Note 22

Provisions for pensions and similar obligations

Addtech has defined-contribution and defined-benefit pension plans in Sweden and the UK. The plans cover a large number of employees. Subsidiaries in other countries have mainly defined-contribution pension plans. The Parent Company’s data on pensions are reported in accordance with the Swedish Act on Safeguarding Pension Obligations.

Defined-contribution plans

These plans are mainly retirement pension plans, disability pensions and family pensions. Premiums are paid on an ongoing basis during the year by each Group company and the size of the premium is based on the salary. The pension cost for the period is included in profit or loss.

Obligations for retirement pensions and family pensions for salaried employees in Sweden are secured by insurance in Alecta. According to statement UFR 3 of the Swedish Financial Reporting Board, this is a
defined-benefit plan covering multiple employers. For the 2018/2019 financial year, the Company did not have access to information enabling it to report this plan as a defined-benefit plan. Thus the pension plan
according to ITP2 and secured by insurance in Alecta is recognised as a defined-contribution plan. The year’s fees for pension insurance with Alecta totalled SEK 30 million (26). Fees for the next financial year
are considered to be in line with those for the year reported. The collective consolidation level for Alecta was 144 percent (152) in March 2019. The pension plan according to ITP1 is recognised as a defined- contribution plan.

Defined-benefit plans
These pension plans primarily comprise retirement pensions. Each employer generally has an obligation to pay a lifelong pension and vesting is based on the number of years of employment. The employee must subscribe to the plan for a certain number of years to be fully entitled to retirement benefits. Each year increases the employee’s entitlement to retirement benefits, which is recognised as pension earned during the period and as an increase in pension obligations. Both funded and unfunded pension plans apply in Sweden and the UK. The funded pension obligations are secured by plan assets that are managed by insurance companies. The Group estimates that SEK 1 million (0) will be paid in 2019/2020 to the funded defined-benefit plans. The total number of commitments of 902 (911) included in the obligation consists of 71 active (74), 518 paid-up policy holders (525) and 313 pensioners (312).

Obligations for employee benefits, defined benefit pension plans
Group Parent Company
Pension liability as per balance sheet 2019-03-31 2018-03-31 2019-03-31 2018-03-31
Pension liability PRI 250 221 15 15
Other pension obligations 10 8
Total cost of defined benefit plans 260 229 15 15
Group Parent Company
Obligations for defined benefits and the value of plan assets 2019-03-31 2018-03-31 2019-03-31 2018-03-31
Funded obligations:
Present value of funded defined benefit obligations 53 51
Fair value of plan assets -43 -44
Net debt, funded obligations 10 7
Present value of unfunded defined benefit obligations 250 222 15 15
Net amount in the balance sheet (obligation +, asset –) 260 229 15 15
Pension obligations and plan assets per country:
Pension obligations 281 248 15 15
Plan assets -23 -23
Net amount in Sweden 258 225 15 15
Pension obligations 1
Plan assets -1
Net amount in Norway 0
Great Britain
Pension obligations 22 24
Plan assets -20 -20
Net amount in Great Britain 2 4
Net amount in the balance sheet (obligation +, asset –) 260 229 15 15
Group Parent Company
Reconciliation of net amount for pensions in the balance sheet 2018/2019 2017/2018 2018/2019 2017/2018
Opening balance 229 210 15 15
Cost defined benefit plans 8 8 1 1
Payment of pension benefits -7 -6 -1 -1
Funds contributed by employer -1
Acquisition of companies 8
Translation effects 0 0
Revaluations 31 9
Gains and losses from settlements 0
Net amount in balance sheet (obligation +, asset -) 260 229 15 15
Changes in the obligation for defined benefit plans recognised in the balance sheet 2018/2019 2017/2018
Opening balance 273 234
Pensions earned during the period 2 2
Pensions earned prior periods, vested 0
Interest on plan assets 7 7
Benefits paid -8 -6
Gain (-)/loss (+) resulting from demographic assumptions
Gain (-)/loss (+) resulting from financial assumptions 25 10
Experienced-based gains (-)/losses (+) 5 -2
Acquisition of companies 27
Translation effects 1 1
Gains and losses from settlements -2
Present value of pension obligations 303 273
Changes in plan assets 2018/2019 2017/2018
Opening balance 44 24
Funds contributed by employer 1
Benefits paid -1 0
Interest income recognised in profit or loss 1 1
Return on plan assets, excluding interest income -1 -1
Acquisition of companies 19
Translation effects 1 1
Gains and losses from settlements -2
Fair value of plan assets 43 44
Group Parent Company
Pension costs 2018/2019 2017/2018 2018/2019 2017/2018
Defined-benefit pension plans
Cost for pensions earned during the year 2 2
Revenue for pensions earned in prior periods 0
Interest on obligations 7 7 1 1
Interest income recognised in profit or loss -1 -1
Total cost of defined benefit plans 8 8 1 1
Total cost of defined contribution plans 139 111 7 5
Social security costs on pension costs 17 16 1 1
Total cost of benefits after termination of employment 164 135 9 7
Allocation of pension costs in the income statement 2018/2019 2017/2018
Cost of sales 32 23
Selling and administrative expenses 126 106
Net financial items 6 6
Total pension costs 164 135
2018/2019 2017/2018
Actuarial assumptions Sweden Norway Great Britain Sweden Norway Great Britain
The following material actuarial assumptions were applied in calculating obligations:
Discount rate, 1 April, % 2.55 3.08 2.75 2.40
Discount rate, 31 March, % 2.10 2.86 2.55 2.40 3.08
Future salary increases, % 2.75 2.75 2.50
Future increases in pensions (change in income base amount), % 2.75 3.08 2.75 2.93
Employee turnover, % 10.0 10.0 2,00-5,00
Expected ‘G regulation’, % 2.25
Mortality table DUS14 S2PMA/S2PFA DUS14 K2013 B.E S2PMA/S2PFA
Sensitivity of pension obligations to changes in assumptions Sweden Norway Great Britain Total
Defined benefit pension obligations at 31 March 2019 281 22 303
The discount rate increases by 0.5% -28 -2 -30
The discount rate decreases by 0.5% 33 1 34
Expected life expectancy increases by 1 year 13 1 14
Expected life expectancy decreases by 1 year -13 -1 -14

The discount rate used is equivalent to the interest rate on high-quality corporate bonds or mortgage bonds with a maturity equivalent to the average maturity of the obligation and currency.

For Swedish pension liabilities, the interest rate for Swedish housing bonds is used as a basis and for pension liabilities in the UK, the interest rate for corporate bonds is used. The weighted average maturity
for the commitment is around 18 years (18), which is used as a basis on which to determine the discount rate. Future increases in pensions are based on inflation assumptions. Remaining period of employment (life expectancy) is based on statistical tables prepared by Insurance Sweden and Försäkringssällskapet (the Insurance Society), in Sweden DUS14 and in the UK S2P, CMI 2018.

The sensitivity analyses are based on a change in an assumption, while all other assumptions are held constant. The same method, the projected unit credit method, is used to calculate the sensitivity in the defined-benefit obligation as to calculate the pension obligation recognised in the balance sheet.

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