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.
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 2013/2014 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 16.5 million (13.6). 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 147 percent (135) in March 2014.
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.
The revised IAS 19, Employee benefits, is applicable as of 1 April 2013. The change involves the disappearance of the alternative of deferring actuarial gains and losses according to the corridor method. The standard also contains new rules regarding the recognition of a special employer's contribution. This standard has been applied retrospectively, which involves the restatement of the comparative figures in the balance sheet. In addition, historical key performance indicators affected by such retrospective application have been restated. The pension liability at 31 March 2012 has increased by SEK 49 million, including a special employer's contribution of SEK 11 million, and shareholders' equity has decreased by a net amount of SEK 33 million. The pension liability at 31 March 2013 has increased by SEK 38 million, including special employer's contribution of SEK 13 million, and shareholders' equity has decreased by a net amount of SEK 25 million, of which SEK 9 million is via comprehensive income. The effect on the income statements is deemed to be immaterial and no restatement has therefore been made.
| Obligations for employee benefits, defined benefit pension plans | ||||
|---|---|---|---|---|
| Group | Parent Company | |||
| Pension liability as per balance sheet | 31 Mar 14 | 31 Mar 13 | 31 Mar 14 | 31 Mar 13 |
| Pension liability PRI | 224.5 | 215.9 | 16.8 | 17.1 |
| Other pension obligations | 27.5 | 22.9 | – | – |
| Total cost of defined benefit plans | 252.0 | 238.8 | 16.8 | 17.1 |
| Group | Parent Company | |||
| Obligations for defined benefits and the value of plan assets | 31 Mar 14 | 31 Mar 13 | 31 Mar 14 | 31 Mar 13 |
| Funded obligations: | ||||
| Present value of funded defined benefit obligations | 76.4 | 71.6 | – | – |
| Fair value of plan assets | -51.8 | -51.0 | – | – |
| Net debt, funded obligations | 24.6 | 20.6 | – | – |
| Present value of unfunded defined benefit obligations | 227.4 | 218.2 | 16.8 | 17.1 |
| Net amount in the balance sheet (obligation +, asset –) | 252.0 | 238.8 | 16.8 | 17.1 |
| Pension obligations and plan assets per country: | ||||
| Sweden | ||||
| Pension obligations | 249.6 | 242.0 | 16.8 | 17.1 |
| Plan assets | -17.4 | -16.6 | – | – |
| Net amount in Sweden | 232.2 | 225.4 | 16.8 | 17.1 |
| Norway | ||||
| Pension obligations | 54.2 | 47.8 | – | – |
| Plan assets | -34.4 | -34.4 | – | – |
| Net amount in Norway | 19.8 | 13.4 | – | – |
| Net amount in the balance sheet (obligation +, asset –) | 252.0 | 238.8 | 16.8 | 17.1 |
| Group | Parent Company | |||
| Reconciliation of net amount for pensions in the balance sheet | 2013/2014 | 2012/2013 | 2013/2014 | 2012/2013 |
| Opening balance | 238.8 | 244.5 | 17.1 | 17.6 |
| Change in accounting for pensions | 17.8 | 18.5 | 0.8 | 0.7 |
| Payment of pension benefits | -6.8 | -6.9 | -1.1 | -1.2 |
| Funds contributed by employer | -7.1 | -6.0 | – | – |
| Acquisitions of companies | 10.3 | – | – | – |
| Translation effects | -0.4 | -0.6 | – | – |
| Revaluations | 0.2 | -12.5 | – | – |
| Gains and losses from settlements | -0.8 | 1.8 | – | – |
| Net amount in balance sheet (obligation +, asset -) | 252.0 | 238.8 | 16.8 | 17.1 |
| Group | ||||
| Changes in the obligation for defined benefit plans recognised in the balance sheet | 2013/2014 | 2012/2013 | ||
| Opening balance | 289.8 | 292.5 | ||
| Pensions earned during the period | 9.6 | 9.5 | ||
| Interest on obligations | 10.2 | 10.5 | ||
| Benefits paid | -7.7 | -7.7 | ||
| Revaluations: | ||||
| Gain (-)/loss (+) resulting from demographic assumptions | 0.9 | – | ||
| Gain (-)/loss (+) resulting from financial assumptions | -2.4 | -8.2 | ||
| Experienced-based gains (-)/losses (+) | 0.8 | -3.9 | ||
| Acquisitions of companies | 10.3 | – | ||
| Translation effects | -1.5 | -2.9 | ||
| Gains and losses from settlements | -6.2 | 0.0 | ||
| Present value of pension obligations | 303.8 | 289.8 | ||
| Group | ||||
| Changes in plan assets | 2013/2014 | 2012/2013 | ||
| Opening balance | 51.0 | 49.5 | ||
| Funds contributed by employer | 7.1 | 6.0 | ||
| Benefits paid | -0.9 | -1.0 | ||
| Interest income recognised in profit or loss | 2.0 | 1.5 | ||
| Return on plan assets, excluding interest income | -0.9 | -1.2 | ||
| Translation effects | -1.1 | -2.0 | ||
| Gains and losses from settlements | -5.4 | -1.8 | ||
| Fair value of plan assets | 51.8 | 51.0 | ||
| Group | Parent Company | |||
| Pension costs | 2013/2014 | 2012/2013 | 2013/2014 | 2012/2013 |
| Defined-benefit pension plans | ||||
| Cost for pensions earned during the year | 9.6 | 9.5 | – | – |
| Interest on obligations | 10.2 | 10.5 | 0.7 | 0.7 |
| Interest income recognised in profit or loss | -2.0 | -1.5 | – | – |
| Total cost of defined benefit plans | 17.8 | 18.5 | 0.7 | 0.7 |
| Total cost of defined contribution plans | 83.5 | 78.0 | 4.7 | 4.6 |
| Social security costs on pension costs | 14.0 | 13.0 | 1.3 | 1.2 |
| Total cost of benefits after termination of employment | 115.3 | 109.5 | 6.7 | 6.5 |
| Group | ||||
| Allocation of pension costs in the income statement | 2013/2014 | 2012/2013 | ||
| Cost of sales | 18.1 | 14.6 | ||
| Selling and administrative expenses | 89.3 | 87.3 | ||
| Net financial items | 7.9 | 7.6 | ||
| Total pension costs | 115.3 | 109.5 | ||
| 2013/2014 | 2012/2013 | |||
| Actuarial assumptions | Sweden | Norway | Sweden | Norway |
| The following material actuarial assumptions were applied in calculating obligations: | ||||
| Discount rate, 1 April, % | 3.60 | 3.85 | 3.70 | 2.60 |
| Discount rate, 31 March, % | 3.80 | 3.60 | 3.60 | 3.85 |
| Future salary increases, % | 2.00-3.50 | 3.75 | 2.00-3.50 | 3.50 |
| Future increases in pensions (change in income base amount), % | 3.00 | – | 3.00 | – |
| Employee turnover, % | 10.00 | 2.00 - 5.00 | 10.00 | 2.00 - 5.00 |
| Expected ‘G regulation’, % | – | 3.50 | – | 3.25 |
| Mortality table | FFFS 2007:31 | K2013 B.E | FFFS 2007:31 | K2005 |
| Sensitivity of pension obligations to changes in assumptions | Sweden | Norway | Total | |
| Defined benefit pension obligations at 31 March 2014 | 249.6 | 54.2 | 303.8 | |
| The discount rate increases by 0.5% | -24.4 | -5.1 | -29.5 | |
| The discount rate decreases by 0.5% | 27.9 | 5.8 | 33.7 | |
| Expected life expectancy increases by 1 year | 12.2 | 1.6 | 13.8 | |
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.