AB InBev Financial Results
Weighted average assumptions used in computing the benefit obligations of the company's significant plans at the
reporting date are as follows:
2022
United
States
Canada
Mexico
Brazil
United
Kingdom
AB InBev
Discount rate
Price inflation
Future salary increases
Future pension increases
Medical cost trend rate
5.5%
5.1%
9.5%
10.0%
4.9%
5.9%
2.5%
2.0%
3.5%
3.5%
3.2%
2.7%
1.0% 4.5%-4.0%
7.1%-5.3%
4.0%
2.0%
3.5%
3.5%
3.0%
2.7%
7.0%-4.5%
4.5%
7.1%
6.8%-6.1%
Life expectation for a 65-year old male
Life expectation for a 65-year old female
86
87
85
85
87
85
88
90
88
87
89
88
2021
United
States
Canada
Mexico
Brazil
United
Kingdom
AB InBev
Discount rate
2.8%
2.9%
8.0%
8.7%
1.9%
3.2%
Price inflation
Future salary increases
Future pension increases
2.5%
2.0%
3.5%
3.3%
3.6%
2.7%
1.0%
4.5%-4.0%
6.9%-5.0%
3.7%
2.0%
3.5%
3.3%
3.2%
2.7%
Medical cost trend rate
5.3%-4.5%
4.5%
6.9%
5.9%-5.7%
Life expectation for a 65-year old male
Life expectation for a 65-year old female
86
88
87
85
85
87
85
90
88
87
89
88
Through its defined benefit pension plans and post-employment medical plans, the company is exposed to a number of
risks, the most significant are detailed below:
INVESTMENT STRATEGY
In case of funded plans, the company ensures that the investment positions are managed within an asset-liability matching
(ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the
pension schemes. Within this framework, the company's ALM objective is to match assets to the pension obligations by
investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the
appropriate currency. The company actively monitors how the duration and the expected yield of the investments are
matching the expected cash outflows arising from the pension obligation.
ASSET VOLATILITY
In general, the company's funded plans are invested in a combination of equities, bonds and real estate, generating high
but volatile returns from equities and at the same time stable and liability-matching returns from bonds. As the plans mature,
the company usually reduces the level of investment risk by investing more in assets that better match the liabilities. Since
2015, the company started the implementation of a pension de-risking strategy to reduce the risk profile of certain plans
by reducing gradually the current exposure to equities and shifting those assets to fixed income securities.
CHANGES IN BOND YIELDS
An increase in bond yields will decrease plan liabilities, although this will be partially offset by a decrease in the value of
the plans' bond holdings.
INFLATION RISK
Some of the company's pension obligations, mainly in the UK, are linked to inflation, and higher inflation will lead to higher
liabilities. The majority of the plan's assets are either unaffected by or loosely correlated with inflation, meaning that an
increase in inflation could potentially increase the company's net benefit obligation.
LIFE EXPECTANCY
The majority of the plans' obligations are to provide benefits for the life of the member, so increases in life expectancy will
result in an increase in the plans' liabilities.
The weighted average duration of the defined benefit obligation in 2022 is 11.4 years (2021: 13.7 years). An increase in
bond yields reduces the average duration.
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