Addtech has defined contribution and defined benefit pension plans in Sweden and Norway. 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 2015/2016 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 22 million (25). 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 144 percent (148) in March 2016. The pension plan according to ITP1 is recognised as a defined-contribution plan.
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 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 and Sweden. The funded pension obligations are secured by plan assets that are managed by insurance companies. The Group estimates that SEK 2 million (4) will be paid in 2016/2017 to the funded defined-benefit plans. The total number of commitments of 874 (810) included in the obligation consists of 104 active (133), 493 paid-up policy holders (432) and 277 pensioners (245).
| Obligations for employee benefits, defined benefit pension plans | |||||
|---|---|---|---|---|---|
| Group | Parent Company | ||||
| Pension liability as per balance sheet | 2016-03-31 | 2015-03-31 | 2016-03-31 | 2015-03-31 | |
| Pension liability PRI | 189 | 280 | 16 | 16 | |
| Other pension obligations | 10 | 38 | – | – | |
| Total cost of defined benefit plans | 199 | 318 | 16 | 16 | |
| Group | Parent Company | ||||
| Obligations for defined benefits and the value of plan assets | 2016-03-31 | 2015-03-31 | 2016-03-31 | 2015-03-31 | |
| Funded obligations: | |||||
| Present value of funded defined benefit obligations | 48 | 92 | – | – | |
| Fair value of plan assets | -38 | -57 | – | – | |
| Net debt, funded obligations | 10 | 35 | – | – | |
| Present value of unfunded defined benefit obligations | 189 | 283 | 16 | 16 | |
| Net amount in the balance sheet (obligation +, asset –) | 199 | 318 | 16 | 16 | |
| Pension obligations and plan assets per country: | |||||
| Sweden | |||||
| Pension obligations | 213 | 313 | 16 | 16 | |
| Plan assets | -22 | -20 | – | – | |
| Net amount in Sweden | 191 | 293 | 16 | 16 | |
| Norway | |||||
| Pension obligations | 24 | 62 | – | – | |
| Plan assets | -16 | -36 | – | – | |
| Net amount in Norway | 8 | 25 | – | – | |
| Net amount in the balance sheet (obligation +, asset –) | 199 | 318 | 16 | 16 | |
| Group | Parent Company | ||||
| Reconciliation of net amount for pensions in the balance sheet | 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | |
| Opening balance | 318 | 252 | 16 | 17 | |
| Cost defined benefit plans | 14 | 17 | 1 | 0 | |
| Payment of pension benefits | -7 | -7 | -1 | -1 | |
| Funds contributed by employer | -7 | -7 | – | – | |
| Discontinued operations | -74 | – | – | – | |
| Translation effects | -1 | -1 | – | – | |
| Reclassification of plan assets | – | 1 | – | – | |
| Revaluations | -44 | 63 | – | – | |
| Gains and losses from settlements | – | 0 | – | – | |
| Net amount in balance sheet (obligation +, asset -) | 199 | 318 | 16 | 16 | |
| Group | |||||
| Changes in the obligation for defined benefit plans recognised in the balance sheet | 2015/2016 | 2014/2015 | |||
| Opening balance | 375 | 304 | |||
| Pensions earned during the period | 10 | 9 | |||
| Pensions earned prior periods, vested | -2 | – | |||
| Interest on plan assets | 7 | 11 | |||
| Benefits paid | -8 | -8 | |||
| Revaluations: | |||||
| Gain (-)/loss (+) resulting from financial assumptions | -43 | 64 | |||
| Experienced-based gains (-)/losses (+) | 0 | 0 | |||
| Discontinued operations | -92 | – | |||
| Translation effects | -3 | -1 | |||
| Gains and losses from settlements | -7 | -4 | |||
| Present value of pension obligations | 237 | 375 | |||
| Group | |||||
| Changes in plan assets | 2015/2016 | 2014/2015 | |||
| Opening balance | 57 | 52 | |||
| Funds contributed by employer | 7 | 7 | |||
| Benefits paid | -1 | -1 | |||
| Interest income recognised in profit or loss | 1 | 2 | |||
| Return on plan assets, excluding interest income | 1 | 1 | |||
| Discontinued operations | -18 | – | |||
| Translation effects | -2 | -1 | |||
| Reclassification of plan assets | – | 0 | |||
| Gains and losses from settlements | -7 | -3 | |||
| Fair value of plan assets | 38 | 57 | |||
| Group | Parent Company | ||||
| Pension costs | 2015/2016 | 2014/2015 | 2015/2016 | 2014/2015 | |
| Defined-benefit pension plans | |||||
| Cost for pensions earned during the year | 10 | 8 | – | – | |
| Revenue for pensions earned in prior periods | -2 | – | – | – | |
| Interest on obligations | 7 | 11 | 1 | 1 | |
| Interest income recognised in profit or loss | -1 | -2 | – | – | |
| Total cost of defined benefit plans | 14 | 17 | 1 | 1 | |
| Total cost of defined contribution plans | 115 | 101 | 6 | 5 | |
| Social security costs on pension costs | 16 | 16 | 1 | 1 | |
| Total cost of benefits after termination of employment | 145 | 134 | 8 | 7 | |
| Group | |||||
| Allocation of pension costs in the income statement | 2015/2016 | 2014/2015 | |||
| Cost of sales | 19 | 21 | |||
| Selling and administrative expenses | 90 | 104 | |||
| Net financial items | 5 | 9 | |||
| Discontinued operations | 31 | – | |||
| Total pension costs | 145 | 134 | |||
| 2015/2016 | 2014/2015 | ||||
| Actuarial assumptions | Sweden | Norway | Sweden | Norway | |
| The following material actuarial assumptions were applied in calculating obligations: | |||||
| Discount rate, 1 April, % | 2.30 | 2.30 | 3.80 | 3.60 | |
| Discount rate, 31 March, % | 2.70 | 2.40 | 2.30 | 2.30 | |
| Future salary increases, % | 3.00 | 2.50 | 1.50-3.00 | 2.75 | |
| Future increases in pensions (change in income base amount), % | 2.50 | – | 2.50 | – | |
| Employee turnover, % | 10.00 | 2.00-5.00 | 10.00 | 2.00-5.00 | |
| Expected ‘G regulation’, % | – | 2.25 | – | 2.50 | |
| Mortality table | FFFS 2007:24 | 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 2016 | 213 | 24 | 237 | ||
| The discount rate increases by 0.5% | -22 | -3 | -25 | ||
| The discount rate decreases by 0.5% | 24 | 2 | 26 | ||
| Expected life expectancy increases by 1 year | 9 | 0 | 9 | ||
| Expected life expectancy decreases by 1 year | -10 | -1 | -11 | ||
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. The weighted average maturity of the obligation is approximately 18 years (19) and is based on statistical tables prepared by Finansinspektionen (Sweden's Financial Supervisory Authority) and the Insurance Society, in Sweden FFFS 2007:24 and in Norway K2013 B.E. Expected G regulation is used in the calculations in Norway and corresponds to Sweden’s income base amounts.
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.