Pension obligations and pension expenses
Total assets (provisions) for pension obligations were as follows.
|
|
December 31, | |
|---|---|---|
| SEK in millions | 2008 | 2007 |
| Present value of pension obligations | 22,814 | 20,807 |
| Fair value of plan assets | -18,068 | -19,265 |
| Pension obligations less plan assets | 4,746 | 1,542 |
| Unrecognized past service cost | -19 | -2 |
| Unrecognized actuarial gains (+)/losses (-) | -5,035 | -1,311 |
| Net assets (-)/provisions (+) for pension obligations | -308 | 229 |
| of which recognized as provisions | 22 | 416 |
| of which recognized as assets | -330 | -187 |
For comments, see section “Pension obligation risk” in Note 28 “Financial Risk Management.”
Total pension expenses were distributed as follows.
|
|
January–December | |
|---|---|---|
| SEK in millions | 2008 | 2007 |
| Current service cost | 441 | 461 |
| Interest cost | 925 | 814 |
| Expected return on plan assets | -996 | -865 |
| Amortization of past service cost | -14 | -13 |
| Amortization of actuarial gains (-)/losses (+) | 52 | 83 |
| Pension expenses, defined benefit pension plans | 408 | 480 |
| Settlement of pension obligations | 3 | – |
| Termination benefits (excl. premiums and pension-related social charges) | 408 | 182 |
| Pension premiums, defined benefit/defined contribution pension plans and pay-as-you-go systems | 690 | 490 |
| Pension-related social charges and taxes, other pension expenses | 206 | 309 |
| Less termination benefits (incl. premiums and pension-related social charges) reported as restructuring charges | -543 | -240 |
| Total pension expenses | 1,172 | 1,221 |
| of which pension premiums paid to the ITP pension plan | 92 | 105 |
Principal actuarial assumptions
The actuarial calculation of pension obligations and pension expenses is based on the following principal assumptions, each presented as a weighted average for the different pension plans.
|
|
December 31, | |
|---|---|---|
|
Percentages, except remaining working life |
2008 | 2007 |
| Discount rate | 4.2 | 4.6 |
| Expected rate of compensation increase | 3.2 | 3.2 |
| Employee turnover rate | 2.9 | 2.9 |
| Average expected remaining working life, years | 14.4 | 14.4 |
| Increase in income base amount (only Swedish Group units) | 2.8 | 2.8 |
| Annual adjustments to pensions | 2.1 | 2.1 |
| Expected return on plan assets | 4.7 | 5.1 |
Specifications to pension obligations and pension expenses
Changes in present value of pension obligations, fair value of plan assets, net assets (net provisions) for pension obligations and actuarial net gains or losses for the defined benefit pension plans were as follows.
|
|
December 31, | |
|---|---|---|
| SEK in millions, except percentages | 2008 | 2007 |
| Present value of pension obligations |
|
|
| Opening balance | 20,807 | 21,495 |
| Current service cost | 441 | 461 |
| Interest cost | 925 | 814 |
| Benefits paid | -1,181 | -1,143 |
| Benefits paid, early retirement | -23 | -48 |
| Termination benefits | 408 | 182 |
| Reclassifications | – | 435 |
| Operations acquired/divested | -22 | -25 |
| Settlement of pension obligations | -3 | – |
| Actuarial gains (-)/losses (+) | 1,104 | -1,489 |
| Exchange rate differences | 358 | 125 |
| Closing balance, present value of pension obligations | 22,814 | 20,807 |
| Experience adjustments arising on plan liabilities (%) | -0.2 | 0.6 |
| Effects of changes in actuarial assumptions (%) | -4.6 | 6.5 |
| Fair value of plan assets |
|
|
| Opening balance | 19,265 | 18,977 |
| Expected return on plan assets | 996 | 865 |
| Contribution to pension funds | 645 | 573 |
| Payment from pension funds | -536 | -982 |
| Operations acquired/divested | -23 | -24 |
| Actuarial gains (+)/losses (-) | -2,633 | -272 |
| Exchange rate differences | 354 | 128 |
| Closing balance, plan assets | 18,068 | 19,265 |
| Experience adjustments arising on plan assets (%) | -13.6 | -1.4 |
| Return on plan assets |
|
|
| Expected return on plan assets | 996 | 865 |
| Actuarial gains (+)/losses (-) | -2,633 | -272 |
| Actual return on plan assets | -1,637 | 593 |
| Actual return on plan assets (%) | -8.5 | 3.1 |
| Net assets/provisions for pension obligations |
|
|
| Opening balance | 229 | -82 |
| Pension expenses, defined benefit pension plans | 408 | 480 |
| Benefits paid | -1,181 | -1,143 |
| Benefits paid, early retirement | -23 | -48 |
| Contribution to pension funds | -645 | -573 |
| Payment from pension funds | 536 | 982 |
| Termination benefits | 408 | 182 |
| Operations acquired/divested, net | -3 | – |
| Reclassifications | – | 435 |
| Exchange rate differences | -37 | -4 |
| Closing balance, net assets (-)/provisions (+) for pension obligations | -308 | 229 |
| Unrecognized actuarial gains/losses |
|
|
| Opening balance, actuarial gains (+)/losses (-) | -1,311 | -2,611 |
| Actuarial gains (-)/losses (+) to be recognized | 52 | 83 |
| Actuarial gains (-)/losses (+), acquired/divested operations | 2 | – |
| Actuarial gains (+)/losses (-), pension obligations | -1,104 | 1,489 |
| Actuarial gains (+)/losses (-), plan assets | -2,633 | -272 |
| Exchange rate differences | -41 | 0 |
| Closing balance, unrecognized actuarial gains (+)/losses (-) | -5,035 | -1,311 |
| Operations divested |
|
|
| Decrease in pension obligations | -22 | -25 |
| Decrease in plan assets | 23 | 24 |
| Change in unrecognized actuarial gains (-)/losses (+) | 2 | – |
| Net position, operations divested | 3 | -1 |
Plan-asset allocation
As of the balance sheet date, plan assets were allocated as follows.
|
|
December 31, | |||
|---|---|---|---|---|
|
|
2008 | 2007 | ||
| Asset category | SEK in millions |
Per- cent |
SEK in millions | Per-cent |
| Fixed income instruments, liquidity | 12,598 | 69.7 | 12,269 | 63.7 |
| Shares and other investments | 5,470 | 30.3 | 6,996 | 36.3 |
| Total | 18,068 | 100.0 | 19,265 | 100.0 |
| of which shares in TeliaSonera AB | 68 | 0.4 | 88 | 0.5 |
Future contributions
For companies in Sweden, the total pension liabilities are secured also by pension credit insurance. This means that, should the net provision for pension obligations increase, each company can choose if and when to contribute to the pension fund or otherwise to recognize a provision in the balance sheet. To pension funds outside Sweden, TeliaSonera expects to contribute SEK 154 million in 2009.