BUSINESS OPERATIONS AND VALUE CREATION
SUSTAINABILITY REPORT
FINANCIAL DEVELOPMENT
GOVERNANCE
■ 3.4 Retirement benefit obligations
Post-employment benefits
EUR million
2022
2021
Liabilities recognised in balance sheet Defined benefit pension plans Defined contribution pension plans
10.3
13.4 0.3 13.7
Accounting principles The Group’s arrangements concerning benefits following the termination of employment are either defined benefit pension plans or defined contribution pension plans. A defined contribu- tion plan is a pension arrangement in which fixed contributions are made to a separate unit, and the Group does not have legal or constructive obligations to make additional contributions if the fund has insufficient funds to pay all benefits to all employees in accordance with its obligations in the future. All arrangements that do not meet these requirements are considered to be defined benefit plans. A defined benefit plan defines the pension benefit that the employee will receive upon retiring , the amount of which depends on factors including the employee’s age, years of service and salary level, for example. With defined benefit plans, the current value of the obligations on the end date of the reporting period, less the fair value of the assets included in the arrangement, is recognised on the balance sheet as a liability. The amount of the obligation arising from the plan is based on annual calculations by independent actuaries using the projected unit credit method. The current value of the obligation is determined using the interest rate equalling the interest rate of high-quality bonds issued by the companies as the discount rate for the estimated future cash flows. The bonds used in determining the interest rate have been issued in the same currency as the benefits to be paid, and their maturity is approximately the same as that of the corresponding pension obligation. Actuarial gains and losses from experience verifications and changes in actuarial assumptions are recognised through items of other comprehensive income as a reimbursement or charge in equity for the period during which they have been incurred. Past service costs are recognised immediately through profit and loss. Apart from contributions related to pension insurance, the Group does not have any other payment obligations in defined contribu- tion plans. Obligation-based payments are allocated as expenses in accordance with accrual accounting. Key estimates and judgements The determination of the current value of pension obligations arising from defined benefit plans and the items to be recognised as expenses during the financial period is based on the use of actuarial assumptions, which involves management judgement. The assumptions include, among other things, the discount rate, the assumed increase in the salary level and the assumed life expectancy. The actuarial assumptions used may differ significantly from the actual results, due to changes in economic conditions or the employment relationships of the people covered by the arrangements. Significant differences between the assumptions and actual results may affect the amount of the pension obligation and the value of items to be recognised as expenses.
0.1
Total
10.4
Surplus of funded plans in assets
-3.4
-12.2
Defined benefit pension plans The most significant defined benefit pension plans are in Germany and United Kingdom. Group’s German defined benefit pension plans grant old-age pensions, disability pensions and family pensions exceeding the statutory pension level to eligible officials and senior management. The retirement age is usu- ally 65 years, and the amount of pension depends on the length of service. Officials and senior management are required to have a service history of 25–30 years to receive a full pension. Some of the pension arrangements are closed. The defined benefit plans in Germany are unfunded. The defined benefits plans in United Kingdom guarantee participants of the plan a pension, the amount of which is based on the length of service and the salary in the most recent working years. The arrangement is closed to new members. The UK pension scheme operates under an independent foundation separate from the Group. The Group also has defined benefit plans in Finland, Belgium and Italy.
Amounts in balance sheet
EUR million
2022 36.3 -37.3
2021
Present value of funded obligations
53.2
Fair value of plan assets Deficit (+) / surplus (-)
-62.8
-0.9
-9.6 10.8
Present value of unfunded obligations
7.8
Deficit (+) / surplus (-) of defined benefit pension plans, total
6.9
1.2
Defined benefit-based pension liabilities on the balance sheet, net Defined benefit-based pension assets on the balance sheet, net
10.3
13.4
-3.4
-12.2
104
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