26. Pensions and other post-employment commitments

As stated in Note 2.2.12, the Group has both defined-benefit and defined-contribution post-employment commitments with employees; the latter is gradually increasing mainly due to new hires and because pre-existing defined-benefit commitments have been mostly closed.

26.1 Defined-contribution commitments

The defined-contribution post-employment pension plans are settled through contributions made by the Group annually on behalf of its beneficiaries, who are, almost exclusively, active employees in the Group. These contributions are accrued and charged to the consolidated income statement in the corresponding financial year (see Note 2.2.12). No liability is therefore recognized in the accompanying consolidated balance sheets for this purpose.

The amounts registered under this item in the accompanying consolidated income statements for contributions to these plans in 2011, 2010 and 2009 were €80, €84 and €68 million, respectively (see Note 46.1).

26.2 Defined-benefit plans and other long-term commitments

Pension commitments in defined-benefit plans correspond mainly to employees who have retired or taken early retirement from the Group and to certain groups of employees still active in the Group in the case of pension benefits, and to the majority of active employees in the case of permanent disability and death benefits.

The breakdown of the Group’s total amounts for pension commitments in defined-benefit plans and other post-employment commitments (such as early retirement and welfare benefits) for the last five years, is as follows. The commitments are recognized under the heading "Provisions – Provisions for pensions and similar obligations" of the corresponding accompanying consolidated balance sheets (see Note 25).

Commitments and Plan Assets in Defined-Benefit Plans and Other Post-Employment Commitments	Millions of Euros
	2011	2010	2009	2008	2007
Pension and post-employment benefits	7,680	8,082	7,996	7,987	7,816
Assets and insurance contracts coverage	2,122	2,102	1,750	1,628	1,883
Net assets	(19)	-	-	-	(34)
Net liabilities (*)	5,577	5,980	6,246	6,359	5,967

(*) Registered under the heading “Provisions - Provisions for pensions and similar obligations” of the accompanying consolidated balance sheets

This information is presented below in greater detail, broken down by beneficiaries from Group companies in Spain and other beneficiaries, as of December 31, 2011, 2010 and 2009.

Pensions and Early-Retirement Commitments and Welfare Benefits: Spain and Abroad	Millions of Euros
	Commitments in Spain			Commitments Abroad				Total BBVA Group
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Post-employment benefits
Pension commitments	2,773	2,857	2,946	1,026	1,122	998	3,799	3,979	3,944
Early retirements	2,904	3,106	3,309	-	-	-	2,904	3,106	3,309
Post-employment welfare benefits	204	220	222	773	777	521	977	997	743
Total post-employment benefits (1)	5,881	6,183	6,477	1,799	1,899	1,519	7,680	8,082	7,996
Insurance contracts coverage
Pension commitments	379	430	455	-	-	-	379	430	455
Other plan assets
Pension commitments	-	-	-	1,010	1,052	953	1,010	1,052	953
Post-employment welfare benefits	-	-	-	733	620	342	733	620	342
Total plan assets and insurance contracts coverage (2)	379	430	455	1,743	1,672	1,295	2,122	2,102	1,750
Total net commitments (1) - (2)	5,502	5,753	6,022	56	227	224	5,558	5,980	6,246
of which:
Net assets	-	-	-	(19)	-	-	(19)	-	-
Net liabilities (*)	5,502	5,753	6,022	75	227	224	5,577	5,980	6,246

(*) Registered under the heading “Provisions - Provisions for pensions and similar obligations” of the accompanying consolidated balance sheets

The balance under the heading “Provisions - Provisions for pensions and similar obligations” of the accompanying consolidated balance sheets as of December 31, 2011 included €206 million, for commitments for post-employment benefits maintained with previous members of the Board of Directors and the Bank’s Management Committee. No charges for those concepts were recognized in the consolidated income statements in 2011.

In addition to the commitments to employees indicated above, the Group has other less relevant commitments. These include Long Service Awards, which were a payment of a certain amount in cash and for the allotment of Banco Bilbao Vizcaya Argentaria, S.A. shares. These awards were granted to certain groups of employees when they completed a given number of years of effective service.

As of December 31, 2011, 2010 and 2009, the actuarial liabilities for the outstanding awards amounted to €36, €39 and €39 million, respectively. Of that sum, €11, €11 and €13 million corresponded to Spanish companies and €25, €28 and €26 million corresponded to companies and branches abroad, respectively. The commitments above are recognized under the heading "Other provisions" of the accompanying consolidated balance sheets (see Note 25).

The net charges registered in the accompanying consolidated income statements and under the heading “Equity" of the accompanying consolidated balance sheets (see Note 2.2.12) for the commitments in post-employment benefits in entities in Spain and abroad, are as follows:

Total Post-employments Benefits BBVA Group: Income Statements and Equity Effects.	Notes	Millions of Euros
		2011	2010	2009
Interest and similar expenses	39.2	259	259	274
Interest cost		376	375	364
Expected return on plan assets		(118)	(116)	(90)
Personnel expenses		131	121	112
Defined-contribution plan expense	46.1	80	84	68
Defined-benefit plan expense	46.1	51	37	44
Other personnel expenses - Welfare benefits		-	-	-
Provision - Pension funds and similar obligations	48	365	405	552
Pension funds		13	9	(5)
Early retirements		290	301	434
Other provisions		62	95	123
Total Effects in Income Statements: Debit (Credit)		755	785	938
Total Effects in equity: Debit (Credit) (*)		9	64	149

(*) Correspond to actuarial losses (gains) arising from pension commitments and certain welfare benefits recognized in ”Valuation Adjustments”. For Early reitirements are recognized in the Income Statements (see Note 2.2.12.).

26.2.1 Commitments in Spain

The most significant actuarial assumptions used as of December 31, 2011, 2010 and 2009, to quantify these commitments with employees in Spain are as follows:

Actuarial Assumptions Commitments with employees in Spain	2011	2010	2009
Mortality tables	PERM/F 2000P.	PERM/F 2000P.	PERM/F 2000P.
Discount rate (cumulative annual)	4.5% / AA Corporate Bond Yield Curve	4.5% / AA Corporate Bond Yield Curve	4.5% / AA Corporate Bond Yield Curve
Consumer price index (cumulative annual)	2%	2%	2%
Salary growth rate (cumulative annual)	At least 3%	At least 3%	At least 3%
Retirement age	First date at which the employees are entitled to retire or contractually agreed at the individual level in the case of early retirements

The breakdown of the various commitments to employees in Spain is as follows:

Pension commitments

The breakdown of pension commitments in defined-benefit plans as of December 31, 2011, 2010 and 2009 is as follows:

Pension Commitments Spain	Millions of Euros
	2011	2010	2009
Pension commitments to retired employees	2,669	2,765	2,847
Vested contingencies in respect of current employees	104	92	99
Total (*)	2,773	2,857	2,946

(*) Recognized under the heading "Provisions-Provisions for pension and similar obligations" in the accompanyng consolidated balance sheets

Insurance contracts have been contracted with insurance companies not related to the Group to cover some pension commitments in Spain. These commitments are covered by assets and therefore are presented in the accompanying consolidated balance sheets for the net amount of the commitment less plan assets. As of December 31, 2011, 2010 and 2009, the plan assets related to the aforementioned insurance contracts (for €379, €430 and €455 million, respectively) equaled the amount of the commitments covered; therefore, no amount for this item was included in the accompanying consolidated balance sheets.

The rest of commitments for pensions in Spain include defined-benefit commitments for which insurance has been contracted with BBVA Seguros, S.A. de Seguros y Reaseguros, which is 99.95% owned by the Group. As it is an entity consolidated within the BBVA Group, the assets in which the insurance company has invested the amount of the policies cannot be considered plan assets under IAS 19 and are presented in the accompanying consolidated balance sheets under different headings of “assets”, depending on the classification of their corresponding financial instruments. The commitments are recognized under the heading "Provisions – Provisions for pensions and similar obligations" of the accompanying consolidated balance sheets (see Note 25).

Early retirements

In 2011, the Spanish companies in the Group offered certain employees the possibility of taking early retirement before the age stipulated in the collective labor agreement in force. This offer was accepted by 669 employees (683 and 857 in 2010 and 2009, respectively).

The early retirements commitments in Spain as of December 31, 2011, 2010 and 2009 are recognized under the heading “Provisions – Provisions for pensions and similar obligations” (see Note 25) in the accompanying consolidated balance sheets and amounted to €2,904 million, €3,106 million and €3,309 million, respectively.

The cost of early retirements for the year was recognized under the heading “Provision Expense (Net) – Transfers to funds for pensions and similar obligations – Early retirements” in the accompanying consolidated income statements (see Note 48).

Post-employment welfare benefits

The details of these commitments as of December 31, 2011, 2010 and 2009 are as follows:

Post-Employment Welfare Benefits Commitments in Spain	Millions of Euros
	2011	2010	2009
Post-employment welfare benefit commitments to retired employees	162	180	183
Vested post-employment welfare benefit contingencies in respect of current employees	42	40	39
Total Commitments (*)	204	220	222

(*) Recognized under the heading "Provisions-Provisions for pension and similar obligations" in the accompanyng consolidated balance sheets

Changes in commitments with employees

The changes in the net commitments with employees in Spain in 2011, 2010 and 2009 are as follows:

Net Commitments in Spain: Changes in the year 2011	Millions of Euros
	Pensions	Early Retirements	Welfare Benefits	Total Spain
Balance at the Beginning	2,427	3,106	220	5,753
Interest cost	106	121	10	237
Expected return on plan assets	-	-	-	-
Current service cost	10	-	2	12
Cost for early retirements	-	297	-	297
Past service cost or changes in the plan	-	-	-	-
Benefits paid in the period	(161)	(611)	(18)	(790)
Acquisitions and divestitures	-	-	-	-
Effect of curtailments and settlements	-	-	-	-
Contributions in the period	-	-	-	-
Actuarial gains and losses	10	(3)	(4)	3
Other changes	2	(6)	(6)	(10)
Balance at the End	2,394	2,904	204	5,502

Net Commitments in Spain : Changes in the year 2010	Millions of Euros
	Pensions	Early Retirements	Welfare Benefits	Total Spain
Balance at the Beginning	2,491	3,309	222	6,022
Interest cost	107	127	10	244
Expected return on plan assets	-	-	-	-
Current service cost	4	-	2	6
Cost for early retirements	-	296	-	296
Past service cost or changes in the plan	-	-	-	-
Benefits paid in the period	(170)	(627)	(18)	(815)
Acquisitions and divestitures	-	-	-	-
Effect of curtailments and settlements	-	-	-	-
Contributions in the period	-	-	-	-
Actuarial gains and losses	(9)	6	(1)	(4)
Other changes	4	(5)	5	4
Balance at the End	2,427	3,106	220	5,753

Net Commitments in Spain : Changes in the year 2009	Millions of Euros
	Pensions	Early Retirements	Welfare Benefits	Total Spain
Balance at the Beginning	2,624	3,437	221	6,282
Interest cost	114	135	10	259
Expected return on plan assets	-	-	-	-
Current service cost	18	-	2	20
Cost for early retirements	-	430	-	430
Past service cost or changes in the plan	31	-	5	36
Benefits paid in the period	(249)	(712)	(19)	(980)
Acquisitions and divestitures	-	-	-	-
Effect of curtailments and settlements	-	-	-	-
Contributions in the period	-	-	-	-
Actuarial gains and losses	2	4	(3)	3
Other changes	(49)	15	6	(28)
Balance at the End	2,491	3,309	222	6,022

26.2.2 Commitments abroad

The main post-employment commitments through defined-contribution plans with employees abroad correspond to those in Mexico, Portugal and the United States, which jointly represent 94% of the total commitments with employees abroad as of December 31, 2011, and 22% of the total commitments with employees in the Group as a whole (95% and 22%, and 94% and 18%, respectively, as of December 31, 2010 and 2009). Those commitments are not available for new employees.

As of December 31, 2011, 2010 and 2009, the breakdown by country of the various commitments with employees of the BBVA Group abroad is as follows:

Post-Employment Commitments Abroad	Millions of Euros
	Commitments			Plan Assets			Net Commitments
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Pension Commitments
Mexico	491	508	398	520	519	424	(29)	(11)	(26)
Portugal	154	288	321	154	290	320	(0)	(2)	1
The United States	285	236	195	283	191	163	2	45	32
Rest of countries	97	90	84	53	52	46	44	38	38
Subtotal	1,027	1,122	998	1,010	1,052	953	16	70	45
Post-Employment Welfare Benefits
Mexico	761	766	511	732	620	342	29	146	169
Portugal	-	-	-	-	-	-	-	-	-
The United States	-	-	-	-	-	-	-	-	-
Rest of countries	12	11	10	1	-	-	11	11	10
Subtotal	773	777	521	733	620	342	40	157	179
Total	1,800	1,899	1,519	1,743	1,672	1,295	56	227	224

The plan assets related to these commitments are to be used directly to settle the vested obligations and meet the following conditions: they are not owned by the Group entities; they are available only to pay post-employment benefits; and they cannot be returned to the Group entities.

The vested obligations related to these commitments are presented in the accompanying consolidated balance sheets net of the plan assets recognized under the heading “Provisions - Provisions for pensions and similar obligations” (see Note 25).

Commitments with employees in Mexico -

In Mexico, the main actuarial assumptions used in quantifying the commitments with employees as of December 31, 2011, 2010 and 2009, are as follows:

Post-Employment Actuarial Assumptions in Mexico	2011	2010	2009
Mortality tables	EMSSA 97	EMSSA 97	EMSSA 97
Discount rate (cumulative annual)	8.75%	8.75%	9.25%
Consumer price index (cumulative annual)	3.75%	3.75%	3.75%
Medical cost trend rate	6.75%	6.75%	6.75%
Expected rate of return on plan assets	8.25%	9.00%	9.40%

• Pension commitments in Mexico: The changes in these commitments and plan assets in 2011, 2010 and 2009 for all of the Group’s companies in Mexico are as follows:

Pension Commitments and Plan Assets in Mexico: Changes in the period	Millions of Euros
	Commitments			Plan Assets			Net Commitments
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Balance at the Beginning	508	398	387	519	424	436	(11)	(26)	(49)
Interest cost	41	40	35	-	-	-	41	40	35
Expected return on plan assets	-	-	-	40	42	37	(40)	(42)	(37)
Current service cost	7	7	4	-	-	-	7	7	4
Past service cost or changes in the plan	-	8	1	-	-	-	-	8	1
Benefits paid in the period	(34)	(36)	(31)	(34)	(36)	(31)	-	(0)	-
Effect of curtailments and settlements	-	-	(1)	-	-	-	-	-	(1)
Contributions in the period	-	-	-	30	45	3	(30)	(45)	(3)
Actuarial gains and losses	7	33	30	5	66	6	2	(33)	24
Exchage differences	(40)	57	6	(41)	61	6	1	(4)	-
Other changes	2	-	(33)	1	(83)	(33)	1	83	-
Balance at the End	491	508	398	520	519	424	(29)	(11)	(26)

As of December 31, 2011, 2010 and 2009, the plan assets covering these obligations correspond entirely to fixed-income securities. In 2011, 2010 and 2009, the return on these assets amounted to €45 million, €108 million and €43 million, respectively.

• Post-employment welfare benefits in Mexico: The changes in these calculations reflecting these commitments and plan assets in 2011, 2010 and 2009 for all the Group’s companies in Mexico are as follows:

Welfare Benefits Commitments and Plan Assets in Mexico: Changes in the period	Millions of Euros
	Commitments			Plan Assets			Net Commitments
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Balance at the Beginning	766	511	360	620	342	301	146	169	59
Interest cost	63	54	37	-	-	-	63	54	37
Expected return on plan assets	-	-	-	50	45	28	(50)	(45)	(28)
Current service cost	24	19	11	-	-	-	24	19	11
Past service cost or changes in the plan	-	-	-	-	-	-	-	-	-
Benefits paid in the period	(23)	(18)	(18)	(23)	(18)	(18)	-	-	-
Effect of curtailments and settlements	(10)	-	(4)	-	-	-	(10)	-	(4)
Contributions in the period	-	-	-	124	69	9	(124)	(69)	(9)
Actuarial gains and losses	8	127	119	15	49	16	(7)	78	103
Exchage differences	(67)	73	6	(54)	49	6	(13)	24	-
Other changes	-	-	-	-	84	-	-	(84)	-
Balance at the End	761	766	511	732	620	342	29	146	169

As of December 31, 2011, 2010 and 2009, the plan assets covering these obligations corresponded almost entirely to fixed-income securities, which produced a return amounting to €65, €94 and €44 million, respectively.

The sensitivity analysis to changes in medical cost trend rates for 2011 is as follows:

Welfare Benefits in Mexico. Sensitivity Analysis	Millions of Euros
	1% Increase	1% Decrease
Increase/Decrease in current service cost and interest cost	21	(16)
Increase/Decrease in commitments	152	(119)

Pension Commitments in Portugal -

In Portugal, the main actuarial assumptions used in quantifying the commitments with employees as of December 31, 2011, 2010 and 2009, are as follows:

Post-Employment Actuarial Assumptions in Portugal	2011	2011	2010
Mortality tables	TV 88/90	TV 88/90	TV 88/90
Discount rate (cumulative annual)	5.75%	5.35%	5.35%
Consumer price index (cumulative annual)	1.75%	1.75%	2.00%
Salary growth rate (cumulative annual)	2.75%	2.75%	3.00%
Expected rate of return on plan assets	3.80%	4.40%	4.50%

The changes in these commitments and plan assets in 2011, 2010 and 2009 for all of the Group’s companies in Portugal are as follows:

Pensions Net Commitments in Portugal: Changes in the period	Millions of Euros
	Commitments			Plan Assets			Net Commitments
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Balance at the Beginning	288	321	283	290	320	283	(2)	1	-
Interest cost	15	17	16	-	-	-	15	17	16
Expected return on plan assets	-	-	-	12	13	13	(12)	(13)	(13)
Current service cost	3	5	4	-	-	-	3	5	4
Cost for early retirements	13	9	-	-	-	-	13	9	-
Past service cost or changes in the plan	-	-	-	-	-	-	-	-	-
Benefits paid in the period	(186)	(16)	(16)	(186)	(16)	(16)	-	-	-
Effect of curtailments and settlements	-	-	10	-	-	-	-	-	10
Contributions in the period	-	-	-	34	17	29	(34)	(17)	(29)
Actuarial gains and losses	(2)	(25)	24	(15)	(44)	11	13	19	13
Exchage differences	-	-	-	-	-	-	-	-	-
Other changes	22	(22)	-	20	-	-	3	(22)	-
Balance at the End	154	288	321	154	290	320	-	(2)	1

In 2011, in compliance with the new regulations, it has diverted part of the benefits (€170 million) to Social Security.

The distribution of the main categories of plan assets related to these commitments as of December 31, 2011, 2010 and 2009 for all of the Group’s companies in Portugal is as follows:

Plan Assets Categories in Portugal	Percentage
	2011	2010	2009
Equity instruments	-	-	-
Debt securities	81.3	91.5	93.2
Property, Land and Buildings	0.7	0.5	-
Cash	18.0	8.0	5.2
Other investments	-	-	1.6

In 2011, 2010 and 2009, the return on plan assets related to these pension commitments reached -€3, -€31, and €24 million, respectively.

Pension commitments in the United States -

In the United States, the main actuarial assumptions used in quantifying the commitments with employees as of December 31, 2011, 2010 and 2009, are as follows:

Post-Employment Actuarial Assumptions in the United States	2011	2010	2009
Mortality tables	RP 2000 Projected & adjusted	RP 2000 Projected	RP 2000 Projected
Discount rate (cumulative annual)	4.28%	5.44%	5.93%
Consumer price index (cumulative annual)	2.50%	2.50%	2.50%
Salary growth rate (cumulative annual)	3.50%	3.50%	3.50%
Expected rate of return on plan assets	6.41%	7.50%	7.50%

The changes of these commitments and plan assets in 2011, 2010 and 2009, for all of the Group’s companies in the United States, are as follows:

Pensions Net Commitments in the United States Changes in the period	Millions of Euros
	Commitments			Plan Assets			Net Commitments
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Balance at the Beginning	236	195	168	191	163	135	45	32	33
Interest cost	11	12	11	-	-	-	11	12	11
Expected return on plan assets	-	-	-	14	13	10	(14)	(13)	(10)
Current service cost	4	5	4	-	-	-	4	5	4
Cost for early retirements	-	-	-	-	-	-	-	-	-
Past service cost or changes in the plan	-	-	-	-	-	-	-	-	-
Benefits paid in the period	(9)	(7)	(6)	(8)	(7)	(6)	(1)	-	-
Acquisitions and divestitures	(8)	-	-	(8)	-	-	-	-	-
Effect of curtailments and settlements	(3)	-	-	-	-	-	(3)	-	-
Contributions in the period	-	-	-	33	2	12	(33)	(2)	(12)
Actuarial gains and losses	46	16	24	53	7	17	(7)	9	7
Exchage differences	7	14	(6)	6	12	(5)	1	2	(1)
Other changes	-	1	-	2	-	-	(2)	1	-
Balance at the End	285	236	195	283	191	163	2	45	32

The distribution of the main category of plan assets related to these commitments as of December 31, 2011, 2010 and 2009 for all the companies in the United States is as follows:

Plan Assets Categories for Pension Commitments in the United States	Percentage
	2011	2010	2009
Equity instruments	-	62.4	63.6
Debt securities	93.0	35.7	35.1
Property, Land and Buildings	-	-	-
Cash	7.0	1.9	1.3
Other investments	-	-	-

In 2011, 2010 and 2009, the return on plan assets related to these pension commitments reached €67, €20, and €27 million, respectively.

Post-employment and welfare benefits in other countries -

The changes in these commitments and plan assets in 2011, 2010 and 2009 for all of the Group’s remaining companies abroad are as follows:

Pensions Net Commitments ans Welfare Benefits in Other Countries. Changes in the period	Millions of Euros
	Commitments			Plan Assets			Net Commitments
	2011	2010	2009	2011	2010	2009	2011	2010	2009
Balance at the Beginning	100	93	77	51	45	43	49	48	34
Interest cost	9	8	6	-	-	-	9	8	6
Expected return on plan assets	-	(2)	(1)	2	1	1	(2)	(3)	(2)
Current service cost	1	(4)	-	-	-	-	1	(4)	-
Cost for early retirements	-	-	-	-	-	-	-	-	-
Past service cost or changes in the plan	-	(1)	4	-	(2)	(2)	-	1	6
Benefits paid in the period	(3)	-	-	-	-	-	(3)	-	-
Acquisitions and divestitures	(1)	-	-	(1)	-	-	-	-	-
Effect of curtailments and settlements	-	-	1	-	-	-	-	-	1
Contributions in the period	(1)	(1)	-	1	2	2	(2)	(3)	(2)
Actuarial gains and losses	(1)	(1)	(1)	1	-	-	(2)	(1)	(1)
Exchage differences	-	4	3	-	-	-	-	4	3
Other changes	5	4	4	-	5	1	5	(1)	3
Balance at the End	109	100	93	54	51	45	55	49	48

26.2.3 Estimated future payments for commitments with employees in the BBVA Group

The estimated benefit payments over the next ten years for all the companies in Spain, Mexico, Portugal and the United States are as follows:

Expected Future Benefits for Post-Employment Commitments	Millions of Euros
	2012	2013	2014	2015	2016	2017-2021
Commitments Spain	788	726	674	616	551	1,769
Of which early retirement Spain	593	534	484	427	366	885
Commitments Mexico	58	57	60	64	69	417
Commitments Portugal	4	4	5	5	5	32
Commitments The United States	9	10	11	12	13	77
Total	859	797	750	697	638	2,295