Volvo 2013 Annual Report Download - page 151
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Assumptions applied for actuarial
calculations, % Dec 31,
2013 Dec 31,
2012
Sweden
Discount rate14.00 3.25
Expected salary increase 3.00 3.00
Infl ation 1.50 1.50
United States
Discount rate1 2 2.50–4.75 1.75–3.75
Expected salary increase 3.50 3.50
Infl ation 2.50 2.00
France
Discount rate13.25 3.75
Expected salary increase 3.00 3.00
Infl ation 1.50 1.50
Great Britain
Discount rate14.25–4.40 4.25–4.60
Expected salary increases 3.70–3.75 3.20–3.30
Infl ation 3.25 2.70
1 The discount rate for each country is determined by reference to market yields on
high-quality corporate bonds. In countries where there is no functioning market in
such bonds, the market yields on government bonds are used. The discount rate
for the Swedish pension obligation is determined by reference to mortgage bonds.
2 For all plans except one the discount rate used is within the range 3.75–4.75
(3.00–3.75).
Pension costs 2013 2012
Current year service costs 1,297 1,071
Interest expense 1,319 1,415
Interest income (842) (944)
Past service costs 144 32
Gain (loss) on settlements 0 35
Pension costs for the period,
defi ned-benefi t plans 1,918 1,609
Pension costs for defi ned-contribution plans 2,226 2,356
Total pension costs for the period 4,144 3,965
Costs for the period, post–employment
benefi ts other than pensions 2013 2012
Current year service costs 82 141
Interest costs 116 142
Interest income (2) (2)
Past service costs 82 11
(Gain) loss on settlements 1 6
Remeasurements 7 0
Total costs for the period, post–employment
benefi ts other than pensions 286 298
− +
Effect on obligation, SEK M
If discount rate increases 0.5% If discount rate decreases 0.5%
Sweden Pensions
Sweden Pensions
US Pensions
US Pensions
US Other benefits
US Other benefits
France Pensions
France Pensions
Great Britain Pensions
Great Britain Pensions
If inflation decreases 0.5% If inflation increases 0.5%
(1,102)
(688)
(157)
1,253
752
175
(440)
(156)
502
170
(1,102) 1,253
0
(4)
0
4
(340)
(15) 17
386
Sensitivity analysis
Sweden
Pensions US
Pensions France
Pensions Great Britain
Pensions US
Other benefi ts
Average duration of the obligation, years 20.8 10.5 14.1 17.7 10.2
The analysis below presents the sensitivity on the defi ned benefi t obliga-
tions when changes in the applied assumptions for dicount rate and infl a-
tion are made. The sensitivity analysis is based on a change in an assump-
tion while holding all other assumptions constant. In practice, this is not
probable, and changes in some of the assumptions may be correlated.
147