Nokia 2005 Annual Report Download - page 164

Notes to the Consolidated Financial Statements (Continued)
6. Pensions (Continued)
Effective on January 1, 2005, the Finnish TEL system was reformed. The most significant change
that has an impact on the Group’s future financial statements is that pensions accumulated after
2005 are calculated on the earnings during the entire working career, not only on the basis of the
last few years of employment as provided by the old rules. An increase to the rate at which
pensions accrue led to a past service cost of EUR 5 million in 2004, which will be recognized over
employees’ future working life.
As a result of the changes in the TEL system, which increased the Group’s obligation in respect of
ex employees and reduced the obligation in respect of recent recruits, a change in the liability has
been recognised to cover future disability pensions. In 2005, to compensate the Group for the
additional liability in respect of ex-employees assets of EUR 24 million were transferred from the
pooled part of the pension system to cover future disability pensions inside Nokia Pension
Foundation. As this transfer of assets is effectively a reduction of the obligation to the pooled
premium, it has been accounted for as a credit to the profit and loss account during 2005.
The amounts recognized in the balance sheet relating to single employer defined benefit schemes
are as follows:
2005 2004
Domestic Foreign Domestic Foreign
Plans Plans Plans Plans
EURm EURm EURm EURm
Fair value of plan assets .............................. 904 372 768 303
Present value of obligations ........................... (890) (495) (727) (398)
Surplus/(Deficit) ..................................... 14 (123) 41 (95)
Unrecognized net actuarial losses ....................... 128 105 93 82
Unrecognized past service cost ......................... 3— 5—
Prepaid/(Accrued) pension cost in balance sheet ........... 145 (18) 139 (13)
Present value of obligations include EUR 35 million (EUR 36 million in 2004) of unfunded
obligations.
The amounts recognized in the profit and loss account are as follows:
2005 2004 2003
EURm EURm EURm
Current service cost .............................................. 69 62 54
Interest cost .................................................... 58 56 46
Expected return on plan assets ..................................... (64) (56) (55)
Net actuarial losses recognized in year ............................... 9—3
Past service cost gain (-) loss (+) .................................... 1(1) —
Transfer from central pool ........................................ (24) ——
Curtailment .................................................... (3) — (10)
Total, included in personnel expenses ................................ 46 61 38
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