Note Provisions for pensions and similar obligations
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
in Sweden, the Netherlands, Belgium, and India. There are
further commitments for retirement and survivors’ pensions
for salaried employees in Sweden that are insured through
Folksam (Folksam cooperative occupational pensions).
The obligations for retirement and survivors’ pension for
salaried employees in Sweden are insured through policies
with Alecta or correspondingly in Folksam. 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,
2019, AAK AB and AAK Sweden AB have not had access to
sufficient information to recognize their proportional shares
of the plan’s obligations, plan assets and costs, which has
meant that it has not been possible to recognize the plan as
a defined benefit plan. The ITP 2 pension plan that is insured
through Folksam is therefore recognized 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 are SEK 17 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 2019, Alecta’s and
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Folksam’s surplus in the form of their collective consolidation
levels was 148 percent and 187 percent, respectively (142
percent and 174 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.
2019 2018
Specification of costs
Costs for services during current year 36 29
Interest expenses 18 18
Anticipated return on plan assets -13 -12
Employee contributions -6 -5
Total cost of defined benefit plans, included in employee costs (Note 6) 35 30
Cost of defined contribution plans 110 83
Total pension costs 145 113
Net defined benefit liability in the Balance Sheet
Present value of funded obligations 1,054 899
Fair value of plan assets -813 -693
Net defined benefit liability 241 206
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