Saab 2014 Annual Report Download - page 110

FINANCIAL INFORMATION – NOTES
NOTE 37 EMPLOYEE BENEFITS
Saab has two types of pension plans: defined-benefit and defined-contribution. In
defined-benefit plans, post-employment compensation is based on a percentage
of the recipient’s salary. In defined-contribution plans, pensions are based on the
premiums paid and return on assets.
Sweden
The predominant plan in Sweden is the ITP plan under collective agreements
adopted by the Confederation of Swedish Enterprise and the Negotiation Cartel for
Salaried Employees in the Private Business Sector (PTK). Saab in Sweden has
three different ways of securing the defined-benefit plans. They are secured as lia-
bilities in the balance sheet, in pension funds or funded through insurance with
mainly Alecta. The Saab Pension Fund, that secured part of the ITP plan, had
assets of MSEK 5,091 (4,595) as of 31 December 2014, compared to an obliga-
tion of MSEK7,428 (5,793) according to IAS 19, or a solvency margin of 69 per
cent (79).
The following applies to the portion of the defined-benefit plans secured through
insurance with Alecta. According to a pronouncement by the Swedish Financial
Reporting Board, UFR 3 Classification of ITP plans financed by insurance in Alecta,
this is a defined-benefit plan that comprises multiple employers. Alecta is unable to
make a precise distribution of assets and liabilities for each employer. As a result,
Saab cannot report its proportionate share of the plan’s obligations, assets under
management and costs, which it why it has not been possible to report this plan as
a defined-benefit plan. The ITP 2 pension plan, which is secured through insurance
with Alecta, is therefore reported as a defined-contribution plan. No premiums for
defined-benefit plans are paid to Alecta.
The collective funding ratio is of the market value of Alecta’s assets as a percen-
tage of the insurance obligations calculated according to Alecta’s actuarial met-
hods and assumptions, which do not conform to IAS 19. The collective funding
ratio should normally be allowed to vary between 125 and 155 per cent. At year-
end 2014, Alecta’s surplus in the form of the collective funding ratio amounted to
143 per cent (148).
USA
The US has a defined-benefit plan which includes some employees as well as a
supplementary plan for certain senior executives. The plans are company-specific
according to an agreement in 1986 between the employees and the company,
and the plans include retirement and survivor’s pension. The pension is not vested
during the first five years of employment, and the retirement age is 65. Payments
corresponding to accrued pensions are made yearly to an external trustee in order
to secure the pension commitment.
Switzerland
Switzerland has a defined-benefit plan that includes all employees and where mini-
mum benefits are prescribed by law. The company is affiliated with a collective
foundation for the purpose of insuring its employees’ old age and survivor’s pen-
sion, and payments are made annually. Provisions for pensions are made by both
employer and employees. The employee may elect to receive the full pension as a
lump sum at retirement.
Other countries
The pension plans in other countries are not of significant amounts and are there-
fore reported together with Sweden below.
Disclosures regarding defined-benefit plans
2014-12-31 Group
MSEK Sweden USA Switzerland Total
Wholly or partially funded obligations
Present value of defined-benefit
obligations 7,730 291 132 8,153
Fair value of assets under management -5,154 -350 -121 -5,625
Present value of net obligation 2,576 -59 11 2,528
Share funded 67% 120% 92% 69%
Average duration of pension obligation 19 11 17
The net amount as well as special
employer’s contribution is reported in
the following items in the statement of
financial position
Provisions for pensions 2,576 - 11 2,587
Provisions for pensions related to
special employer’s contribution 562 - - 562
Long-term receivables - 59 - 59
2013-12-31 Group
MSEK Sweden USA Switzerland Total
Wholly or partially funded obligations
Present value of defined-benefit
obligations 6,080 233 100 6,413
Fair value of assets under management -4,658 -269 -97 -5,024
Present value of net obligation 1,422 -36 3 1,389
Share funded 77% 115% 97% 78%
Average duration of pension obligation 17 10 15
The net amount as well as special
employer’s contribution is reported in
the following items in the statement of
financial position
Provisions for pensions 1,422 - 3 1,425
Provisions for pensions related to
special employer’s contribution 255 - - 255
Long-term receivables - 36 - 36
Cost reported in the income statement
2014 Group
MSEK Sweden USA Switzerland Total
Costs for employment during
the current year 173 13 6 192
Net interest expense 60 -3 - 57
Cost of defined-benefit plans in
the i ncome statement 233 10 6 249
Cost of defined-contribution plans 565
Payroll tax 197
Total cost of post-employment
compensation 1,011
2013 Group
MSEK Sweden USA Switzerland Total
Costs for employment during
the current year 147 14 5 166
Net interest expense 74 - - 74
Cost of defined-benefit plans in
the i ncome statement 221 14 5 240
Cost of defined-contribution plans 580
Payroll tax 210
Total cost of post-employment
compensation 1,030
106 – SAAB ANNUAL REPORT 2014