Scania - Annual Report 2006

Scania annual report 2006 83 Recognised as provision for pensions in the balance sheet Pension obligations Obligations related to health care Other obligations 2006 2005 2004 2006 2005 2004 2006 2005 2004 Present value of defined-benefit obligations, wholly or partly funded 1,216 1,258 593 – – – 41 40 28 Present value of defined-benefit obligations, unfunded 3,004 2,827 2 091 261 258 167 50 50 36 Present value of defined-benefit obligations 4,220 4,085 2 684 261 258 167 91 90 64 Fair value of plan assets -1,100 -1,048 -395 – – – -48 -47 -21 Net assets not fully valued due to curtailment rule 144 81 – – – – – – – Recognised in the balance sheet 3,264 3,118 2 289 261 258 167 43 43 43 Of which, pension liability recognised under the heading “Provisions for pensions” 3,301 3,157 2 289 261 258 167 43 43 43 Of which, pension asset recognised under the heading “Other non-current receivables” -37 -39 – – – – – – – Assumptions applied in actuarial calculation Sweden (pension) Great Britain (pension) Brazil (health care) Other countries (pension etc) 2006 2005 2004 2006 2005 2004 2006 2005 2004 2006 2005 2004 Discount rate (%) 4.0 4.0 5.5 5.1 5.0 5.5 10.3 10.3 10.3 2.3 – 5.0 2.0 – 4.5 4.5 – 5.5 Expected return on plan assets (%) - - - 6.0 5.5 6.0 10.3 10.3 10.3 3.7 – 5.0 2.3 – 5.0 5.0 – 6.0 Expected wage and salary increase (%) 3.0 3.0 3.0 0.0 0.0 0.0 – – – 1.5 – 4.4 1.5 – 4.4 2.0 – 4.3 Change in health care costs (%) – – – – – – 8.6 8.6 7.8 – – – Employee turnover (%) 5.0 5.0 5.0 0.0 0.0 0.0 – – – 1.0 – 6.4 1.0 – 8.0 1.0 – 6.0 Expected remaining years of service 21.7 22.0 21.5 9.0 10.0 11.0 18.2 18.7 19.0 8.3 – 33.0 8.5 – 33.0 15.0 – 33.0 Expected increase in pension (%) 2.0 2.0 2.0 3.0 2.8 3.0 – – – 0.8 – 3.0 0.8 – 2.0 1.8 – 2.5 Expected return in each country and category of plan assets is calculated taking into account historic return and management’s estimate of future developments. These figures in the above tables have then been combined into a total expected return for Brazil, Great Britain and “Other countries” in the Scania Group, taking into account that no changes in investment strategies are planned. The categories of plan assets in question in the Scania Group are “shares and participations”, “other interest-bearing securities”, “properties” and “bank deposits etc.” Present value of defined-benefit obligations changed Liabilities related to pension obligations Liabilities related to health care benefits Liabilities related to other obligations during the year as follows: 2006 2005 2004 2006 2005 2004 2006 2005 2004 Present value of defined-benefit obligations, 1 January 4,085 2,684 2,411 258 167 150 90 64 52 Present value of reclassified obligations, 1 January 1 -44 401 – – – – – – – Current service expenses 129 117 186 3 2 2 11 10 4 Interest expenses 157 143 125 26 21 14 5 4 2 Payments made by pension plan participants – – -4 – – -8 – – -3 Net actuarial gains and losses for the year 74 785 58 – 6 7 -1 5 8 Exchange rate differences -68 62 -10 -15 65 2 -5 16 3 Disbursements of pension payments -127 -113 -85 -11 -11 – -9 -9 -2 Past service expenses – – 3 – 8 – – – – Present value of defined-benefit obligations in companies bought/sold – 1 – – – – – – – Gains and losses due to net settlements for the year 14 5 – – – – – – – Present value of defined-benefit obligations, 31 December 4,220 4,085 2,684 261 258 167 91 90 64 1 2006: reclassification of a defined-benefit plan to a defined-contribution plan in Switzerland. 2005: a change in legislation in Switzerland as of 1 January 2005, which compels employers to participate in restructuring into foundations in the event of financing deficits, is leading to a reclassification of the plan from defined-contribution to defined-benefit. Continued on next page