Note 22 Provisions for pensions and similar obligations 


Addtech has defined benefit pension plans in Sweden and Norway. In these plans, a pension is determined mainly by the salary received at the time of retirement. The plans cover many employees, but some defined contribution plans also applies. Subsidiaries in other countries in the Group 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. 

Defined contributions

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 to separate legal entities, such as insurance companies. 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 2014/2015 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 ITP and secured by insurance in Alecta is recognised as a defined contribution plan. The year's fees for pension insurance with Alecta totalled SEK 24.7 million (16.5). 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 148 percent (147) in March 2015.

Defined benefit plans

The revised IAS 19, Employee benefits, is applicable as of 1 April 2013. These pension plans primarily comprise retirement pensions. Each employer generally has an obligation to pay a lifelong pension. 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 and Sweden. These funded pension obligations are secured by plan assets.

Download Excel

Obligations for employee benefits, defined benefit pension plans    
Group Parent Company
Pension liability as per balance sheet 2015-03-31 2014-03-31 2015-03-31 2014-03-31
Pension liability PRI 280.2 224.5 16.3 16.8
Other pension obligations 38.1 27.5
Total cost of defined benefit plans 318.3 252.0 16.3 16.8
         
Group Parent Company
Obligations for defined benefits and the value of plan assets 2015-03-31 2014-03-31 2015-03-31 2014-03-31
Funded obligations:        
Present value of funded defined benefit obligations 92.4 76.4
Fair value of plan assets -56.7 -51.8
Net debt, funded obligations 35.7 24.6
Present value of unfunded defined benefit obligations 282.6 227.4 16.3 16.8
Net amount in the balance sheet (obligation +, asset –) 318.3 252.0 16.3 16.8
Pension obligations and plan assets per country:        
Sweden        
Pension obligations   313.3 249.6 16.3 16.8
Plan assets   -20.4 -17.4
Net amount in Sweden   292.9 232.2 16.3 16.8
Norway        
Pension obligations   61.7 54.2
Plan assets   -36.3 -34.4
Net amount in Norway   25.4 19.8
Net amount in the balance sheet (obligation +, asset –) 318.3 252.0 16.3 16.8
   
  Group Parent Company
Reconciliation of net amount for pensions in the balance sheet 2014/2015 2013/2014 2014/2015 2013/2014
Opening balance 252.0 238.8 16.8 17.1
Change in accounting for pensions 17.2 17.8 0.7 0.8
Payment of pension benefits -7.0 -6.8 -1.2 -1.1
Funds contributed by employer -6.7 -7.1
Acquisitions of companies 10.3
Translation effects -0.5 -0.4
Reclassification of plan assets   0.5
Revaluations   63.1 0.2
Gains and losses from settlements -0.3 -0.8
Net amount in balance sheet (obligation +, asset -) 318.3 252.0 16.3 16.8
     
Group    
Changes in the obligation for defined benefit plans recognised in the balance sheet 2014/2015 2013/2014    
Opening balance 303.8 289.8    
Pensions earned during the period   8.5 9.6    
Interest on obligations   10.7 10.2    
Benefits paid -7.7 -7.7    
Revaluations:          
Gain (-)/loss (+) resulting from demographic assumptions   0.9    
Gain (-)/loss (+) resulting from financial assumptions   64.1 -2.4    
Experienced-based gains (-)/losses (+)   0.3 0.8    
Acquisitions of companies 10.3    
Translation effects   -1.2 -1.5    
Gains and losses from settlements -3.5 -6.2    
Present value of pension obligations 375.0 303.8    
Group    
Changes in plan assets 2014/2015 2013/2014    
Opening balance 51.8 51.0    
Funds contributed by employer 6.7 7.1    
Benefits paid   -0.7 -0.9    
Interest income recognised in profit or loss 2.0 2.0    
Return on plan assets, excluding interest income 1.3 -0.9    
Translation effects -0.7 -1.1    
Reclassification of plan assets   -0.5    
Gains and losses from settlements -3.2 -5.4    
Fair value of plan assets 56.7 51.8    
Group Parent Company
Pension costs 2014/2015 2013/2014 2014/2015 2013/2014
Defined-benefit pension plans        
Cost for pensions earned during the year 8.5 9.6
Interest on obligations 10.7 10.2 1.0 0.7
Interest income recognised in profit or loss -2.0 -2.0
Total cost of defined benefit plans 17.2 17.8 1.0 0.7
Total cost of defined contribution plans 101.0 83.5 5.1 4.7
Social security costs on pension costs 15.7 14.0 1.4 1.3
Total cost of benefits after termination of employment 133.9 115.3 7.5 6.7
   
Group    
Allocation of pension costs in the income statement 2014/2015 2013/2014    
Cost of sales 21.3 18.1    
Selling and administrative expenses 103.5 89.3    
Net financial items 9.1 7.9    
Total pension costs 133.9 115.3    
2014/2015 2013/2014
Actuarial assumptions Sweden Norway Sweden Norway
The following material actuarial assumptions were applied in calculating obligations:    
Discount rate, 1 April, % 3.80 3.60 3.60 3.85
Discount rate, 31 March, % 2.30 2.30 3.80 3.60
Future salary increases, % 1.50-3.00 2.75 2.00-3.50 3.75
Future increases in pensions (change in income base amount), % 2.50 3.00
Employee turnover, % 10.00 2.00-5.00 10.00 2.00-5.00
Expected ‘G regulation’, % 2.50 3.50
Mortality table FFFS 2007:31 K2013 B.E FFFS 2007:31 K2013 B.E
Sensitivity of pension obligations to changes in assumptions Sweden Norway Total  
Defined benefit pension obligations at 31 March 2015   313.3 61.7 375.0  
The discount rate increases by 0.5%   -32.2 -6.2 -38.4  
The discount rate decreases by 0.5%   37.0 7.0 44.0  
Expected life expectancy increases by 1 year   16.4 2.0 18.4  

 

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. For Swedish pension liabilities, the interest rate for Swedish housing bonds is used as a basis and for Norwegian pension liabilities, the interest rate for Norwegian corporate bonds is used. Future increases in pensions are based on inflation assumptions. Remaining period of employment (life expectancy) is based on statistical tables prepared by Finansinspektionen (Sweden's Financial Supervisory Authority) and the Insurance Society, in Sweden FFFS 2007:31 and in Norway K2013 B.E. Expected G regulation is used in the calculations in Norway and corresponds to Sweden's base amount.

These sensitivity analyses are based on a change in one assumption, while all the other assumptions remain constant. The same method, the projected unit credit method, is used to calculate the sensitivity in the defined benefit obligation as to calculate pension the obligation recognised in the balance sheet.