Annual Report 2008 - Securitas

Note 32. Provisions for pensions
and similar commitments
The Group operates or participates in a number of defined benefit and defined
contribution pension and other long-term employee post benefit plans
throughout the world. These plans are structured in accordance with local
rules and practices. The overall cost of these plans for the Group is provided
in Note 12.
USA
The majority of the Group’s U.S. employees are eligible to join their respective
employer’s defined contribution retirement arrangements under which
the employer matches employee contributions up to certain limits, although
enrollment rates are low. The Group’s U.S. operations also operate two defined
benefit pension plans which are closed to new entrants and future
benefit accruals. One of these plans is funded with assets held separately
from those of the employer. The Group’s plan for health care was, for the
most part, terminated in 2006 and 2005.
Sweden
Blue-collar workers are covered by the SAF-LO collective pension plan,
an industrywide multi-employer defined contribution arrangement. White-
collar workers are covered by the industry-wide ITP plan, which is a defined
benefit plan based on a collective agreement and operated on a multi-
employer basis. According to a statement (UrA 42) issued by the Swedish
Emerging Issues Task Force this is a multi-employer defined benefit plan.
Alecta, the insurance company that operates this plan has been unable to
provide Securitas, or other Swedish companies, with sufficient information
to determine its share of the total assets and liabilities for this arrangement.
Consequently this arrangement is accounted for on a defined contribution
basis. The cost for continuing operations during 2008 amounts to MSEK
11.2 (13.6 and 14.9). The surplus in Alecta can be allocated to the insured
employer and/or the insured employees. Alecta’s level of consolidation
was 112.0 percent (152.0 and 143.1) as of December 31, 2008. The level
of consolidation is calculated as the fair value of Alecta’s plan assets as a
percentage of the obligations calculated according to Alecta’s actuarial
assumptions. This calculation is not in line with IAS 19.
Pension cost
The table below shows the total cost for defined benefit plans. The settlements,
curtailments and terminations during 2008 are mainly related to
minor settlements and terminations in Germany and Austria.
The settlements, curtailments and terminations during 2007 are mainly
related to a gain relating to the pension plan for Loomis cash Management
Ltd in the United Kingdom as well as settlements of plans in the Netherlands
and Germany. The settlements, curtailments and terminations during 2006
are mainly explained by a curtailment gain resulting from the continuing
PENSION cOST
MSEK
continuing
operations
Discontinued
operations
Norway
The defined benefit arrangements have been closed to new entrants and
currently cover about 20 percent of the employees. New employees are
instead covered by defined contribution plans. The defined benefit plans
comprise both funded and unfunded arrangements.
Other countries
There are also defined benefit arrangements in countries other than those
mentioned above. The countries with material plans are canada, France,
Germany, Netherlands and U.K. The Group´s defined benefit plans in the
U.K., which in previous years mainly related to Loomis, are substantially
smaller this year after the dividend of Loomis.
Sensitivity analysis
A reduction of the discount rate by 0.1 percentage points would increase
the provision for pensions and similar commitments by approximately
MSEK 25. An increase in the inflation rate by 0.1 percentage points would
increase the provisions for pensions and similar commitments by approximately
MSEK 2. An increase in the average expected life span by 1 year
would increase the provision for pensions and similar commitments by
approximately MSEK 67.
An increase of one percentage point in the assumed medical cost trend
rate would increase the provision for post-retirement medical plans in canada
by approximately MSEK 15 and increase the aggregate of the service cost
and interest cost components by approximately MSEK 1. A decrease of one
percentage point in the assumed medical cost trend rate would decrease
the provision for post-retirement medical plans in canada by approximately
MSEK 12 and decrease the aggregate of the service cost and interest cost
components by approximately MSEK 1.
Changes in the discount rate, the inflation rate and the average expected
life span are accounted for as actuarial gains and losses whereby the change
with the exception of the impact on other long-term employee benefits
would be recognized through the statement of recognized income and
expense and thus would not burden the net income for the year. changes
in assumptions will impact the pension cost, and consequently the net
income, for the following year.
reduction of a health care plan in the USA as well as minor curtailments in
the Netherlands and Austria.
Included in the table below are pension costs for non-material defined
benefit plans for continuing operations of MSEK 0.4 (0.3 and 0.6).
The cost for defined contribution plans for continuing operations was
MSEK 344.4 (286.0 and 336.0). The actual return on plan assets for all
operations 2008 was MSEK –252.5 (138.1 and 213.0).
2008 2007 2006
All
operations
continuing
operations
Discontinued
operations
All
operations
continuing
operations
Discontinued
operations
All
operations
current service cost 60.5 36.8 97.3 55.0 60.5 115.5 48.0 68.7 116.7
Interest cost 131.9 69.6 201.5 106.6 69.8 176.4 104.7 64.9 169.6
Expected return on assets –122.2 –66.1 –188.3 –102.9 –65.3 –168.2 –101.6 –60.4 –162.0
Recognized actuarial gain/loss 1 0.4 0.0 0.4 4.4 –6.5 –2.1 –0.3 –1.8 –2.1
Recognized past service cost 0.2 – 0.2 – – – 13.9 –14.8 –0.9
Settlements, curtailments
and terminations –0.7 – –0.7 –4.4 –21.8 –26.2 –27.3 – –27.3
Total pension cost 70.1 40.3 110.4 58.7 36.7 95.4 37.4 56.6 94.0
1 Relates to other long-term employee benefits.
Annual report
Notes and comments to the consolidated financial statements
Securitas Annual report 2008
105