BANCO BILBAO VIZCAYA ARGENTARIA, S.A. AND ... - BBVA

• The discount rate used is determined by reference to market yields at the balance sheet date on high
quality corporate bonds or debentures.
The Group recognizes all actuarial differences under the heading “Provisions (net)” (see Note 48) in the
accompanying consolidated income statements for the period in which they arise in connection with
commitments assumed by the Group for its staff’s early retirement schemes, benefits awarded for seniority
and other similar concepts.
The Group recognizes the actuarial gains or losses arising on all other defined benefit post-employment
commitments directly under the heading ”Reserves” (see Note 29) in the accompanying consolidated
balance sheets.
The Group does not apply the option of deferring actuarial gains and losses in equity to any of its employee
commitments using the so-called corridor approach.
Post-employment benefits
- Pensions
Post-employment benefits include defined-contribution and defined-benefit commitments.
- Defined-contribution commitments
The amounts of these commitments are determined as a percentage of certain remuneration items and/or
as a pre-established annual amount. The contributions made each period by the Group’s companies for
defined-contribution retirement commitments, which are recognized with a charge to the heading
“Personnel expenses- Contribution to external pension funds” in the accompanying consolidated income
statements (see Note 46).
- Defined-benefit commitments
Some of the Group’s companies have defined-benefit commitments for permanent disability and death of
certain current employees and early retirees; and defined-benefit retirement commitments applicable only
to certain groups of serving employees, or early retired employees and retired employees. Defined benefit
commitments are funded by insurance contracts and internal provisions.
The amounts recognized in the heading “Provisions – Provisions for pensions and similar obligations” (see
Note 25) are the differences between the present values of the vested obligations for defined obligation
retirement commitments at balance sheet date, adjusted by the prior service cost and the fair value of plan
assets, if applicable, which are to be used directly to settle employee benefit obligations.
These retirement commitments are charged to the heading “Provisions (net)” in the accompanying
consolidated income statements (see Note 48).
The current contributions made by the Group’s companies for defined-benefit retirement commitments
covering current employees are charged to the heading “Administration costs - Personnel expenses” in the
accompanying consolidated income statements (see Note 46).
- Early retirements
In the first half of 2010, as in previous years, the Group offered some employees in Spain the possibility of
taking early retirement before the age stipulated in the collective labor agreement then in force. The
corresponding provisions by the Group were recognized with a charge to the heading “Provisions (net)” in
the accompanying consolidated income statements (see Note 48). The present values for early retirement
are quantified on a case-by-case basis and they are recognized in the heading "Provisions – Provision for
pensions and similar obligations” in the accompanying consolidated balance sheets (see Note 25).
The commitments to early retirees include the compensation and indemnities and contributions to external
pension funds payable during the year of early retirement. The commitments relating to this group of
employees after they have reached normal retirement age are included in the previous section “Pensions”.
- Other post-employment welfare benefits
Some of the Group’s companies have welfare benefit commitments whose effects extend beyond the
retirement of the employees entitled to the benefits. These commitments relate to certain current employees
and retirees, depending upon the employee group to which they belong.
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