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PENSIONS AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS
 6 Months Ended
Jun. 30, 2020
Disclosure of employee benefits [Abstract]  
PENSION AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS
NOTE 19 - PENSIONS AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS
19.1 Actuarial assumptions
Pension and other post-employment benefit obligations were updated based on the discount rates applicable at June 30, 2020.
 
 
At June 30,
2020
 
At December 31,
2019
Switzerland
 
0.20%
 
0.15%
US
 
 
 
 
Hourly pension
 
2.70% - 2.85%
 
3.15% - 3.25%
Salaried pension
 
2.75%
 
3.25%
OPEB
 
2.70% - 3.00%
 
3.20% - 3.40%
Other benefits
 
2.45% - 2.75%
 
3.00% - 3.20%
France
 
 
 
 
Retirements
 
0.95%
 
0.95%
Other benefits
 
0.85%
 
0.80%
Germany
 
1.05%
 
1.00%

19.2 Amounts recognized in the Unaudited Interim Consolidated Statement of Financial Position
 
 
At June 30,
2020
 
At December 31,
2019
(in millions of Euros)
 
Pension Benefits
 
Other Benefits
 
Total
 
Pension Benefits
 
Other Benefits
 
Total
Present value of funded obligation
 
789

 
—

 
789

 
768

 
—

 
768

Fair value of plan assets
 
(435
)
 
—

 
(435
)
 
(445
)
 
—

 
(445
)
Deficit of funded plans
 
354

 
—

 
354

 
323

 
—

 
323

Present value of unfunded obligation
 
131

 
230

 
361

 
127

 
220

 
347

Net liability arising from defined benefit obligation
 
485

 
230

 
715

 
450

 
220

 
670


19.3 Amounts recognized in the Unaudited Interim Consolidated Income Statement
 
 
Three months ended
June 30, 2020
 
Three months ended
June 30, 2019
(in millions of Euros)
 
Pension Benefits
 
Other Benefits
 
Total
 
Pension Benefits
 
Other Benefits
 
Total
Service cost
 
 
 
 
 
 
 
 
 
 
 
 
Current service cost
 
(5
)
 
(1
)
 
(6
)
 
(5
)
 
(1
)
 
(6
)
Past service cost
 
—

 
(2
)
 
(2
)
 
—

 
—

 
—

Net interest
 
(2
)
 
(1
)
 
(3
)
 
(2
)
 
(2
)
 
(4
)
Immediate recognition of gains / (losses) arising over the period
 
—

 
(1
)
 
(1
)
 
—

 
(2
)
 
(2
)
Administration expenses
 
(1
)
 
—

 
(1
)
 
—

 
—

 
—

Total
 
(8
)
 
(5
)
 
(13
)
 
(7
)
 
(5
)
 
(12
)

 
 
Six months ended
June 30, 2020
 
Six months ended
June 30, 2019
(in millions of Euros)
 
Pension Benefits
 
Other Benefits
 
Total
 
Pension Benefits
 
Other Benefits
 
Total
Service cost
 
 
 
 
 
 
 
 
 
 
 
 
Current service cost
 
(11
)
 
(3
)
 
(14
)
 
(9
)
 
(3
)
 
(12
)
Past service cost
 
—

 
(2
)
 
(2
)
 
—

 
—

 
—

Net interest
 
(3
)
 
(3
)
 
(6
)
 
(4
)
 
(4
)
 
(8
)
Immediate recognition of gains / (losses) arising over the period
 
—

 
—

 
—

 
—

 
(2
)
 
(2
)
Administration expenses
 
(1
)
 
—

 
(1
)
 
(1
)
 
—

 
(1
)
Total
 
(15
)
 
(8
)
 
(23
)
 
(14
)
 
(9
)
 
(23
)

19.4 Movement in net defined benefit obligations
 
 
At June 30,
2020
 
 
Defined benefit obligations
 
Plan Assets
 
Net defined benefit liability
(in millions of Euros)
 
Pension benefits
 
Other benefits
 
Total
 
At January 1, 2020
 
895

 
220

 
1,115

 
(445
)
 
670

Included in the Unaudited Interim Consolidated Income Statement
 
 
 
 
 
 
 
 
 
 
Current service cost
 
11

 
3

 
14

 
—

 
14

Interest cost / (income)
 
7

 
3

 
10

 
(4
)
 
6

Past service cost
 
—

 
2

 
2

 
—

 
2

Immediate recognition of gains / (losses) arising over the year
 
—

 
—

 
—

 
—

 
—

Administration expenses
 
—

 
—

 
—

 
1

 
1

Included in the Unaudited Interim Consolidated Statement of Comprehensive Income / (Loss)
 
 
 
 
 
 
 
 
 
 
Remeasurements due to:
 
 
 
 
 
 
 
 
 
 
—actual return less interest on plan assets
 
—

 
—

 
—

 
13

 
13

—changes in financial assumptions
 
16

 
11

 
27

 
—

 
27

—changes in demographic assumptions
 
—

 
—

 
—

 
—

 
—

—experience losses
 
1

 
(1
)
 
—

 
—

 
—

Effects of changes in foreign exchange rates
 
6

 
1

 
7

 
(5
)
 
2

Included in the Unaudited Interim Consolidated Statement of Cash Flows
 
 
 
 
 
 
 
 
 
 
Benefits paid
 
(18
)
 
(9
)
 
(27
)
 
17

 
(10
)
Contributions by the Group
 
—

 
—

 
—

 
(10
)
 
(10
)
Contributions by the plan participants
 
2

 
—

 
2

 
(2
)
 
—

At June 30, 2020
 
920

 
230

 
1,150

 
(435
)
 
715


Ravenswood OPEB disputes
In 2018, the Group announced a plan to transfer certain participants in the Constellium Rolled Products Ravenswood Retiree Medical and Life Insurance Plan (“the Plan”) from a company sponsored program to a third-party health network that provides similar benefits at a lower cost. This change in benefits resulted in the recognition of a gain of €36 million from negative past service cost, which was lowered by €3 million in 2019 and €2 million in the second quarter of 2020, to reflect delays in the estimated implementation timetable. The United Steelworkers Local Union 5668 (the “Union”) is contesting the OPEB Amendments and filed a lawsuit against Constellium Rolled Products Ravenswood, LLC ("Ravenswood") in a federal district court in West Virginia (the “Court”) seeking to enjoin the Plan changes and to compel arbitration. The Court issued an order in December 2018, enjoining Ravenswood from implementing the OPEB amendments pending resolution in arbitration. In September 2019, the arbitrator issued a decision ruling against Ravenswood and sustaining the Union’s grievance. Ravenswood filed a motion to vacate this decision, which was denied in June 2020. The Group intends to vigorously defend this case as it believes it has a strong legal position and it is probable that Ravenswood will ultimately prevail and be able to implement the OPEB amendments.
Additionally, during 2019, the Union filed a grievance disputing the existing limitation of Ravenswood’s liability for the healthcare costs of pre-Medicare retirees. This matter is scheduled to be arbitrated in the coming months and the Group believes it is without merit and intends to defend it vigorously.
19.5 Net defined benefit obligations by country
 
 
At June 30,
2020
 
At December 31,
2019
(in millions of Euros)
 
Defined benefit obligations
 
Plan assets
 
Net defined benefit liability
 
Defined benefit obligations
 
Plan assets
 
Net defined benefit liability
France
 
164

 
(3
)
 
161

 
161

 
(3
)
 
158

Germany
 
140

 
(1
)
 
139

 
144

 
(1
)
 
143

Switzerland
 
303

 
(213
)
 
90

 
299

 
(214
)
 
85

United States
 
542

 
(218
)
 
324

 
510

 
(227
)
 
283

Other countries
 
1

 
—

 
1

 
1

 
—

 
1

Total
 
1,150

 
(435
)
 
715

 
1,115

 
(445
)
 
670