Note 22

Provisions for pensions and similar obligation

Addtech has defined-contribution and defined-benefit pension plans in Sweden, Switzerland, the UK and Italy. 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 2020/2021 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 (31). 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 160 percent (133) in March 2021. 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 reti-rement 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, Switzerland, the UK and Italy. The funded pension obligations are secured by plan assets that are managed by insurance companies. The Group estimates that SEK 6 million (4) will be paid in 2021/2022 to the funded defined-benefit plans. The total number of commitments of 996 (963) included in the obligation consists of 160 active (132), 473 paid-up policy holders (488) and 363 pensioners (343).

Obligations for employee benefits, defined benefit pension plans
Group Parent Company
Pension liability as per balance sheet 2021-03-31 2020-03-31 2021-03-31 2020-03-31
Pension liability PRI 284 270 14 15
Other pension obligations 52 62
Total cost of defined benefit plans 336 332 14 15
Group Parent Company
Obligations for defined benefits and the value of plan assets 2021-03-31 2020-03-31 2021-03-31 2020-03-31
Funded obligations:
Present value of funded defined benefit obligations 308 255
Fair value of plan assets -263 -193
Net debt, funded obligations 45 62
Present value of unfunded defined benefit obligations 291 270 14 15
Net amount in the balance sheet (obligation +, asset –) 336 332 14 15
Pension obligations and plan assets per country:
Sweden
Pension obligations 318 303 14 15
Plan assets -25 -25
Net amount in Sweden 293 278 14 15
Switzerland
Pension obligations 250 200
Plan assets -218 -149
Net amount in Switzerland 32 51
Great Britain
Pension obligations 23 22
Plan assets -20 -19
Net amount in Great Britain 3 3
Italy
Pension obligations 8
Plan assets
Net amount in Italy 8
Net amount in the balance sheet (obligation +, asset –) 336 332 14 15
Group Parent Company
Reconciliation of net amount for pensions in the balance sheet 2020/2021 2019/2020 2020/2021 2019/2020
Opening balance 332 260 15 15
Cost defined benefit plans 8 13 1 1
Payment of pension benefits -7 -7 -2 -1
Funds contributed by employer -5 -4
Acquisition of companies -18 12
Translation effects 32 54
Revaluations -6 4
Gains and losses from settlements 0 0
Net amount in balance sheet (obligation +, asset -) 336 332 14 15
Group
Changes in the obligation for defined benefit plans recognised in the balance sheet 2020/2021 2019/2020
Opening balance 525 303
Pensions earned during the period 9 7
Pensions earned prior periods, vested -5
Interest on obligations 6 7
Benefits paid -4 -5
Funds contributed by employee 3 3
Revaluations:
Gain (-)/loss (+) resulting from demographic assumptions -10
Gain (-)/loss (+) resulting from financial assumptions 13 20
Experienced-based gains (-)/losses (+) 5 -14
Acquisition of companies 89 189
Translation effects -32 15
Gains and losses from settlements
PRESENT VALUE OF PENSIONS OBLIGATIONS 599 525
Group
Changes in plan assets 2020/2021 2019/2020
Opening balance 193 43
Funds contributed by employer 5 4
Funds contributed by employee 3 3
Benefits paid 3 2
Interest income recognised in profit or loss 2 1
Return on plan assets, excluding interest income 26 -6
Acquisition of companies 57 135
Translation effects -26 11
Gains and losses from settlements
Fair value of plan assets 263 193
Group Parent Company
Pension costs 2020/2021 2019/2020 2020/2021 2019/2020
Defined-benefit pension plans
Cost for pensions earned during the year 9 7 0 1
Revenue for pensions earned in prior periods -5 0
Interest on obligations 6 7 1 0
Interest income recognised in profit or loss -2 -1
Total cost of defined benefit plans 8 13 1 1
Total cost of defined contribution plans 157 157 6 7
Social security costs on pension costs 20 19 1 1
Total cost of benefits after termination of employment 185 189 8 9
Group
Allocation of pension costs in the income statement 2020/2021 2019/2020
Cost of sales 40 37
Selling and administrative expenses 141 146
Net financial items 4 6
Total pension costs 185 189
2020/2021 2019/2020
Actuarial assumptions Sweden Switzerland Great Britain Italy Sweden Switzerland Great Britain Italy
The following material actuarial assumptions were applied in calculating obligations:
Discount rate, 1 April, % 1.30 0.45 2.81 2.10 2.86
Discount rate, 31 March, % 1.60 0,40/0,30 2.53 0.72 1.30 0.45 2.81
Future salary increases, % 2.80 0,50/1,00 2.00 2.25 1.00
Future increases in pensions (change in income base amount), % 1.80 0.00 3.22 0.80 1.20 0.00 2.61
Employee turnover, % 10.0 5.0 10.0
Expected ‘G regulation’, %
Mortality table DUS14 BVG 2015/2020 GT S3PA Tavole IPS55 DUS14 BVG 2015 GT S3PA
Sensitivity of pension obligations to changes in assumptions Sweden Switzerland Great Britain Italy Total
Defined benefit pension obligations at 31 March 2021 318 250 23 8 599
The discount rate increases by 0.5% -32 -20 -2 0 -54
The discount rate decreases by 0.5% 36 21 2 0 59
Expected life expectancy increases by 1 year 16 7 3 26
Expected life expectancy decreases by 1 year -15 -8 -3 -26

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 Switzerland, the UK and Italy, 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. In Sweden, the remaining period of employment (life expectancy) is based on DUS 14, statistical tables prepared by Insurance Sweden and Försäkringssällskapet (the Insurance Society), in Switzerland on BVG 2015 and 2020 GT, in the UK on S3PA, and in Italy on Tavole IPS55.

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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