The vast majority of employees in TeliaSonera AB are covered by a defined benefit pension plan (the ITP-Tele plan) which means that the individual is guaranteed a pension equal to a certain percentage of his or her salary. The pension plan mainly includes old-age pension, disability pension and family pension. As of January 1, 2007, a new defined contribution pension plan (the ITP1 plan) was introduced. This pension plan is applicable to all employees born in 1979 and later.
The existing pension obligations that TeliaSonera AB assumed when it was converted into a limited liability company on July 1, 1993 and other pension obligations of the parent company are secured by Telia Pension Fund. Certain commitments, chiefly the contractual right to retire at age 55, 60, or 63 for certain categories of personnel, are provided for by a taxed reserve in the balance sheet.
Pension obligations are calculated annually, on the balance sheet date, based on actuarial principles.
December 31,
SEK in millions

20072006
Opening balance, pension obligations covered by plan assets

10,40410,674
Opening balance, pension obligations not covered by plan assets

555859
Opening balance, total pension obligations

10,95911,533
Current service cost

109117
Interest cost

448386
Benefits paid

-849-1,147
Other changes in valuation of pension obligations

-1-47
Termination benefits

153117
Closing balance, pension obligations covered by plan assets

10,28110,404
Closing balance, pension obligations not covered by plan assets

538555
Closing balance, total pension obligations

10,81910,959
of which FPG/PRI pensions

5,9855,819
The fair value of plan assets changed as follows.
December 31,
SEK in millions, except percentages

20072006
Opening balance, plan assets

12,33512,527
Actual return

412808
Payment from pension fund

-950-1,000
Closing balance, plan assets

11,79712,335
Actual return on plan assets (%)

3.36.5
As of the balance sheet date, plan assets were allocated as follows.
December 31, 2007December 31, 2006
Asset categorySEK in millionsPercentSEK in millionsPercent
Fixed income instruments, liquidity7,62264.67,31159.3
Shares and other investments4,17535.45,02440.7
Total11,797100.012,335100.0
of which shares in TeliaSonera AB410.3360.3
Provisions for pension obligations were recognized in the balance sheet as follows.
December 31,
SEK in millions

20072006
Present value of pension obligations

10,81910,959
Fair value of plan assets

-11,797-12,335
Surplus capital in pension fund

1,5161,931
Provisions for pension obligations

538555
Total pension expense (income) was distributed as follows.
January-December
SEK in millions

20072006
Current service cost

109117
Interest cost

448386
Less interest expenses recognized as financial expenses

-24-30
Actual return on plan assets

-412-808
Other changes in valuation of pension obligation

-1-47
Termination benefits

153117
Pension expense (+)/income (-), defined benefit pension plans

273-265
Pension premiums, defined benefit/defined contribution pension plans and other pension costs

6298
Changes in estimates

-19-91
Pension-related social charges and taxes

-58
Less termination benefits (incl. premiums and pension-related social charges) reclassified as restructuring cost

-189-158
Pension expense (+)/income (-)

127-358
Decrease (-)/Increase (+) of surplus capital in pension fund

-41578
Total pension income

-288-280
of which pension premiums paid to the ITP pension plan

3349
Actuarial calculation assumptions
The actuarial calculation of pension obligations and pension expenses is based on principles set by the FPG/PRI system and the Swedish Financial Supervisory Authority. In 2008, actuarial modifications reflecting an extended average life expectancy will be implemented, which is expected to involve a limited increase of the present value of pension obligations.
Strategic plan asset allocation
See "Notes to Consolidated Financial Statements" (corresponding section in Note 23).
Future contributions
As of December 31, 2007, the fair value of plan assets exceeded the present value of TeliaSonera AB's pension obligations and is anticipated to continue doing so. Hence, TeliaSonera AB will not make any contribution to the pension fund in 2008.