Electrolux 2006 Annual Report Download - page 99

notes, all amounts in SEKm unless otherwise stated
• When determining the discount rate, the Group uses AA rated
corporate bonds indexes which match the duration of the pen-
sion obligations. If no corporate bond is available, government
bonds are used to determine the discount rate.
• Expected long-term return on assets is calculated by assuming
that fi x ed income holdings are expected to have the same return
as 10 year government bonds. Equity holdings are assumed to
return an equity-risk premium of 5% over 10 year government
bonds. Hedge funds are assumed to return 4% over 3 month
treasury bills annually. Other alternative asset classes such as
infrastructure or real estate are expected to return what could be
considered reasonable given historical performance and current
market conditions. The benchmark allocation for the assets is
used when calculating the expected return, as this represents
the long-term actual allocation.
• Expected salary increases are based on local conditions in
each country.
• Assumed healthcare costs trend rate has a signifi cant effect on
the amounts recognized in the profi t or loss. A one percentage
point change in the assumed medical cost trend rate would have
the following effects:
Reconcilation of change in the present value of the defi ned benefi t
obligation for funded and unfunded obligations
2006 2005
Other post- Other post-
Pension Healthcare employment Pension Healthcare employment
benefi ts benefi ts benefi ts Total benefi ts benefi ts benefi ts Total
Opening balance, January 1 22,186 3,469 1,078 26,733 17,638 2,948 984 21,570
Current service cost 324 1 98 423 375 15 95 485
Interest cost 814 151 39 1,004 1,043 175 46 1,264
Contributions by plan participants 50 36 — 86 61 6 — 67
Actuarial losses (gains) –724 –161 99 –786 2,094 –63 72 2,103
Past-service cost –174 – 62 33 –203 — — — —
Curtailments –47 — — –47 — — –2 –2
Liabilities extinguished on settlements — — — — –1 — — –1
Liabilities adhering to discontinued operations –1,800 –78 –55 –1,933 — — — —
Exchange differences on foreign plans –1,418 –441 –39 –1,898 1,961 629 45 2,635
Benefi t s paid –1,026 –251 –219 –1,496 –985 –241 –162 –1,388
Closing balance, December 31 18,185 2,664 1,034 21,883 22,186 3,469 1,078 26,733
Reconcilation of change in the
fair value of plan assets 2006 2005
Other post- Other post-
Pension Healthcare employment Pension Healthcare employment
benefi ts benefi ts benefi ts Total benefi ts benefi ts benefi ts Total
Opening balance, January 1 15,548 54 — 15,602 12,234 180 — 12,414
Expected return on plan assets 828 — — 828 840 6 — 846
Actuarial gains (losses) 120 1 — 121 575 –2 — 573
Contributions by employer 979 167 219 1,365 1,307 45 162 1,514
Contributions by plan participants 50 36 — 86 61 6 — 67
Discontinued operations –1,296 — — –1,296 — — — —
Exchange differences on foreign plans –1,196 –4 — –1,200 1,516 60 — 1,576
Benefi t s paid –1,026 –251 –219 –1,496 –985 –241 –162 –1,388
Closing balance, December 31 14,007 3 — 14,010 15,548 54 — 15,602
The pension plan assets include ordinary shares issued by AB Electrolux with a fair value of SEK 41m (62). In 2007, the Group expects
to pay the total of SEK 1,068m in contributions by employer and benefi ts paid directly by the company. In 2006, this amounted to
SEK 1,365m of which SEK 922m were contributions to the Group’s pension funds.
Major categories of plan assets as a percentage
of the total plan assets
December 31,
% 2006 2005
European equities 11 11
North American equities 24 28
Other equities 8 6
European bonds 25 26
North American bonds 20 19
Alternative investments 1) 7 5
Property 3 2
Cash and cash equivalents 2 3
Total 100 100
1) Includes hedge funds and infrastructure investments.
Principal actuarial assumptions at the balance sheet date
expressed as a weighted average
December 31,
% 2006 2005
Discount rate 4.9 4.6
Expected long-term return on assets 6.3 6.4
Expected salary increases 3.7 3.6
Annual increase of healthcare costs 10.0 10.0
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