Electrolux 2010 Annual Report Download - page 157

• When determining the discount rate, the Group uses AA-rated
corporate bond 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. In Sweden,
mortgage bonds are used for determining the discount rate.
• Expected long-term return on assets is calculated by assuming
that fixed-income holdings are expected to have the same
return as ten-year corporate bonds. Equity holdings are
assumed to return an equity-risk premium of 5% over ten-year
government bonds. Alternative investments are assumed to
return 4% over three-month Libor annually. The benchmark allo-
cation 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.
• The assumed healthcare cost-trend rate has a significant effect
on the amounts recognized in the profit or loss. A one-percent-
age point change in the assumed medical cost-trend rate would
have the following effects:
Major categories of plan assets as a percentage
of total plan assets
December 31,
%2010 2009
European equities 16 10
North American equities 16 18
Other equities 10 11
European bonds 19 21
North American bonds 22 23
Alternative investments1) 13 9
Property 3 4
Cash and cash equivalents 1 4
Total 100 100
1) Includes hedge funds and infrastructure investments.
Principal actuarial assumptions at balance-sheet date expressed
as a weighted average
December 31,
%2010 2009
Discount rate 5.2 5.2
Expected long-term return on assets 6.8 6.9
Expected salary increases 3.8 3.8
Annual increase of healthcare costs 8.0 8.5
Reconciliation of change in present value of defined benefit obligation
for funded and unfunded obligations
2010 2009
Pension
benefits Healthcare benefits
Other post-
employment
benefits Total Pension benefits
Healthcare
benefits
Other post-
employment
benefits Total
Opening balance, January 1 19,610 2,055 734 22,399 19,934 2,369 882 23,185
Current service cost 312 1 4 317 248 1 4 253
Interest cost 957 114 35 1,106 990 134 43 1,167
Contributions by plan participants 41 21 — 62 44 25 — 69
Actuarial losses/gains 222 150 26 398 341 –90 –25 226
Past-service cost — — 15 15 –20 –13 — –33
Curtailments/special termination benefit cost 10 32 12 54 –69 — –1 –70
Liabilities extinguished on settlements –2 — –3 –5 –4 — 7 3
Exchange differences on foreign plans –1,054 –117 –94 –1,265 –690 –148 –45 –883
Benefits paid –1,098 –199 –72 –1,369 –1,164 –236 –131 –1,531
Other — 11 — 11 — 13 — 13
Closing balance, December 31 18,998 2,068 657 21,723 19,610 2,055 734 22,399
Reconciliation of change in fair value of plan assets
2010 2009
Pension
benefits Healthcare benefits
Other post-
employment
benefits Total Pension benefits
Healthcare
benefits
Other post-
employment
benefits Total
Opening balance, January 1 17,749 1,259 — 19,008 13,987 2 — 13,989
Expected return on plan assets 1,140 90 — 1,230 935 — — 935
Actuarial gains/losses 581 53 — 634 1,130 — — 1,130
Settlements — — — — –4 — — –4
Contributions by employer 626 192 72 890 3,418 1,545 131 5,094
Contributions by plan participants 41 21 — 62 44 25 — 69
Exchange differences on foreign plans –974 –76 — –1,050 –597 –77 — –674
Benefits paid –1,098 –199 –72 –1,369 –1,164 –236 –131 –1,531
Other 4 — — 4 — — — —
Closing balance, December 31 18,069 1,340 — 19,409 17,749 1,259 — 19,008
The pension plan assets include ordinary shares issued by AB
Electrolux with a fair value of SEK 86m (75). In 2011, the Group
expects to pay a total of SEK 667m in contributions to the funds
and payments of benefits directly to the employees. In 2010, this
amounted to SEK 890m, of which SEK 579m were contribu-
tions to the Group’s pension funds.
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