Scania - Annual Report 2006

Scania annual report 2006 82 The Group’s employees, former employees and their survivors may be included in both defined-contribution and defined-benefit plans related to post-employment compensation. The defined-benefit plans include retirement pensions, survivor pensions, health care and severance pay. The commitment that is recognised in the balance sheet stems from the defined-benefit plans. Where of the largest are found in Sweden, Great Britain and Brazil. They are safeguarded via re-insured provisions in the balance sheet, foundations and funds. Calculations are performed according to the “projected unit credit method”, using the assumptions presented in the table below, also taking into account any revocability. As of 2005, actuarial gains and losses are recognised directly in equity. The actuarial loss of SEK 72 m. during the comparative year 2004 was reclassified from the income statement to equity. In the case of some of the Group’s defined-benefit multi-employer plans, sufficient information cannot be obtained to calculate Scania’s share in these plans. They have thus been accounted for as defined-contribution. In Scania’s case, this applies to the Dutch fund Pensioenfonds Metaal en Techniek, which is administered via MN Services, and Bedrijfstakpensioenfonds Metaloelektro, which is administered via PVF Achmea, as well as the portion of the Swedish ITP occupational pension plan that is administered via the retirement insurance company Alecta. Most of the Swedish plan for salaried employees (the collectively agreed ITP plan), however, is accounted for by provisions in the balance sheet, safeguarded by credit insurance from the mutual insurance company Försäkringsbolaget Pensionsgaranti (FPG), and are administered by a Swedish multi-employer institution, the Pension Registration Institute (PRI). Premiums to Alecta amounted to SEK 76 m. (72 and 74, respectively). A surplus or deficit at Alecta may mean a refund to the Group or lower or higher future premiums. At year-end 2006, Alecta’s surplus, in the form of a collective consolidation level, amounted to 144 (128 and 128, respectively) percent. The collective consolidation level consists of the fair value of Alecta’s assets as a percentage of its insurance obligations calculated according to Alecta’s actuarial assumptions, which do not coincide with IA S 19. In the Dutch plans, both companies and employees contribute to the plan. The companies’ premiums to MN Services amounted to SEK 24 m. (22 and 19, respectively) and to PVF Achmea SEK 51 m. (55 and 49, respectively). The consolidation level amounted to 135 (126 and 114, respectively) percent for MN Services and 129 (127 and 115, respectively) percent for PVF Achmea. Scania’s forecasted disbursement of pensions is SEK 151 m. in 2007. NOTE 17 Provisions for pensions and simi lar commi tments Expenses for pensions and other defined-benefit obligations recognised in the income statement Expenses related to pension obligations Expenses related to health care benefits Expenses related to other obligations 2006 2005 2004 2006 2005 2004 2006 2005 2004 Current service expenses -129 -117 -186 -3 -2 -2 -11 -10 -4 Interest expenses -157 -143 -125 -26 -21 -14 -5 -4 -2 Expected return on plan assets 46 44 20 – – – 5 3 1 Past service expenses – – -3 – -8 – – – – Gains (+) and losses (-) due to curtailments and settlements -14 10 – – – – – – – Curtailment in valuation of net assets -10 – – – – – – – – Total expense for defined-benefit obligations recognised in the income statement -264 -206 -294 -29 -31 -16 -11 -11 -5 For defined-contribution plans, Scania makes continuous payments to public authorities and independent organisations, which thus take over obligations towards employees. The Group’s expenses for defined-contribution plans amounted to SEK 542 m. (488 and 455, respectively) during 2006. Pension expenses and other defined-benefit payments are found in the income statement under the headings “Cost of goods sold”, SEK 41 (72 and 117, respectively), “Selling expenses”, SEK 62 m. (54 and 22, respectively) and “Administrative expenses”, SEK 64 m. (23 and 71, respectively). The interest portion of pension expenses, along with the return on plan assets, is found under “Financial expenses and income”. Expenses for pensions and other defined-benefit obligations recognised in equity Expenses related to pension obligations Expenses related to health care benefits Expenses related to other obligations 2006 2005 2004 2006 2005 2004 2006 2005 2004 Experience-based adjustments in pension liability -56 -32 N/A – -6 N/A 1 -1 N/A Experience-based adjustments in plan assets 22 40 N/A – – N/A – 14 N/A Effects of changes in actuarial assumptions -19 -771 N/A – – N/A – -2 N/A Net actuarial gains (+) and losses (-) for the year -53 -763 -65 – -6 -7 1 11 0 Curtailment in valuation of net assets -16 -12 – – – – – – – Total expense/revenue for defined-benefit obligations recognised in equity -69 -775 -65 – -6 -7 1 11 0 The accumulated amount of actuarial losses in equity was SEK 907 m. before taxes.