29 Pension obligations

The company has in its operating countries several defined contribution pension plans which are subject to local regulation and practices. The company’s one most significant pension plan is the Finnish Emplyees Pensions Act (TyEL), in which the benefits are determined directly on the basis of the level of the beneficiary’s earnings level. TyEL pension plan is mainly arranged through pension insurance companies and it is treated as a defined contribution plan.

At the end of 2014, the company had defined benefit pension plans in Finland and Norway. All plans at the year-end 2014 were final salary defined benefit plans, and they supplement the statutory pensions or enable retirement before the statutory retirement age. The company’s two defined benefit pension plans in Norway were terminated during 2014 from which the company recognised a curtailment gain of EUR 0.2 million which was booked to other operating income. In 2013, some of the company’s defined benefit plans were converted to defined contribution plans in Norway. All of the plans’ obligations, EUR 12.4 million, were settled. In addition, the company recognised a curtailment gain of EUR 1.9 million, which was booked to other operating income. Three persons left the Finnish plan in 2013, which was treated as a partial settlement of the obligation, and it had no effect on the company’s income statement.

EUR 1,000

31 Dec 2015 (forecast) 31 Dec 2014 31 Dec 2013
Recognised in the balance sheet


Present value of funded obligations

576 614 969

Fair value of plan assets

-68 -61 -102

Total amount recognised in the balance sheet

508 553 867


of which in Finland

499 504 490


of which in Norway

10 49 376

Estimated amount of defined benefit plan payments in Lemminkäinen Group during 2015 is EUR 0.0 million. Estimates and forecasts may vary from actual figures.


EUR 1,000 Present value of obligation Fair value of plan assets Total
1 Jan 2014
969
-102 867
Current service cost
5

5
Net interest
22
-3 19
Settlements
-41
41
Curtailments
-227

-227



-241
38 -203
Remeasurements

Return on plan assets
13 13

(Gain)/loss from change in financial assumptions -159

-159

Experience (gains)/losses 149

149


-10
13 3
Exchange differences -11
0 -11
Employer contributions

-23 -23
Benefit payments -14
14
Business combinations and disposals
-79

-79
31 Dec 2014 614
-61 553
EUR 1,000 Present value of obligation Fair value of plan assets Total
1 Jan 2013 19,032
-13,816 5,216
Current service cost 1,383

1,383
Net interest 393
-226 167
Settlements -12,434
12,434
Curtailments -1,933

-1,933


-12,591
12,208 -383
Remeasurements



Return on plan assets
27 27

Change in demographic assumptions
1,101

1,101

(Gain)/loss from change in financial assumptions -4,479
586 -3,892

Experience (gains)/losses
-554

-554


-3,931
614 -3,318
Exchange differences -1,158
824 -334
Employer contributions

-314 -314
Benefit payments -382
382
31 Dec 2013 969
-102 867








The company's defined benefit pension obligations do not include minimum funding requirements.





31 Dec 2014 Finland 31 Dec 2014 Norway 31 Dec 2013 Finland 31 Dec 2013 Norway
Actuarial assumptions





Discount rate, %
2.5 3.0 3.3 4.1

Inflation rate, %
2.0 1.8 2.0 1.8

Expected rate of salary increases, %
1.0 3.0 1.0 3.3

Future pension increases, %
2.1 2.3 2.1 0.6












31 Dec 2014 Finland 31 Dec 2014 Norway 31 Dec 2013 Finland 31 Dec 2013 Norway
Life expextancy of plan members





Male age 65 (current life expectancy), years
19.0 20.6 19.0 20.6

Female age 65 (current life expectancy), years
24.7 23.5 24.7 23.5

Male age 45 (at age 65), years
20.6 22.8 20.6 22.8

Female age 45 (at age 65), years
26.4 26.0 26.4 26.0








Defined benefit plans’ assets consist entirely of qualifying insurance policies and are fair valued on the accounting date. These assets do not include investments to Lemminkäinen or to real estate or other assets used by the company. The expected return on the plan assets is an estimate of a life insurance company's future long term total rebate.


Plan participants at the end of period 31 Dec 2014 31 Dec 2013
Active
6 12
Inactive not in pay status / Deferred 9 9
Inactive in pay status / Pensioners
91 95
Total number of participants
106 116


The effect of a 0.5 percentage point change in the most significant actuarial assumptions to the amount of defined benefit pension obligations is presented in the tables below.



31 Dec 2014 Finland 31 Dec 2014 Norway 31 Dec 2013 Finland 31 Dec 2013 Norway
0.5% increase in the principal assumption will impact the liability as follows


Discount rate
-4.76% -0.33% -4.49% -3.32%

Inflation rate
55.41% - 4.98% -

Expected rate of salary increases
0.24% 0.01% 0.17% 0.01%







0.5% decrease in the principal assumption will impact the liability as follows





Discount rate
5.22% 0.33% 4.30% 3.32%

Inflation rate
-35.66% - -4.74% -

Expected rate of salary increases
-0.24% -0.01% -0.17% -0.01%







The above analyses are based on a 0.5 percentage point change in an assumption while holding all other assumptions constant. When calculating the sensitivity of the defined benefit pension obligation the same method has been applied as when measuring the defined benefit pension obligation recognised in the balance sheet.




2014 2013 2012 2011 2010
Plan assets and liabilities for the past five years

Defined benefit obligation 614 969 19,032 21,674 21,776

Fair value of plan assets -61 -102 -13,816 -13,376 -15,961


553 867 5,216 8,298 5,815
 
ToolsClose