SECURITAS AB Annual Report 2011

Note 31. 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 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.
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 also based
on a collective agreement and operated industrywide on a multi-employer
basis. According to a statement (UFR 3) issued by the Swedish Financial
Reporting Board 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 2011 amounts to MSEK 22.4 (22.5 and 19.9). The surplus
in Alecta can be allocated to the insured employer and/or the insured
employees. Alecta’s level of consolidation was 113 percent (146 and 141)
as of December 31, 2011. 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.
Norway
The defined benefit arrangements are closed to new entrants and currently
cover about 15 percent of the employees. New employees are instead
covered by defined contribution plans. The defined benefit plans comprise
both funded and unfunded arrangements.
The old AFP plans were closed in 2010 following changes in legislation,
and employees have joined a new AFP plan as of January 1, 2011. The new
AFP plan operates as a funded multi-employer plan. Since the company is
unable to separately identify its share of total assets and liabilities, the new
AFP plan is accounted for on a defined contribution basis.
Other countries
There are also defined benefit arrangements in countries other than those
mentioned above. The countries with material plans are Canada, France,
Germany, the Netherlands, Switzerland and the United Kingdom.
Annual Report
Notes and comments to the consolidated financial statements
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 47. An increase in the inflation rate by 0.1 percentage points would
increase the provisions for pensions and similar commitments by approximately
MSEK 4. An increase in the average expected life span by 1 year
would increase the provision for pensions and similar commitments by
approximately MSEK 82.
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 23 and increase the aggregate of the
service cost and interest cost components by approximately MSEK 3.
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 18 and decrease the aggregate of the service cost
and interest cost components by approximately MSEK 2.
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 in the statement of comprehensive income and thus
would not burden the net income for the year. Changes in assumptions
will, however, impact the pension cost, and consequently the net income,
for the following year.
Pension costs
The table below shows the total costs for defined benefit plans. The settlements,
curtailments and terminations during 2011 are related to settlements
mainly in France. The settlements, curtailments and terminations
during 2010 are related to settlements in Germany and Austria (cost)
and curtailments in Norway (income). The settlements, curtailments and
terminations during 2009 are mainly related to minor settlements and
terminations in Germany and Austria.
Included in the table below are pension costs for non-material defined
benefit plans of MSEK 9.6 (9.2 and 1.1).
The costs for defined contribution plans were MSEK 471.6 (467.3 and
405.5). The actual return on plan assets was MSEK -15.4 (142.3 and
159.3).
PENSION COSTS fOR DEfINED BENEfIT PLANS
MSEK 2011 2010 2009
Current service costs 85.7 57.4 63.7
Interest costs 140.8 127.4 135.0
Expected return on assets -125.4 -93.9 -87.3
Recognized actuarial gain / loss1 0.4 4.7 0.9
Recognized past service costs
Settlements, curtailments
-0.3 -0.3 -0.6
and terminations -1.3 -0.1 -0.4
Total pension costs 99.9 95.2 111.3
1 Relates to other long-term employee benefits.
PENSION COSTS fOR DEfINED BENEfIT PLANS ALLOCATED PER fuNCTION
MSEK 2011 2010 2009
Production expenses 65.9 56.1 57.5
Selling and administrative expenses
Total pension costs allocated per
34.0 39.1 53.8
function 99.9 95.2 111.3
Securitas Annual Report 2011
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