 
Net employee
benefit liability
 
Balance at the beginning of the year
  
Ps.
 313,282,595
 
 
Ps.
 (222,345,621
) 
 
Ps.
 7,083,218
 
 
Ps.
 98,020,192
 
Current service cost
  
 
4,285,693
 
 
   
 
   
 
 
4,285,693
 
Interest cost on projected benefit obligation
  
 
28,922,385
 
 
   
 
   
 
 
28,922,385
 
Expected return on plan assets
  
   
 
 
(20,916,104
) 
 
   
 
 
(20,916,104
) 
Changes in the asset ceiling during the period and others
  
   
 
   
 
 
716,330
 
 
 
716,330
 
Past service costs and other
  
   
 
 
53,032
 
 
   
 
 
53,032
 
Actuarial gain for changes in experience
  
 
(35,145
) 
 
   
 
   
 
 
(35,145
) 
Actuarial gain from changes in demographic assumptions
  
 
(85
) 
 
   
 
   
 
 
(85
) 
Actuarial gain from changes in financial assumptions
  
 
(4,294
) 
 
   
 
   
 
 
(4,294
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net period cost
  
Ps.
33,168,554
 
 
Ps.
(20,863,072
) 
 
Ps.
716,330
 
 
Ps.
13,021,812
 
Actuarial loss for changes in experience
  
 
11,671,860
 
 
   
 
   
 
 
11,671,860
 
Actuarial gain from changes in demographic assumptions
  
 
(381,172
) 
 
   
 
   
 
 
(381,172
) 
Actuarial loss from changes in financial assumptions
  
 
2,438,078
 
 
   
 
   
 
 
2,438,078
 
Changes in the asset ceiling during the period and others
  
   
 
   
 
 
(856,188
) 
 
 
(856,188
) 
Return on plan assets greater than discount rate
  
   
 
 
(2,483,430
) 
 
   
 
 
(2,483,430
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognized in other comprehensive income
  
Ps.
13,728,766
 
 
Ps.
(2,483,430
) 
 
Ps.
(856,188
) 
 
Ps.
 10,389,148
 
Contributions made by plan participants
  
 
198,713
 
 
 
(198,713
) 
 
   
 
 
—  
 
Contributions to the pension plan made by the Company
  
   
 
 
(2,697,621
) 
 
   
 
 
(2,697,621
) 
Benefits paid
  
 
(18,841,754
) 
 
 
18,841,754
 
 
   
 
 
—  
 
Payments to employees
  
 
(9,843,743
) 
 
   
 
   
 
 
(9,843,743
) 
Effect of translation
  
 
(2,579,506
) 
 
 
2,058,099
 
 
 
(423,800
) 
 
 
(945,207
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Others
  
Ps.
(31,066,290
) 
 
Ps.
18,003,519
 
 
Ps.
(423,800
) 
 
Ps.
 (13,486,571
) 
Balance at the end of the year
  
 
329,113,625
 
 
 
(227,688,604
) 
 
 
6,519,560
 
 
 
107,944,581
 
Less short-term portion
  
 
(172,406
) 
 
   
 
   
 
 
(172,406
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current
obligation
  
Ps.
 328,941,219
 
 
Ps.
 (227,688,604)
 
 
Ps.
6,519,560
 
 
Ps.
 107,772,175
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
At December 31, 2018
 
 
  
DBO
 
 
Plan Assets
 
 
Effect of asset
celling
 
 
Net employee
benefit liability
 
Balance at the beginning of the year
  
Ps.
 329,113,625
 
 
Ps.
 (227,688,604
) 
 
Ps.
 6,519,560
 
 
Ps.
 107,944,581
 
Current service cost
  
 
3,322,813
 
 
   
 
   
 
 
3,322,813
 
Interest cost on projected benefit obligation
  
 
30,185,257
 
 
   
 
   
 
 
30,185,257
 
Expected return on plan assets
  
   
 
 
(20,804,104
) 
 
   
 
 
(20,804,104
) 
Changes in the asset ceiling during the period and others
  
   
 
   
 
 
587,373
 
 
 
587,373
 
Past service costs and other
  
   
 
 
157,765
 
 
   
 
 
157,765
 
Actuarial gain for changes in experience
  
 
(7,222
) 
 
   
 
   
 
 
(7,222
) 
Actuarial loss from changes in demographic assumptions
  
 
134,625
 
 
   
 
   
 
 
134,625
 
Actuarial gain from changes in financial assumptions
  
 
(24,890
) 
 
   
 
   
 
 
(24,890
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net period cost
  
Ps.
   33,610,583
 
 
Ps.
 (20,646,339
) 
 
Ps.
    587,373
 
 
Ps.
   13,551,617
 
Actuarial gain for changes in experience
  
 
(21,283,470
) 
 
   
 
   
 
 
(21,283,470
) 
Actuarial loss from changes in demographic assumptions
  
 
68,482
 
 
   
 
   
 
 
68,482
 
Actuarial gain from changes in financial assumptions
  
 
(1,246,539
) 
 
   
 
   
 
 
(1,246,539
) 
Changes in the asset ceiling during the period and others
  
   
 
   
 
 
(1,055,409
) 
 
 
(1,055,409
) 
Return on plan assets greater than discount rate
  
   
 
 
23,503,296
 
 
   
 
 
23,503,296
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognized in other comprehensive income
  
Ps.
 (22,461,527
) 
 
Ps.
23,503,296
 
 
Ps.
(1,055,409
) 
 
Ps.
(13,640
) 
Contributions made by plan participants
  
 
173,722
 
 
 
(173,722
) 
 
   
 
 
—  
 
Contributions to the pension plan made by the Company
  
   
 
 
(1,565,792
) 
 
   
 
 
(1,565,792
) 
Benefits paid
  
 
(19,546,541
) 
 
 
19,546,541
 
 
   
 
 
—  
 
Payments to employees
  
 
(10,651,938
) 
 
   
 
   
 
 
(10,651,938
) 
Effect of translation
  
 
(3,535,477
) 
 
 
3,353,498
 
 
 
(963,981
) 
 
 
(1,145,960
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Others
  
Ps.
 (33,560,234
) 
 
Ps.
    21,160,525
 
 
Ps.
(963,981
) 
 
Ps.
  (13,363,690
) 
Balance at the end of the year
  
 
306,702,447
 
 
 
(203,671,122
) 
 
 
5,087,543
 
 
 
108,118,868
 
Less short-term portion
  
 
(212,141
) 
 
   
 
   
 
 
(212,141
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current
obligation
  
Ps.
 306,490,306
 
 
Ps.
 (203,671,122
) 
 
Ps.
5,087,543
 
 
Ps.
 107,906,727
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
At December 31, 2019
 
 
  
DBO
 
 
Plan Assets
 
 
Effect of asset
celling
 
 
Net employee
benefit liability
 
Balance at the beginning of the year
  
Ps.
306,702,447
 
 
Ps.
 (203,671,122)
 
 
Ps.
 5,087,543
 
 
Ps.
 108,118,868
 
Current service cost
  
 
2,591,975
 
 
   
 
   
 
 
2,591,975
 
Interest cost on projected benefit obligation
  
 
31,001,348
 
 
   
 
   
 
 
31,001,348
 
Expected return on plan assets
  
   
 
 
(20,070,037
) 
 
   
 
 
(20,070,037
) 
Changes in the asset ceiling during the period and others
  
   
 
   
 
 
445,743
 
 
 
445,743
 
Past service costs and others
  
   
 
 
144,481
 
 
   
 
 
144,481
 
Actuarial gain for changes in experience
  
 
(22,599
) 
 
   
 
   
 
 
(22,599
) 
Actuarial gain from changes in demographic assumptions
  
 
(129
) 
 
   
 
   
 
 
(129
) 
Actuarial loss from changes in financial assumptions
  
 
36,163
 
 
   
 
   
 
 
36,163
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net period cost
  
Ps.
33,606,758
 
 
Ps.
(19,925,556)
 
 
Ps.
445,743
 
 
Ps.
14,126,945
 
Actuarial loss for changes in experience
  
 
31,606,323
 
 
   
 
   
 
 
31,606,323
 
Actuarial gain from changes in demographic assumptions
  
 
(339,657
) 
 
   
 
   
 
 
(339,657
) 
Actuarial loss from changes in financial assumptions
  
 
7,207,072
 
 
   
 
   
 
 
7,207,072
 
Changes in the asset ceiling during the period and others
  
   
 
   
 
 
(712,064
) 
 
 
(712,064
) 
Return on plan assets greater than discount rate
  
   
 
 
423,514
 
 
   
 
 
423,514
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognized in other comprehensive income
  
Ps.
38,473,738
 
 
Ps.
423,514
 
 
Ps.
(712,064
) 
 
Ps.
38,185,188
 
Contributions made by plan participants
  
 
155,188
 
 
 
(155,188
) 
 
   
 
 
—  
 
Contributions to the pension plan made by the Company
  
   
 
 
(1,337,610
) 
 
   
 
 
(1,337,610
) 
Benefits paid
  
 
(15,836,928
) 
 
 
15,836,928
 
 
   
 
 
—  
 
Payments to employees
  
 
(16,996,920
) 
 
   
 
   
 
 
(16,996,920
) 
Effect of translation
  
 
(3,534,509
) 
 
 
2,528,213
 
 
 
(393,201
) 
 
 
(1,399,497
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Others
  
Ps.
 (36,213,169)
 
 
Ps.
16,872,343
 
 
Ps.
(393,201
) 
 
Ps.
 (19,734,027)
 
Balance at the end of the year
  
 
342,569,774
 
 
 
(206,300,821
) 
 
 
4,428,021
 
 
 
140,696,974
 
Less short-term portion
  
 
(213,065
) 
 
   
 
   
 
 
(213,065
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current
obligation
  
Ps.
 342,356,709
 
 
Ps.
 (206,300,821)
 
 
Ps.
4,428,021
 
 
Ps.
140,483,909
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In the case of other subsidiaries in Mexico, the net period cost of other employee benefits for the years ended December 31, 2017, 2018 and 2019 was Ps. 165,884, Ps.(16,347) and Ps.49,050, respectively. The balance of other employee benefits at December 31, 2018 and 2019 was Ps. 924,548 and Ps. 845,830 respectively.
In the case of Brazil, the net period cost of other benefits for the years ended December 31, 2017, 2018 and 2019 was Ps. 93,742, Ps.98,658 and Ps. 99,498, respectively. The balance of employee benefits at December 31, 2018 and 2019 was Ps. 724,009 and Ps. 2,402,285, respectively.
In the case of Ecuador, the net period cost of other benefits for the years ended December 31, 2017, 2018 and 2019 was Ps. 152,335, Ps.58,354 and Ps. 34,425, respectively. The balance of employee benefits at December 31, 2018 and 2019 was Ps. 448,608 and Ps. 409,750, respectively. 
 
Plan assets are invested in:
 
 
  
At December 31
 
 
  
2018
 
  
2019
 
 
  
Puerto Rico
 
  
Brazil
 
  
Mexico
 
  
Puerto Rico
 
  
Brazil
 
  
Mexico
 
Equity instruments
  
 
37%
 
  
 
—  
 
  
 
39%
 
  
 
41%
 
  
 
—  
 
  
 
36%
 
Debt instruments
  
 
60%
 
  
 
94%
 
  
 
61%
 
  
 
58%
 
  
 
94%
 
  
 
64%
 
Others
  
 
3%
 
  
 
6%
 
  
 
—  
 
  
 
1%
 
  
 
6%
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
  
 
        100%
 
  
 
    100%
 
  
 
    100%
 
  
 
        100%
 
  
 
    100%
 
  
 
    100%
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Included in Telmex’s net pension plan liability are plan
assets
of Ps. 163,404,418 and Ps. 164,910,346 as of December 31, 2018 and 2019, respectively, of which 30.4% and 31.9% during 2018 and 2019, respectively, were invested in equity and debt instruments of both América Movil and also of related parties, primarily entities that are under common control of the Company’s principal shareholder. Telmex pension plan recorded a
re-measurement
of its defined pension plan of Ps. (1,141,142) and Ps. 34,782,129 during 2018 and 2019, respectively, attributable to a change in actuarial assumptions, and also a decline in the fair value of plan investments from December 31, 2018 to December 31, 2019. The decrease in fair value of the aforementioned related party pension plan investments approximated Ps. 21,279,760 and Ps. 4,156,919 during the years ended December 31, 2018 and 2019, respectively.
The assumptions used in determining the net period cost were as follows:
 
 
 
2017
 
 
2018
 
 
2019
 
 
 
Puerto
Rico
 
 
Brazil
 
 
Mexico
 
 
Europe
 
 
Puerto
Rico
 
 
Brazil
 
 
Mexico
 
 
Europe
 
 
Puerto
Rico
 
 
Brazil
 
 
Mexico
 
 
Europe
 
Discount rate and long-term rate return
 
 
3.61%
 
 
 
10.18
% 
 
 
10.70
% 
 
 
1.0%, 1.5% &
2.00%    
 
 
 
 
4.45%
 
 
 
9.10
% 
 
 
11.81%
 
 
 

 
1.25%,   
1.75% &
2.00%    
 
 
 
 
 
3.23%
 
 
 
7.03
% 
 
 
10.50%
 
 
 

 
0.75%,   
1.00% &
1.25%   
 
 
 
Rate of future salary increases
 
 
2.75%
 
 
 
4.50
% 
 
 
4.50
% 
 
 
3.0.%,   
3.5% &
4.4%    
 
 
 
 
 
2.75%
 
 
 
4.00
% 
 
 
3.55%
 
 
 
 
3.0.%,   
3.5% &
4.4%    
 
 
 
 
 
2.75%
 
 
 
3.80
% 
 
 
3.20%
 
 
 

 
3.00%,   
3.50% &
4.40%   
 
 
 
Percentage of increase in health care costs for the coming year
 
 
3.57%
 
 
 
11.00
% 
 
   
 
   
 
 
3.87%
 
 
 
10.50
% 
 
   
 
   
 
 
3.18%
 
 
 
10.30
% 
 
   
 
   
Year to which this level will be maintained
 
 
N/A  
 
 
 
2028
 
 
   
 
   
 
 
N/A  
 
 
 
2029
 
 
   
 
   
 
 
N/A  
 
 
 
2029
 
 
   
 
   
Rate of increase of pensions
 
   
 
   
 
   
 
 
1.60%  
 
 
   
 
   
 
   
 
 
1.60%    
 
 
   
 
   
 
   
 
 
1.60%   
 
Employee turnover rate*
 
   
 
   
 
   
 
 
0.0%-1.72%  
 
 
   
 
   
 
   
 
 
0.0%-1.51%    
 
 
   
 
   
 
   
 
 
0.00%-1.38%
 
*
Depending on years of service
 
Biometric
 
Puerto Rico:
  
 
Mortality:
  
RP 2014, MSS 2019 Tables.
Disability:
  
1985 Pension Disability Table
Brazil:
  
 
Mortality:
  
2000 Basic AT Table for gender
Disability for assets:
  
UP 84 modified table for gender
Disability retirement:
  
80 CSO Code Table
Rotation:
  
Probability of leaving the Company other than death, Disability and retirement is zero
 
Europe
Life expectancy in Austria is base
d
on “AVÖ
2018-P
– Rechnungsgrundlagen für die Pensionsversicherung – Pagler & Pagler”.
 
Telmex
 
 
Mortality:
 
Mexican 2000 (CNSF) adjusted
Disability:
 
Mexican Social Security adjusted by Telmex experience
Turnover:
 
Telmex experience
Retirement:
 
Telmex experience
For the year ended December 31, 2019, the Company conducted a sensitivity analysis on the most significant variables that affect the DBO, simulating independently, reasonable changes to roughly 100 basis points in each of these variables. The increase (decrease) would have resulted in the DBO pension and other benefits at December 31, 2018 are as follows:
 
 
 
  
100 points
 
 
+100 points
 
Discount rate
  
Ps.
30,321,815
 
 
Ps.
(26,138,603
) 
Health care cost trend rate
  
Ps.
(878,071
) 
 
Ps.
1,032,650
 
Telmex Plans
Part of Telmex´s employees are covered under defined benefit pension plans and seniority premiums. Pension benefits and seniority premiums are determined on the basis of compensation received by the employees in their final year of employment, their seniority, and their age at the time of retirement. Telmex has set up an irrevocable trust fund to finance these employee benefits and has adopted the policy of making contributions to such fund when it is considered necessary.
Europe
Defined benefit pension plans
A1 Telekom Austria Group provides defined benefits for certain former employees in Austria. All eligible employees are retired and were employed prior to January 1, 1975. This unfunded plan provides benefits based on a percentage of salary and years employed, not exceeding 80% of the salary before retirement, and taking into consideration the pension provided by the social security system. A1 Telekom Austria Group is exposed primarily to the risk of development of life expectancy and inflation because the benefits from pension plans are lifetime benefits. Furthermore, at December 31, 2019 and 2018, approximately 10% and 7%, respectively, of the obligation for pensions relate to the employees of the company Akenes in Lausanne, which was acquired in 2017.
Service awards
Civil servants and certain employees (in the following “employees”) are eligible to receive service awards. In accordance with the legal regulations, eligible employees receive a cash bonus of two months’ salary after 25 years of service and four months’ salary after 40 years of service. Employees with at least 35 years of service when retiring (at the age of 65) or who are retiring based on specific legal regulations are also eligible to receive the service award of four monthly salaries. The obligation is accrued over the period of service, taking into account the employee turnover rate of employees who leave service early. The main risk that A1 Telekom Austria Group is exposed to is the risk of development of salary increases and changes of interest rates.
 
Severance
Defined contribution plans
Employees who started work for A1 Telekom Austria Group in Austria on or after January 1, 2003 are covered by a defined contribution plan. A1 Telekom Austria Group paid Ps. 51,042 and Ps. 54,945 (1.53% of the salary or wage) into this defined contribution plan (BAWAG Allianz Mitarbeitervorsorgekasse AG) in 2018 and 2019, respectively.
Defined benefit plans
Severance benefit obligations for employees hired before January 1, 2003, excluding civil servants, are covered by defined benefit plans. Upon termination by A1 Telekom Austria Group or retirement, eligible employees receive severance payments. Depending on their time in service, their severance is equal to a multiple of their monthly basic compensation plus variable elements such as overtime or bonuses, with a maximum of twelve monthly salaries. In case of death, the heirs of eligible employees receive 50% of the severance benefits. The primary risks to A1 Telekom Austria Group are salary increases and changes of interest rates.
b) Defined Contribution Plans
Brazil
Claro makes contributions to the DCP through Embratel Social Security Fund – Telos. Contributions are computed based on the salaries of the employees, who decide on the percentage of their contributions to the plan (participants enrolled before October 31st, 2014 is from 1% to 8% and, for those subscribed after that date, the contribution is from 1% to 7% of their salaries). Claro contributes the same percentage as the employee, capped at 8% of the participant’s balance for the employees that are eligible to participate in this plan.
At December 31, 2018 and 2019, the balance of the DCP liability was Ps. 92,238 and Ps.76,509, respectively. For the years ended December 31, 2017, 2018 and 2019 the cost of labor were Ps. 374, Ps. 2,377 and Ps. 3,365, respectively.
Europe
In Austria, pension benefits are generally provided by the social security system for employees, and by the government for civil servants. The contributions of 12.55% that A1 Telekom Austria Group made in 2018 and 2019 to the social security system and the government in Austria, amount to Ps. 1,348,773 and Ps. 1,334,713, respectively. Contributions of the foreign subsidiaries into the respective systems range between 7% and 29% and amount to Ps. 492,439 and Ps. 530,888 in 2018 and 2019, respectively.
Additionally, A1 Telekom Austria Group offers a defined contribution plan for employees of some of its Austrian subsidiaries. A1 Telekom Austria Group’s contributions to this plan are based on a percentage of the compensation not exceeding 5%. The annual expenses for this plan amounted to Ps. 281 693 and Ps. 258,705 in 2018 and 2019, respectively.
As of December 31, 2018 and 2019 the liability related to this defined contribution plan amounted to Ps. 126,869 and Ps. 117,975, respectively.
Other countries
For the rest of the countries where the Company operates and that do not have defined benefit plans or defined contribution plans, the Company makes contributions to the respective governmental social security agencies which are recognized in results of operations as they are incurred.
 
c) Long-term direct employee benefits
 
 
  
Balance at
December 31,
2017
 
  
 
 
 
 
 
  
Applications
 
  
Balance at
December 31,
2017
 
 
  
Effect of
translation
 
 
Increase of
the year
 
  
Payments
 
  
Reversals
 
Long-term direct employee benefits
  
Ps.
 10,158,036
 
  
Ps.
 (493,795
) 
 
Ps.
 1,750,831
 
  
Ps.
 (2,079,880)
 
  
Ps.
 (1,223,414)
 
  
Ps.
 8,111,778
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
      
 
  
Balance at
December 31,
2018
 
  
 
 
 
 
 
  
Applications
 
  
Balance at
December 31,
2019
 
 
  
Effect of
translation
 
 
Increase of
the year
 
  
Payments
 
  
Reversals
 
Long-term direct employee benefits
  
Ps.
8,111,778
 
  
Ps.
(518,180
) 
 
Ps.
2,528,224
 
  
Ps.
(1,946,055)
 
  
Ps.
—  
 
  
Ps.
8,175,767
 
 
  
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
In 2008, a comprehensive restructuring program was initiated in the segment Austria. The provision for restructuring includes future compensation of employees who will no longer provide services for A1 Telekom Austria Group but who cannot be laid off due to their status as civil servants. These employment contracts are onerous contracts under IAS 37, as the unavoidable cost related to the contractual obligation exceeds the future economic benefit. The restructuring program also includes social plans for employees whose employment will be terminated in a socially responsible way. In 2009 and every year from 2011 to 2019, new social plans were initiated that provide for early retirement, special severance packages and golden handshake options. Due to their nature as termination benefits, these social plans are accounted for according to IAS 19.