Volvo 2014 Annual Report Download - page 178

The Parent Company has two types of pension plans:
Defi ned-contribution plans: post-employment benefi t plans where the
Company makes regular payments to separate entities and has no legal
or constructive obligation to pay further contributions. The expenses for
defi ned contribution plans are recognized during the period when the
employee provides service.
Defi ned-benefi t plans: post-employment benefi t plans where the Com-
pany’s undertaking is to provide predetermined benefi ts that the employee
will receive on or after retirement. These benefi t plans are secured
through balance-sheet provisions or pension-fund contributions. Further-
more, a credit insurance policy has been taken out for the value of the
obligations. The main defi ned-benefi t plan is the ITP2 plan which is based
on fi nal salary. The plan is semi-closed, meaning that only new employees
born before 1979 have the possibility to choose the ITP2 solution. The
ITP2 plan for the Company is funded in Volvo Pension Foundation. Pen-
sion obligations are calculated annually, on the balance sheet date, based
on actuarial assumptions.
The defi ned-benefi t obligations are calculated based on the actual salary
levels at year-end and based on a discount rate of 3.84% (3.84) for the
ITP2 plan and 2.6% (2.2) for other pension obligations. Assumptions for
discount rates and mortality rates are determined annually by PRI Pen-
sionsgaranti for ITP2 and Finansinspektionen for other pension obligations,
respectively.
PROVISIONS FOR POST-
EMPLOYMENT BENEFITS
NOTE16
Dec 31,
2014 Dec 31, 2013
Accumulated additional depreciation
Land – 3
Machinery and equipment 4 2
B/S Total untaxed reserves 4 5
NOTE 15 UNTAXED RESERVES
Dec 31,
2014 Dec 31, 2013
Accounts receivable 25 31
Prepaid expenses and accrued income 221 248
Other receivables 54 32
B/S Total other receivables 300 311
The valuation allowance for doubtful receivables amounted to 2 (2) at the
end of the year. The company considers that fair value does not differ from
carrying value.
NOTE 14 OTHER RECEIVABLES
Obligations in
defi ned-benefi t plans Funded Unfunded Total
Obligations opening balance 2013 535 135 670
Service costs 15 13 28
Interest costs 22 3 25
Pensionspaid (16) (19) (35)
Obligations as of December 31, 2013 556 132 688
Service costs 4 6 10
Interest costs 32 3 35
Pensionspaid (17) (19) (36)
Obligations as of December 31, 2014 575 122 697
Fair value of plan assets in funded plans
Plan assets opening balance 2013 547
Actual return on plan assets 44
Contributions and compensation to/from the fund –
Plan assets as of December 31, 2013 591
Actual return on plan assets 65
Contributions and compensation to/from the fund –
Plan assets as of December 31, 2014 656
Provisions for post-employment benefi ts Dec 31,
2014
Dec 31,
2013
Obligations1(697) (688)
Fair value of plan assets 656 591
Funded status (41) (97)
Limitation on assets in accordance with
Swedish accounting principles (81) (36)
B/S Net provisions for
post-employment benefi ts2(122) (133)
1 ITP2 obligations amount to 556 (533).
2 ITP2 obligations, net, amount to 0 (0).
Pension costs 2014 2013
Service costs 10 28
Interest costs335 25
Interest income3(20) (20)
Pension costs for defi ned-benefi t plans 25 33
Pension costs for defi ned-contribution plans 54 40
Special payroll tax/yield tax4326
Cost for credit insurance FPG 2 1
Total costs for the period 84 100
3 Interest cost/interest income, net of 3 (3) is included in fi nancial items.
4 Special payroll tax / yield tax are calculated according to Swedish Tax law and
accrued for in Current liabilities.
The Volvo Pension Foundation was formed in 1996 to secure obliga-
tions relating to retirement pensions for white-collar workers in accord-
ance with the ITP plan. Since its formation, net contributions of 249 have
been made to the foundation by the Parent Company.
Provisions for post-employment benefi ts in the Parent Company’s
balance sheet correspond to the present value of obligations at year-end,
less value of plan assets.
FINANCIAL INFORMATION 2014
174