2012 Integrated report - Sappi

27. Post-employment benefits – pensions and other benefits continued
Defined benefit
pension plans
Other defined
benefit plans
2012 2011 2012 2011
Development in the balance sheets for the pension/other benefit plans
Net pension/other benefit liabilities at beginning of year (268) (261) (182) (185)
Net pension/other benefit costs for the year (24) (14) (13) (14)
Employer contributions 48 58 10 11
Net actuarial losses for the year to other comprehensive income (OCI) (79) (50) (9) (9)
Translation differences 5 (1) 2 15
Net pension/other benefit liabilities at end of year (318) (268) (192) (182)
The rest of this note sets out the summary of results above in more detail.
Detailed results
Defined contribution plans
The group operates defined contribution plans of various sizes for all qualifying employees in most regions throughout the group.
The assets of the plans are held, separately from those of the group, in funds under the control of trustees. In addition, the group
participates in country-wide union/industry plans in certain locations open to eligible employees.
The total cost charged to the income statement of US$35 million (2011: US$46 million, 2010: US$42 million) represents contributions
payable to these plans by the group based on rates specified in the rules of these plans. As at September 2012, US$2 million
(2011: US$3 million, 2010: US$4 million) was due in respect of the current reporting period that had not yet been paid over to the plans.
Defined benefit pension plans
The group operates several principal defined benefit pension and/or lump sum plans in all regions plus a number of smaller plans.
The extent of employee access to these plans vary. Plans open to new entrants or future accrual cover all qualifying employees.
All plans have been established in accordance with applicable legal requirements, customs and existing circumstances in each country.
Plans remain open to new hires except for the following: plans in Southern Africa, Austria and some in Germany. Plans in the United
Kingdom and one in North America are closed to future accrual.
Benefits are formula-driven, based upon varying definitions of compensation (such as average salary near retirement or career average
revalued earnings) and years of service. Exceptions to these are certain plans in Germany and Austria that provide fixed value benefits
(in Euro) and certain plans in North America that provide benefits based on years of service and a ‘$ multiplier’. The $ multiplier is a
formula that is based on a nominal US Dollar value which historically, has increased from time to time.
With the exception of our German and Austrian plans, which are unfunded, the assets of our funded plans are held in separate
trustee-administered funds which are subject to varying statutory requirements in the particular countries concerned. In terms
of these requirements, periodic actuarial valuations of these funds are performed by independent actuaries.
As of September 2012, the total number of active members in our defined benefit pension plans is approximately 6,100.
Post-employment benefits other than pensions (‘other defined benefit’ plans)
The group sponsors two defined benefit post-employment plans that provide certain healthcare and life insurance benefits to eligible
retired employees of the North American and South African operations. Employees are generally eligible for benefits upon retirement
and completion of a specified number of years of service.
Other employee benefits
Group companies have no other significant post-employment defined benefit obligations except for the following:
• Jubilee (long service award plans per note 21) in continental Europe of US$23 million and an early retirement benefit plan in Belgium
of US$6 million (of which US$3 million is long-term per note 21).
• ‘ATZ’ (early retirement) benefit obligations in Germany and Austria totalling US$9 million (within ‘other payables’).
• Workmen’s compensation benefit obligations in North America totalling US$18 million (of which US$14 million is long-term per note 21).
Actuarial valuations of all plans are performed annually with the exception of our South African and United Kingdom defined benefit pension plans where an actuarial
review is performed annually with an actuarial valuation being performed on a tri-annual basis.
All post-employment obligations were measured at the end of the financial year.
sappi Integrated Report 2012 143