Volvo 2007 Annual Report Download - page 114
Download and view the complete annual report
Please find page 114 of the 2007 Volvo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.The Volvo Group
110 Financial information 2007
Notes to consolidated fi nancial statements
Note 24 Provisions for post-employment benefi ts
Post-employment benefi ts, such as pensions, healthcare and other
benefi ts are mainly settled by means of regular payments to inde-
pendent authorities or bodies that assume pension obligations and
administer pensions through defi ned contribution plans. The remain-
ing post-employment benefi ts are defi ned benefi t plans; that is, the
obligations remain within the Volvo Group or are secured by own pen-
sion foundations. Costs and the obligations at the end of period for
defi ned benefi t plans are calculated based on actuarial assumptions
and measured on a discounted basis. The Volvo Group defi ned bene-
fi ts plans relate mainly to subsidiaries in the US and comprise both
pensions and other benefi ts, such as healthcare. Other large-scale
defi ned benefi t plans apply for salaried employees in Sweden (mainly
through the Swedish ITP pension plan) and employees in France and
Great Britain. See Note 1 for further information about the accounting
principles.
The following tables disclose information about defi ned benefi t
plans in the Volvo Group. Volvo report the difference between the
obligations and the plan assets adjusted for actuarial gains and losses
in the balance sheet. The information refers to assumptions applied
for actuarial calculations, periodical costs and the value of obligations
and plan assets at year-end. The tables also include reconciliation of
obligations and plan assets during the year and the difference
between fair values and carrying amounts reported on the balance
sheet date.
Summary of provision for
post-employment benefi ts 2006 2007
Obligations 34,740 35,984
Fair value of plan assets 25,227 25,768
Funded status (9,513) (10,216)
Unrecognized actuarial
(gains) and losses 2,958 2,220
Unrecognized past service costs (96) 353
Net provisions for post-
employment benefi ts (6,651) (7,643)
Assumptions applied for December 31 December 31
actuarial calculations, % 2006 2007
Sweden
Discount rate 4.00 4.50
Expected return on plan assets1 6.00 6.00
Expected salary increases 3.20 3.20
Infl ation 1.50 2.00
United States
Discount rate 5.50 5.75–6.25
Expected return on plan assets1 7.65 7.65
Expected salary increases 3.50 3.50
Infl ation 2.50 2.50
France
Discount rate 4.25 5.25
Expected salary increases 3.00 3.00
Infl ation 2.00 2.00
Great Britain
Discount rate 5.00 5.75
Expected return on plan assets1 5.00–5.80 5.30–6.10
Expected salary increases 4.00–4.60 4.20–4.90
Infl ation 3.00 3.40
1 Applicable for the following accounting period. These assumptions refl ect the
expected long-term return rate on plan assets, based upon historical yield
rates for different categories of investments and weighted in accordance with
the foundation’s investment policy. The expected return has been calculated
net of administrative expenses and applicable taxes.