Addtech has defined contribution and defined benefit pension plans in Sweden, Norway and Great Britain. The plans cover a large number of employees. Subsidiaries in other countries mainly have defined contribution pension plans. The Parent Company's data on pensions are reported in accordance with the Swedish Act on Safeguarding Pension Obligations.
These plans are mainly retirement pension plans, disability pensions and family pensions. Premiums are paid on an ongoing basis during the year by each Group company and the size of the premium is based on the salary. The pension cost for the period is included in profit or loss.
Obligations for retirement pensions and family pensions for salaried employees in Sweden are secured by insurance in Alecta. According to statement UFR 3 of the Swedish Financial Reporting Board, this is a defined benefit plan covering multiple employers. For the 2017/2018 financial year, the Company did not have access to information enabling it to report this plan as a defined benefit plan. Thus the pension plan according to ITP2 and secured by insurance in Alecta is recognised as a defined contribution plan. The year's fees for pension insurance with Alecta totalled SEK 26 million (24). Fees for the next financial year are considered to be in line with those for the latest year. The collective consolidation level for Alecta was 152 percent (152) in March 2018. The pension plan according to ITP1 is recognised as a defined-contribution plan.
These pension plans primarily comprise retirement pensions. Each employer generally has an obligation to pay a lifelong pension and vesting is based on the number of years of employment. The employee must subscribe to the plan for a certain number of years to be fully entitled to retirement benefits. Each year increases the employee's entitlement to retirement benefits, which is recognised as pension earned during the period and as an increase in pension obligations. Both funded and unfunded pension plans apply in Norway, Sweden and Great Britain. The funded pension obligations are secured by plan assets that are managed by insurance companies. The Group estimates that SEK 0 million (0) will be paid in 2018/2019 to the funded defined-benefit plans. The total number of commitments of 911 (677) included in the obligation consists of 74active (77), 525 paid-up policy holders (355) and 312 pensioners (245).
| Obligations for employee benefits, defined benefit pension plans | |||||
|---|---|---|---|---|---|
| Group | Parent Company | ||||
| Pension liability as per balance sheet | 2018-03-31 | 2017-03-31 | 2018-03-31 | 2017-03-31 | |
| Pension liability PRI | 221 | 206 | 15 | 15 | |
| Other pension obligations | 8 | 4 | – | – | |
| Total cost of defined benefit plans | 229 | 210 | 15 | 15 | |
| Group | Parent Company | ||||
| Obligations for defined benefits and the value of plan assets | 2018-03-31 | 2017-03-31 | 2018-03-31 | 2017-03-31 | |
| Funded obligations: | |||||
| Present value of funded defined benefit obligations | 51 | 27 | – | – | |
| Fair value of plan assets | -44 | -23 | – | – | |
| Net debt, funded obligations | 7 | 4 | – | – | |
| Present value of unfunded defined benefit obligations | 222 | 206 | 15 | 15 | |
| Net amount in the balance sheet (obligation +, asset –) | 229 | 210 | 15 | 15 | |
| Pension obligations and plan assets per country: | |||||
| Sweden | |||||
| Pension obligations | 248 | 232 | 15 | 15 | |
| Plan assets | -23 | -23 | – | – | |
| Net amount in Sweden | 225 | 209 | 15 | 15 | |
| Norway | |||||
| Pension obligations | 1 | 2 | – | – | |
| Plan assets | -1 | -1 | – | – | |
| Net amount in Norway | 0 | 1 | – | – | |
| Great Britain | |||||
| Pension obligations | 24 | – | – | – | |
| Plan assets | -20 | – | – | – | |
| Net amount in Great Britain | 4 | – | – | – | |
| Net amount in the balance sheet (obligation +, asset –) | 229 | 210 | 15 | 15 | |
| Group | Parent Company | ||||
| Reconciliation of net amount for pensions in the balance sheet | 2017/2018 | 2016/2017 | 2017/2018 | 2016/2017 | |
| Opening balance | 210 | 199 | 15 | 16 | |
| Cost defined benefit plans | 8 | 4 | 1 | 0 | |
| Payment of pension benefits | -6 | -6 | -1 | -1 | |
| Funds contributed by employer | – | -1 | – | – | |
| Acquisition of companies | 8 | – | – | – | |
| Translation effects | 0 | 1 | – | – | |
| Revaluations | 9 | 13 | – | – | |
| Net amount in balance sheet (obligation +, asset -) | 229 | 210 | 15 | 15 | |
| Group | |||||
| Changes in the obligation for defined benefit plans recognised in the balance sheet | 2017/2018 | 2016/2017 | |||
| Opening balance | 234 | 237 | |||
| Pensions earned during the period | 2 | 5 | |||
| Pensions earned prior periods, vested | – | -6 | |||
| Interest on plan assets | 7 | 6 | |||
| Benefits paid | -6 | -6 | |||
| Revaluations: | |||||
| Gain (-)/loss (+) resulting from demographic assumptions | – | 11 | |||
| Gain (-)/loss (+) resulting from financial assumptions | 10 | 4 | |||
| Experienced-based gains (-)/losses (+) | -2 | -2 | |||
| Acquisition of companies | 27 | – | |||
| Translation effects | 1 | 2 | |||
| Gains and losses from settlements | – | -17 | |||
| Present value of pension obligations | 273 | 234 | |||
| Group | |||||
| Changes in plan assets | 2017/2018 | 2016/2017 | |||
| Opening balance | 24 | 38 | |||
| Funds contributed by employer | – | 1 | |||
| Benefits paid | 0 | 0 | |||
| Interest income recognised in profit or loss | 1 | 1 | |||
| Return on plan assets, excluding interest income | -1 | 0 | |||
| Acquisition of companies | 19 | – | |||
| Translation effects | 1 | 1 | |||
| Gains and losses from settlements | – | -17 | |||
| Fair value of plan assets | 44 | 24 | |||
| Group | Parent Company | ||||
| Pension costs | 2017/2018 | 2016/2017 | 2017/2018 | 2016/2017 | |
| Defined-benefit pension plans | |||||
| Cost for pensions earned during the year | 2 | 5 | – | – | |
| Revenue for pensions earned in prior periods | – | -6 | – | – | |
| Interest on obligations | 7 | 6 | 1 | 0 | |
| Interest income recognised in profit or loss | -1 | -1 | – | – | |
| Total cost of defined benefit plans | 8 | 4 | 1 | 0 | |
| Total cost of defined contribution plans | 111 | 99 | 5 | 5 | |
| Social security costs on pension costs | 16 | 15 | 1 | 2 | |
| Total cost of benefits after termination of employment | 135 | 118 | 7 | 7 | |
| Group | |||||
| Allocation of pension costs in the income statement | 2017/2018 | 2016/2017 | |||
| Cost of sales | 23 | 20 | |||
| Selling and administrative expenses | 106 | 93 | |||
| Net financial items | 6 | 5 | |||
| Total pension costs | 135 | 118 | |||
| 2017/2018 | 2016/2017 | ||||||
|---|---|---|---|---|---|---|---|
| Actuarial assumptions | Sweden | Norway | Great Britain | Sweden | Norway | Great Britain | |
| The following material actuarial assumptions were applied in calculating obligations: | |||||||
| Discount rate, 1 April, % | 2.75 | 2.40 | – | 2.70 | 2.40 | – | |
| Discount rate, 31 March, % | 2.55 | 2.40 | 3.08 | 2.75 | 2.40 | – | |
| Future salary increases, % | 2.75 | 2.50 | – | 2.75 | 2.50 | – | |
| Future increases in pensions (change in income base amount), % | 2.75 | – | 2.83 | 2.75 | – | – | |
| Employee turnover, % | 10.00 | 2.00-5.00 | – | 10.00 | 2.00-5.00 | – | |
| Expected ‘G regulation’, % | – | 2.25 | – | – | 2.25 | – | |
| Mortality table | DUS14 | K2013 B.E | S2P, CMI 2016 | DUS14 | K2013 B.E | – | |
| Sensitivity of pension obligations to changes in assumptions | Sweden | Norway | Great Britain | Total | |||
| Defined benefit pension obligations at 31 March 2017 | 248 | 1 | 24 | 273 | |||
| The discount rate increases by 0.5% | -26 | -1 | -2 | -29 | |||
| The discount rate decreases by 0.5% | 27 | 1 | 2 | 30 | |||
| Expected life expectancy increases by 1 year | 10 | 1 | 1 | 12 | |||
| Expected life expectancy decreases by 1 year | -12 | -1 | -1 | -14 | |||
The discount rate used is equivalent to the interest rate on high-quality corporate bonds or mortgage bonds with a maturity equivalent to the average maturity of the obligation and currency.
Swedish pension liabilities are based on the interest rate for Swedish housing bonds while Norwegian and Great Britain pension liabilities are based on the interest rate for Norwegian corporate bonds. The weighted average maturity for the commitment is around 18 years (18), which is used as a basis on which to determine the discount rate. Future increases in pensions are based on inflation assumptions. Remaining period of employment (life expectancy) is based on statistical tables prepared by Insurance Sweden and Försäkringssällskapet (the Insurance Society), in Sweden DUS14, in Norway K2013 B.E and in Great Britain S2P, CMI 2016. The anticipated basic pension adjustment, corresponding to Sweden’s income base amount, is used for the calculations in Norway.
The sensitivity analyses are based on a change in an assumption, while all other assumptions are held constant. The same method, the projected unit credit method, is used to calculate the sensitivity in the defined benefit obligation as to calculate the pension obligation recognised in the balance sheet.