Volvo 2015 Annual Report Download - page 168

The Parent Company has two types of pension plans:
Defined-contribution plans: post-employment benefit plans where the
Company makes regular payments to separate entities and has no legal
or constructive obligation to pay further contributions. The expenses for
defined contribution plans are recognized during the period when the
employee provides service.
Defined-benefit plans: post-employment benefit plans where the Company’s
undertaking is to provide predetermined benefits that the employee will
receive on or after retirement. These benefit plans are secured through
balance-sheet provisions or pension-fund contributions. Furthermore, a
credit insurance policy has been taken out for the value of the obligations.
The main defined-benefit plan is the ITP2 plan which is based on final
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. Pension
obligations are calculated annually, on the balance sheet date, based on
actuarial assumptions.
The defined-benefit 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 1.9% (2.6) 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.
The Volvo Pension Foundation was formed in 1996 to secure obliga-
tions relating to retirement pensions in accordance with the ITP plan.
Since its formation, net contributions of 249 have been made to the foun-
dation by the Parent Company.
Provisions for post-employment benefits in the Parent Company’s
balance sheet correspond to the present value of obligations at year-end,
less value of plan assets.
PROVISIONS FOR POST-
EMPLOYMENT BENEFITS
NOTE
16
Dec 31,
2015 Dec 31, 2014
Accumulated additional depreciation
Machinery and equipment 4 4
B/S Total untaxed reserves 4 4
NOTE 15 UNTAXED RESERVES
Dec 31,
2015 Dec 31, 2014
Accounts receivable 9 25
Prepaid expenses and accrued income 62 221
Other receivables 45 54
B/S Total other receivables 116 300
The valuation allowance for doubtful receivables amounted to 1 (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
defined-benefit plans Funded Unfunded Total
Obligations opening balance 2014 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
Service costs 15 11 26
Interest costs 21 2 23
Pensionspaid –18 –18 –36
Obligations as of December 31, 2015 593 117 710
Fair value of plan assets in funded plans
Plan assets opening balance 2014 591
Actual return on plan assets 65
Contributions and compensation to/from the fund –
Plan assets as of December 31, 2014 656
Actual return on plan assets 36
Contributions and compensation to/from the fund –
Plan assets as of December 31, 2015 692
Provisions for post-employment benefits Dec 31,
2015
Dec 31,
2014
Obligations1–710 –697
Fair value of plan assets 692 656
Funded status –18 –41
Limitation on assets in accordance with RFR2 (when
plan assets exceed corresponding obligations) –99 –81
B/S Net provisions for
post-employment benefits2–117 –122
1 The ITP2 obligations amount to 573 (556).
2 ITP2 obligations, net, amount to 0 (0).
Pension costs 2015 2014
Service costs 26 10
Interest costs323 35
Interest income3–18 –20
Pension costs for defined-benefit plans 31 25
Pension costs for defined-contribution plans 46 54
Special payroll tax/yield tax446 3
Cost for credit insurance FPG 0 2
Total costs for the period 123 84
3 Interest cost, net of 2 (3) is included in the financial items
4 Special payroll tax / yield tax are calculated according to Swedish Tax law and
accrued for in Current liabilities
166
GROUP PERFORMANCE 2015 PARENT COMPANY NOTES