Scania annual report 2004

January–December 2004
Expenses for pensions and other Defined benefit Post-employment Other postdefined
benefit obligations pension plans medical benefits employment benefits
Current service cost – 186 – 2 – 4
Interest on obligation – 125 – 14 – 2
Expected return on plan assets 20 – 1
Net actuarial gains (+) and losses (–) recognised in year – 65 – 7 0
Past service cost – 3 – –
Net gains (–) and losses (+) due to curtailments and settlements 0 – –
Total expense for defined benefit obligations – 359 – 23 – 5
Actual return on plan assets 23 – 11
For defined-contribution plans, Scania makes continuous payments to public authorities and independent organisations, which thus take over obligations
towards employees. The Group’s expenses for defined-contribution plans amounted to SEK 452 m. during 2004.
31 December 2004
Defined benefit Post-employment Other postpension
plans medical benefits employment benefits
Present value of wholly or partly funded obligations 593 – 28
Present value of unfunded obligations 2,091 167 36
Present value of obligations 2,684 167 64
Fair value of plan assets – 395 – – 21
Reported as “Provisions for pensions” in the balance sheet 2,289 167 43
The reported net liability for defined benefit plans changed
as follows during the year:
SEK m. 2004
Net liability, 1 January 1 2,274
Change in net liability due to
change in accounting principle – 29
Net expense recognised in the income statement 387
Contributions – 44
Benefits paid out – 87
Exchange rate differences – 2
Net liability, 31 December 2 2,499
1 A reclassification of SEK 180 m. was made from “Other provisions” to “Pension
commitments”.
2 In December 2003, the net liability amounted to SEK 2,274 m. and in December
2002 it was SEK 2,225 m. The net liability in December 2002 was reported
according to earlier accounting principles.
Plan assets consist mainly of shares and interest-bearing securities with
the following market values on the balance sheet date:
SEK m. 2004
Shares and participations 127
Other interest-bearing securities 248
Real estate 15
Bank balances etc 26
Total 416
Sweden Great Britain Brazil Other countries
(pensions) (pensions) (medical services) (pensions etc)
Actuarial assumptions 2004 2003 2004 2003 2004 2003 2004 2003
Discount rate (%) 5.5 5.5 5.5 5.6 10.3 10.3 4.5–5.5 4.7–5.5
Expected return on plan assets (%) – – 6.0 7.0 10.3 10.3 5.0–6.0 5.0
Expected wage and salary increase (%) 3.0 3.0 – – – – 2.0–4.3 3.0–3.5
Change in medical costs (%) – – – – 7.8 8.8 – –
Employee turnover (%) 5.0 5.0 – – – – 1.0–6.0 1.0–5.0
Expected remaining years of service 21.5 22.0 11.0 12.0 19.0 18.7 15.0–33.0 15.9–34.0
Expected increase in pension (%) 2.0 2.0 3.0 3.0 – – 1.8–2.5 2.0
Expenses for pension and other defined benefit plans are reported in the income statement under the headings “Cost of goods sold”, “Research and
development expenditures”, “Selling expenses”, and “Administrative expenses”. The interest portion of pension expenses is reported as “Financial
expenses and income”.
65 NOTES • SCANIA ANNUAL REPORT 2004