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The Volvo Group
112 Volvo Group 2005
United Great US
Sweden States France Britain Other Other
Net provisions for post-employment benefi ts Pensions Pensions Pensions Pensions benefi ts plans Total
Funded status at December 31, 2004 (2,158) (3,358) (2,079) (894) (5,876) (1,142) (15,507)
Unrecognized actuarial (gains) and losses 456 277 69 162 240 54 1,258
Unrecognized past service costs – 2 (66) (3) (9) (7) (83)
Net provisions for post-employment
benefi ts at December 31, 2004 (1,702) (3,079) (2,076) (735) (5,645) (1,095) (14,332)
whereof reported as
Prepaid pensions and other assets 2 166 0 0 133 70 371
Provisions for post-employment benefi ts (1,704) (3,245) (2,076) (735) (5,778) (1,165) (14,703)
Net provisions for post-employment benefi ts
Funded status at December 31, 2005 (916) (2,551) (1,858) (563) (6,961) (1,394) (14,243)
Unrecognized actuarial (gains) and losses 755 770 223 592 326 201 2,867
Unrecognized past service costs – 3 (67) (12) (12) 2 (86)
Net provisions for post-employment
benefi ts at December 31, 2005 (161) (1,778) (1,702) 17 (6,647) (1,191) (11,462)
whereof reported as
Prepaid pensions and other assets 0 145 0 35 253 90 523
Provisions for post-employment benefi ts (161) (1,923) (1,702) (18) (6,900) (1,282) (11,986)
Volvo’s pension foundation in Sweden was formed in 1996 to secure
obligations relating to retirement pensions for salaried employees in
Sweden in accordance with the ITP plan (a Swedish individual pen-
sion plan). Plan assets amounting to 2,456 was contributed to the
foundation at its formation, corresponding to the value of the pen-
sion obligations at that time. Since its formation, net contributions of
1,420, whereof 1,188 during 2005, have been made to the founda-
tion. The plan assets in Volvo’s Swedish pension foundation are
invested in Swedish and foreign shares and mutual funds, and in
interest-bearing securities, in accordance with a distribution that is
determined by the foundation’s Board of Directors. At December 31,
2005, the fair value of the foundation’s plan assets amounted to
5,925 (4,079), of which 58% (55) was invested in shares or mutual
funds. At the same date, retirement pension obligations attributable
to the ITP plan amounted to 6,342 (5,366). Swedish companies can
secure new pension obligations through balance sheet provisions or
pension fund contributions. Furthermore, a credit insurance must be
taken out for the value of the obligations. In addition to benefi ts
relating to retirement pensions, the ITP plan also includes, for exam-
ple, a collective family pension, which Volvo fi nances through insur-
ance with the Alecta insurance company. According to an interpreta-
tion from the Swedish Financial Accounting Standards Council’s
interpretations committee, this is a multi-employer defi ned benefi t
plan. For fi scal year 2005, Volvo did not have access to information
from Alecta that would have enabled this plan to be reported as a
defi ned benefi t plan. Accordingly, the plan has been reported as a
defi ned contribution plan. Alecta’s funding ratio is 128.5% (128.0).
Volvo’s subsidiaries in the United States mainly secure their pen-
sion obligations through transfer of funds to pension plans. At the
end of 2005, the total value of pension obligations secured by pen-
sion plans of this type amounted to 12,962 (10,287). At the same
point in time, the total value of the plan assets in these plans
amounted to 10,728 (7,163), of which 60% (64) was invested in
shares or mutual funds. The regulations for securing pension obliga-
tions stipulate certain minimum levels concerning the ratio between
the value of the plan assets and the value of the obligations. During
2005, Volvo contributed 2,225 (1,153) to the pension plans in order
to comply with these regulations.
During 2005 Volvo has made extra contributions to the pensionp-
lans in Great Britain in the amount of 906.
Volvo’s pensionfoundations had no investments in Volvo shares or
other investments related to Volvo as per December 31, 2005.
Notes to consolidated fi nancial statements