P16 Post-Employment Benefits
The Parent Company has two types of pension plans:
- Defined contribution plans: post-employment benefit plans where the Parent Company pays fixed contributions into separate entities and has no legal or constructive obligation to pay further contributions if the entities do not hold sufficient assets to pay all employee benefits relating to employee service. The expenses for defined contribution plans are recognized during the period when the employee provides service.
- Defined benefit plans: post-employment benefit plans where the Parent Company’s undertaking is to provide predetermined benefits that the employee will receive on or after retirement. The FPG/PRI plan for the Parent Company is partly funded. FPG is a Swedish credit insurance company for pension obligations and PRI is a pension registration institute. Pension obligations are calculated annually, on the balance sheet date, based on actuarial assumptions.
| Defined Benefit Obligation – Amount Recognized in the Balance Sheet | ||
| 2011 | 2010 | |
| Present value of wholly or partially funded pension plans 1) | 679 | 618 |
| Fair value of plan assets | –756 | –714 |
| Unfunded/net surplus(–) of funded pension plans | –77 | –96 |
| Present value of unfunded pension plans | 376 | 389 |
| Excess from plan assets not accounted for | 77 | 96 |
| Closing balance provision for pensions | 376 | 389 |
| 1) This FPG/PRI obligation is covered by the Swedish law on safeguarding of pension commitments. | ||
The defined benefit obligations are calculated based on the actual salary levels at year-end and based on a discount rate of 3.8%.
Weighted average life expectancy after the age of 65 is 25 years for women and 23 years for men.
In 2005, SEK 524 million was transferred into the Swedish pension trust.From 2009–2011 additional transfers of SEK 94 million have been made.
The Parent Company utilizes no assets held by the pension trust. Return on plan assets for 2011 was 0.9% (17.4 %).
| Plan assets allocation | ||
| 2011 | 2010 | |
| Equities | 167 | 249 |
| Interest-bearing securities | 461 | 433 |
| Other | 128 | 32 |
| Total | 756 | 714 |
| Change in the Defined Benefit Obligation | ||
| 2011 | 2010 | |
| Opening balance | 389 | 372 |
| Payment to pension trust | –36 | –31 |
| Pension costs, excluding taxes, related to defined benefit obligations accounted for in the income statement | 98 | 98 |
| Pension payments | –50 | –44 |
| Return on plan assets | –25 | –44 |
| Return on plan assets not accounted for | – | 38 |
| Closing balance provision for pensions | 376 | 389 |
Estimated pension payments for 2012 are SEK 55 million.
| Total pension cost and income recognized in the Income Statement | ||
| 2011 | 2010 | |
| Defined benefit obligations | ||
| Costs excluding interest and taxes | 55 | 54 |
| Interest cost | 43 | 44 |
| Credit insurance premium | –1 | –2 |
| Total cost defined benefit plans excluding taxes | 97 | 96 |
| Defined contribution plans | ||
| Pension insurance premium | 123 | 96 |
| Total cost defined contribution plans excluding taxes | 123 | 96 |
| Return on plan assets | –25 | –5 |
| Total pension cost, net excluding taxes | 195 | 187 |
Of the total pension cost, SEK 177 million (SEK 149 million in 2010) is included in operating expenses and SEK 18 million (SEK 38 million in 2010) in the financial net.
