The actuarial assumptions used to calculate these obligations take into account the economic conditions specific to each country or Group company. The main weighted average assumptions for the Group are as follows:
| In % | 31.12.2023 | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| Discount rate (commitment) |
Discount rate (commitment) 31.12.2023 3.9% |
Discount rate (commitment) 31.12.20224.2% |
Discount rate (commitment) 31.12.20211.6% |
| Discount rate (service cost)* Used for the services cost for the following financial year. |
Discount rate (service cost) * Used for the services cost for the following financial year.31.12.2023 4.1% |
Discount rate (service cost) * Used for the services cost for the following financial year.31.12.20224.2% |
Discount rate (service cost) * Used for the services cost for the following financial year.31.12.20211.8% |
| Salary increases |
Salary increases 31.12.2023 3.9% |
Salary increases 31.12.20223.7% |
Salary increases 31.12.20213.6% |
| non-inclus | 31.12.2023 | 31.12.2022 | 31.12.2021 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| non-inclus | Initial rate | Final rate | Application of final rate | Initial rate | Final rate | Application of final rate | Initial rate | Final rate | Application of final rate |
| Expected rate of health care inflation | 5.6% | 4.1% | 2031 | 5.4% | 4.3% | 2027 | 5.3% | 4.2% | 2027 |
The discount rates are obtained by reference to market yields on high quality corporate bonds having term dates equivalent to those of the obligations.
Bond quality is assessed by reference to the AA-/Aa3 minimum rating provided by one of the three main credit-rating agencies.
Discount rates can be broken down by geographic zone as follows:
| In % | 2023 | 2022 | 2021 |
|---|---|---|---|
| Weighted average (all countries) based on the benefit obligation | Weighted average (all countries) based on the benefit obligation20233.9% | Weighted average (all countries) based on the benefit obligation20224.2% | Weighted average (all countries) based on the benefit obligation20211.6% |
| Of which: |
Of which: 2023
|
Of which: 2022
|
Of which: 2021
|
| Euro zone |
Euro zone 2023
|
Euro zone 2022
|
Euro zone 2021
|
| Discount rate (commitment)(1)The weighted average for 2023 consists of a 3.35% discount rate on annuity plans with an average term of 16.62 years and a 3.3% discount rate on capital plans with an average term of 10.72 years. |
Discount rate (commitment) (1)The weighted average for 2023 consists of a 3.35% discount rate on annuity plans with an average term of 16.62 years and a 3.3% discount rate on capital plans with an average term of 10.72 years.20233.3% |
Discount rate (commitment) (1)The weighted average for 2023 consists of a 3.35% discount rate on annuity plans with an average term of 16.62 years and a 3.3% discount rate on capital plans with an average term of 10.72 years.20223.7% |
Discount rate (commitment) (1)The weighted average for 2023 consists of a 3.35% discount rate on annuity plans with an average term of 16.62 years and a 3.3% discount rate on capital plans with an average term of 10.72 years.20211.0% |
| Discount rate (service cost)*Used for the service cost for the following financial year. |
Discount rate (service cost) *Used for the service cost for the following financial year.20233.4% |
Discount rate (service cost) *Used for the service cost for the following financial year.20223.7% |
Discount rate (service cost) *Used for the service cost for the following financial year.20211.1% |
| USA |
USA 2023
|
USA 2022
|
USA 2021
|
| Discount rate (commitment) |
Discount rate (commitment) 20234.8% |
Discount rate (commitment) 20225.0% |
Discount rate (commitment) 20212.5% |
| Discount rate (service cost)*Used for the service cost for the following financial year. |
Discount rate (service cost) *Used for the service cost for the following financial year.20235.0% |
Discount rate (service cost) *Used for the service cost for the following financial year.20225.3% |
Discount rate (service cost) *Used for the service cost for the following financial year.20212.8% |
| United Kingdom |
United Kingdom 2023
|
United Kingdom 2022
|
United Kingdom 2021
|
| Discount rate (commitment) |
Discount rate (commitment) 20234.5% |
Discount rate (commitment) 20224.8% |
Discount rate (commitment) 20212.0% |
| Discount rate (service cost)*Used for the service cost for the following financial year. |
Discount rate (service cost) *Used for the service cost for the following financial year.20234.5% |
Discount rate (service cost) *Used for the service cost for the following financial year.20224.8% |
Discount rate (service cost) *Used for the service cost for the following financial year.20212.0% |
A 50 basis point decrease in the discount rates would increase the projected defined benefit obligations by €151.2 million for the euro zone, €53.2 million for the United States and €31.8 million for the United Kingdom.
The expected returns on plan assets are based on the discount rates used.
The breakdown of plan assets is as follows:
| In % | 31.12.2023 | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| Equity securities(1)Of which L’Oréal shares: none. |
Equity securities (1)Of which L’Oréal shares: none.31.12.2023 28.2% |
Equity securities (1)Of which L’Oréal shares: none.31.12.202234.0% |
Equity securities (1)Of which L’Oréal shares: none.31.12.202136.6% |
| Bonds |
Bonds 31.12.2023 61.2% |
Bonds 31.12.202251.5% |
Bonds 31.12.202154.1% |
| Property assets(2)Of which property assets occupied by Group entities: none. |
Property assets (2)Of which property assets occupied by Group entities: none.31.12.2023 4.7% |
Property assets (2)Of which property assets occupied by Group entities: none.31.12.20225.9% |
Property assets (2)Of which property assets occupied by Group entities: none.31.12.20214.3% |
| Monetary instruments |
Monetary instruments 31.12.2023 0.9% |
Monetary instruments 31.12.20223.4% |
Monetary instruments 31.12.20213.3% |
| Other |
Other 31.12.2023 5.0% |
Other 31.12.20225.2% |
Other 31.12.20211.7% |
| TOTAL |
TOTAL 31.12.2023 100% |
TOTAL 31.12.2022100% |
TOTAL 31.12.2021100% |
The allocation of plan assets has to comply with specific investment limits for the different classes of assets and meet minimum rating criteria for monetary instruments and bonds.
