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AAK Annual Report 2015

63 NOTE 9 – PENSION PROVISIONS Defined benefit plans The Group maintains defined benefit retirement plans in which employees earn the right to payment of benefits after completing their employment, based on their final salary and period of service. These defined benefit retirement plans exist primarily in Sweden and the Netherlands. There are further commitments for retirement and survivors’ pensions for managers and officers in Sweden that are insured through Folksam (Folksam Kooperativa tjänstepensioner).   The obligations for retirement and survivors’ pension for professional employees in Sweden are insured through policies with Alecta or correspondingly in Folksam (Folksam Kooperativa tjänstepensioner). According to a statement by the Swedish Financial Reporting Board, UFR 3, classification of ITP plans financed via insurance with Alecta, this is a defined benefit plan that involves several different employers. For the period from January 1 to December 31, 2015, AAK AB (publ.) and AAK Sweden AB have not had access to sufficient information to recognise their proportional shares of the plan’s obligations, plan assets and costs, which has meant that it has not been possible to recognise the plan as a defined benefit plan. The ITP 2 pension plan that is insured through Folksam is therefore recognised as a defined contribution plan. The premium for the defined benefit retirement and survivors’ pension is calculated individually and depends on factors including salary, pension earned previously and expected remaining period of service. Charges for ITP 2 pensions insured through Folksam (Folksam Kooperativa tjänstepensioner) are SEK 14 million (14).   The collective consolidation level consists of the market value of Alecta’s assets as a percentage of the estimated insurance commitments, computed using Alecta’s actuarial methods and assumptions, which are not in accordance with IAS 19. The collective consolidation level should normally be permitted to vary between 125 and 155 percent. If Alecta’s collective consolidation level is below 125 percent or above 155 percent, measures must be taken to create the conditions for the consolidation level to return to the normal range. If the consolidation is low, one measure may be to increase the agreed price for new policies and increasing existing benefits. If the consolidation is high, one measure may be to introduce premium reductions. At year-end 2015, Alecta’s and Folksam’s surplus in the form of their collective consolidation levels was 153 percent and 119 percent, respectively (143 percent and 126 percent, respectively).   The Group has defined benefit pension plans in Sweden and the Netherlands which come under largely similar regulations. All plans are pension plans based on final salary and give employees covered by the plans benefits in the form of a guaranteed level of pension payments during their lives. The level of the benefits depends on the employees’ period of service and salary on retirement. The pension payments in the Swedish and Dutch plans are normally indexed according to the consumer price index. The plans are subject to largely similar risks. Benefits are paid from plans that are secured with foundations. The activities of the foundations are regulated by national regulations and practice which also apply to the relationship between the Group and the administrator (or equivalent) of the foundation’s plan assets. Responsibility for monitoring the plans, including investment decisions and contributions, is held jointly by the company and the foundation’s board. Defined benefit plans 2015 2014 The amounts recognised in the consolidated balance sheet are determined as follows: Present value of funded obligations 662 683 Fair value of plan assets -534 -533 128 149 Defined benefit plans 2015 2014 The amounts recognised in consolidated income statement are as follows: Costs pertaining to service during the current year 17 -32 Interest expenses 15 19 Interest income -12 -9 Total, included in employee costs (Note 6) 20 -22 Pension costs 2015 2014 Total pension costs recognised in the consolidated income statement are as follows: Total costs for defined contribution plans including employer's contribution 82 74 Total 82 74 Defined benefit plans 2015 2014 Movement in the net liability recognised in the consolidated balance sheet: Net liability at start of year 149 121 Net cost recognised in the income statement 20 -22 Benefits paid -9 -8 Contributions by employer to funded obligations -10 -23 Divestment of subsidiary - -2 Revaluation of defined benefit pension plans -19 75 Exchange rate differences on foreign plans -3 8 Net liability at year-end 128 149


AAK Annual Report 2015
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