Defined benefit obligations and the value of managed assets
Lagercrantz Group has defined benefit pension plans in just a few countries. These plans cover virtually all employees in Norway and also certain subsidiaries in Sweden. The plans provide benefits based on the compensation and the years of service the employees have at or close to retirement. The pension plan according to ITP secured by insurance with Alecta is reported as a defined contribution plan since the Company has not had access to information detail making it possible to report this plan as a defined benefit plan.
|
|
3/1/2009 | 3/31/2008 |
|---|---|---|
| Group |
|
|
| Present value of wholly or partially funded obligations | 19 | 28 |
| Fair value of managed assets | –11 | –17 |
| Surplus (–)/Deficit (+) in the pension plan | 8 | 11 |
| Present value of unfunded defined benefit obligations | 50 | 60 |
| Net obligations before adjustments | 58 | 71 |
| Adjustments: |
|
|
| Adjustments of pension obligations based on experience | –1 | –2 |
| Other actuarial gains and losses on pension obligations | –5 | –10 |
| Subtotal of accumulated unreported actuarial gains(+) and losses(–) | –6 | –12 |
| Net amount of obligation in balance sheet (+), asset (–) | 52 | 59 |
| The net amount is recorded in the following items in the balance sheet: |
|
|
| Provision for pensions and similar obligations | 52 | 59 |
| Net amount in the balance sheet | 52 | 59 |
| Distribution of amount on plans in the following countries: | 3/1/2009 | 3/31/2008 |
|---|---|---|
| Sweden | 47 | 46 |
| Norway | 4 | 10 |
| Germany | 1 | 3 |
| Amount in the balance sheet | 52 | 59 |
Actuarial gains and losses may arise when the present value of the obligation and the fair value of managed assets are determined. They arise either when the actual outcome differs from the previously made assumption, or when assumptions are changed. The portion of the accumulated actuarial gains and losses at the end of the preceding year that exceeds 10 percent of the higher of present value of the obligations and the fair value of managed assets is expensed and distributed evenly over the average remaining time of employment of the employees.
| Pension cost | 2008/09 | 2007/08 |
|---|---|---|
| Group |
|
|
| Defined benefit plans |
|
|
| Cost of pensions earned during the year | –2 | –2 |
| Interest expense | –3 | –3 |
| Expected return on managed assets | 1 | 1 |
| Actuarial gains (–) and losses (+) reported during the year | 0 | 0 |
| Cost defined benefit plans | –4 | –4 |
| Cost of defined contribution plans | –16 | –18 |
| Total cost of compensation after termination of employment | –20 | –22 |
The pension cost relating to the most important defined benefit pension plans in the amount of MSEK 4 (4) is reported in the income statement on the lines Selling costs, Administrative expenses and Interest expense. The interest component of the pension cost reported as financial expense amounted to MSEK -3 (-3). The pension cost of defined contribution pension plans was MSEK 16 (18). The total cost of defined benefit and defined contribution pension plans amounted to MSEK 20 (22).
Reconciliation of net amount of pensions in the balance sheet
The following table explains how the net amount in the balance sheet has changed during the period.
|
|
2008/09 | 2007/08 |
|---|---|---|
| Opening balance of fair value of managed assets | –17 | –16 |
| Expected return on managed assets | –1 | –1 |
| Funds contributed by employers | –2 | –1 |
| Benefits paid | 5 | – |
| Compensation transferred operations | 3 | 1 |
| Actuarial gain (+) or loss (–) on managed assets | 1 | 0 |
| Other | 0 | 0 |
| Closing balance of fair value of managed assets | –11 | –17 |
| Opening balance of present value of obligation | 76 | 73 |
| Cost of defined benefit plans | 4 | 5 |
| Disbursement of compensation | –6 | –2 |
| Payment of fees from the Company | –2 | 0 |
| Change in actuarial gains/losses | –1 | 0 |
| Redemption of transferred obligations | –9 | – |
| Exchange rate differences | 1 | 0 |
| Closing balance of present value of obligation | 63 | 76 |
| Net amount in the balance sheet, closing balance | 52 | 59 |
The managed assets consist of risk-diversified investments via established life insurance companies.
Actuarial assumptions
The following significant actuarial assumptions have been applied when calculating the obligations: (weighted average values)
|
|
3/31/2009 |
3/31/2008 |
|---|---|---|
| Discount interest rate | 4.0% | 4.3% |
| Expected return on managed assets | 5.8% | 5.5% |
| Expected inflation | 2.0% | 2.2% |
| Future salary increases | 3.0% | 3.5% |
| Personnel turnover | 5.0% | 5.0% |
| Change in income amount | 3.0% | 3.4% |
Historic information
|
|
2008/09 | 2007/08 | 2006/07 |
|---|---|---|---|
| Group |
|
|
|
| Present value of wholly or partially funded obligations | 19 | 28 | 20 |
| Fair value of managed assets | –11 | –17 | –16 |
| Surplus (–)/Deficit (+) in pension plan | 8 | 11 | 4 |
| Adjustment of defined benefit pensions based on experience | –1 | –2 | –4 |
The Group estimates that MSEK 5 will be paid during 2009/10 to funded and unfunded defined benefit plans.
| Parent Company | 3/31/2009 | 3/31/2008 |
|---|---|---|
| Provision for pensions | – | – |
| Other pension prohibitions | – | – |
Pledged assets for pension obligations
The Parent Company has issued its guarantee for Group company PRI liabilities.
