[31] Provisions for pensions and other post-employment benefits Audited by KPMG

The calculation of obligations as well as the relevant plan assets is based on the following actuarial parameters:

These are average values weighted by the present value of the respective benefit obligation. The average expected return on plan assets is weighted by the fair value of the respective plan assets. Plan assets for funded benefit obligations primarily comprise equities, fixed-income securities and real estate. They do not include financial instruments issued by Merck Group companies or real estate used by Group companies.

The balance sheet item “Provisions for pensions and other post-employment benefits” can be broken down as follows:

In 2007, the following items were recognized in income:

The actual return on plan assets amounted to €18.2 million (2006: €31.7 million). Apart from the interest component stemming from provisions for pension obligations, which is disclosed in the financial result, the relevant expense of defined benefit and defined contribution plans is distributed across the individual functional areas.

During 2007, the present value of all defined obligations changed as follows:

The fair value of the plan assets changed as follows in the reporting period:

In the reporting period, actuarial gains (+) and losses (-) as well as the effects of limiting accrued pension payments in accordance with IAS 19.58 amounting to €+102.4 million (2006: €–24.8 million) were taken to equity.

As of December 31, 2007, for the aforementioned reasons a cumulative total of €–164.8 million (2006: €–267.2 million) was taken to equity.

The fair value of the plan assets can be allocated to the individual asset categories as follows. Weighted average values are used here:

On average, the expected rate of return on equity instruments is 8.3%, on debt instruments 4.3% and on real estate 5.2%. The respective rates of return take into account country-specific conditions and are based, among other things, on interest and dividend income expected over the long term as well increases in the value of the investment portfolio after the deduction of directly allocable taxes and expenses.

Over the past five years, the funded status, composed of the present value of the defined benefit obligations and the fair value of the plan assets, has changed as follows:

It is expected that the payments to beneficiaries from unfunded pension plans will amount to around €59 million in 2008 (2007: €54 million) while payments to fund-financed pension plans will probably amount to around €31 million in 2008 (2007: €20 million).

The cost of ongoing contributions in 2007 for defined contribution plans that are financed exclusively by external funds and for which the companies of the Merck Group are only obliged to pay the contributions, amounted to €13.5 million in 2007 (2006: €13.2 million). In addition, employer contributions of €45.6 million (2006: €42.3 million) were transferred to the German statutory pension insurance system and of €7.7 million (2006: €7.1 million) to statutory pension insurance systems abroad.