Employee benefits (Tables)

The company’s net liability for post-employment and long-term employee benefit plans comprises the following at 31 December:


Million US dollar	2018			2017
Present value of funded obligations		(6 762	)		(7 506	)
Fair value of plan assets		5 059			5 623

Present value of net obligations for funded plans		(1 703	)		(1 883	)
Present value of unfunded obligations		(806	)		(904	)

Present value of net obligations		(2 509	)		(2 787	)
Unrecognized asset		(77	)		(111	)

Net liability		(2 586	)		(2 898	)
Other long term employee benefits		(79	)		(73	)
Reclassified as held for sale		—			—

Total employee benefits		(2 665	)		(2 971	)
Employee benefits amounts in the balance sheet:
Liabilities		(2 681	)		(2 993	)
Assets		16			22

Net liability		(2 665	)		(2 971	)

The changes in the unrecognized asset are as follows:


Million US dollar	2018			2017			2016
Irrecoverable surplus impact at 1 January		(111	)		(168	)		(137	)
Interest expense		(10	)		(17	)		(17	)
Changes excluding amounts included in interest expense		44			74			14

Irrecoverable surplus impact at 31 December		(77	)		(111	)		(168	)

The expense recognized in the income statement with regard to defined benefit plans can be detailed as follows:


Million US dollar	2018			2017			2016
Current service costs		(72	)		(74	)		(73	)
Administration costs		(14	)		(22	)		(24	)
Past service cost due to plan amendments and curtailments		(3	)		17			8
(Losses)/gains on settlements		—			—			10
(Losses)/gains on due to experience and demographic assumption changes		3			3			—

Profit from operations		(86	)		(76	)		(79	)
Net finance cost		(107	)		(120	)		(115	)

Total employee benefit expense		(193	)		(196	)		(194	)

The employee benefit expense is included in the following line items of the income statement:


Million US dollar	2018			2017			2016
Cost of sales		(26	)		(24	)		(59	)
Distribution expenses		(11	)		(10	)		(9	)
Sales and marketing expenses		(16	)		(15	)		(13	)
Administrative expenses		(28	)		(29	)		(15	)
Other operating (expense)/income		(6	)		(4	)		10
Exceptional items		1			6			7
Net finance cost		(107	)		(120	)		(115	)

		(193	)		(196	)		(194	)

Weighted average assumptions used in computing the benefit obligations of the company’s significant plans at the balance sheet date are as follows:


	2018
	United States			Canada			Mexico			Brazil			United Kingdom			AB InBev
Discount rate		4.3	%		3.9	%		9.0	%		8.9	%		2.8	%		4.3	%
Price inflation		2.5	%		2.0	%		3.5	%		4.0	%		3.4	%		2.7	%
Future salary increases		—			1.0	%		4.3	%		7.6%-5.6	%		—			3.8	%
Future pension increases		—			2.0	%		3.5	%		4.0	%		3.0	%		2.8	%
Medical cost trend rate		6.5%-4.5	%		4.5	%		—			7.6	%		—			6.8%-6.0	%
Life expectation for a 65 year old male		85			87			82			85			87			85
Life expectation for a 65 year old female		87			89			85			88			89			87


	2017
	United States			Canada			Mexico			Brazil			United Kingdom			AB InBev
Discount rate		3.7	%		3.6	%		8.0	%		10.0	%		2.6	%		4.0	%
Price inflation		2.5	%		2.0	%		3.5	%		4.3	%		3.3	%		2.7	%
Future salary increases		—			1.0	%		4.3	%		5.6	%		—			3.5	%
Future pension increases		—			2.0	%		3.5	%		4.3	%		3.0	%		2.8	%
Medical cost trend rate		6.2%-5.0	%		4.5	%		—			7.9	%		—			6.8%-6.4	%
Life expectation for a 65 year old male		85			87			82			85			87			85
Life expectation for a 65 year old female		88			89			85			88			89			88

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

The fair value of plan assets at 31 December consists of the following:


	2018									2017
	Quoted			Unquoted			Total			Quoted			Unquoted			Total
Government bonds		32	%		—			32	%		27	%		—			27	%
Corporate bonds		36	%		—			36	%		37	%		—			37	%
Equity instruments		22	%		—			22	%		26	%		—			26	%
Property		—			4	%		4	%		—			4	%		4	%
Insurance contracts and others		4	%		2	%		6	%		5	%		1	%		6	%

		94	%		6	%		100	%		95	%		5	%		100	%

The changes in the present value of the defined benefit obligations are as follows:


Million US dollar	2018			2017			2016
Defined benefit obligation at 1 January		(8 410	)		(7 952	)		(7 594	)
Current service costs		(72	)		(74	)		(73	)
Interest cost		(322	)		(340	)		(347	)
Past service gain/(cost)		(3	)		17			8
Settlements		45			6			174
Benefits paid		493			502			482
Contribution by plan participants		(3	)		(4	)		(4	)
Acquisition and disposal through business combination		—			—			(260	)
Actuarial gains/(losses) – demographic assumptions		27			24			(1	)
Actuarial gains/(losses) – financial assumptions		350			(264	)		(607	)
Experience adjustments		14			(21	)		37
Exchange differences		313			(343	)		256
Transfers and other movements		—			39			(23	)

Defined benefit obligation at 31 December		(7 568	)		(8 410	)		(7 952	)

The changes in the fair value of plan assets are as follows:


Million US dollar	2018			2017			2016
Fair value of plan assets at 1 January		5 623			5 177			5 075
Interest income		225			239			249
Administration costs		(14	)		(22	)		(24	)
Return on plan assets exceeding interest income		(333	)		233			297
Contributions by AB InBev		307			315			302
Contributions by plan participants		3			4			4
Benefits paid net of administration costs		(493	)		(502	)		(478	)
Acquisition through business combination		—			—			68
Assets distributed on settlements		(45	)		(7	)		(164	)
Exchange differences		(214	)		214			(155	)
Transfers and other movements		—			(28	)		3

Fair value of plan assets at 31 December		5 059			5 623			5 177