Note 31 Pensions

Defined benefit pension plans

Defined benefit plans consist of the Swedish ITP 2 Plan for white-collar workers which is managed through insurance with Alecta. The defined benefit plan in Norway was renegotiated in 2016 and is now recognized as a defined contribution plan. Since Alecta cannot provide the information required to report the ITP 2 plan as a defined benefit plan it is recognized as a defined contribution plan (see below).

ITP 2 defined benefit plan obligations for old age pension and family pension obligations for white-collar workers in Sweden are managed through insurance from Alecta. According to a statement from the Swedish Financial Reporting Board, UFR 10 Reporting pension plan ITP 2 which is financed through insurance from Alecta, this is a defined benefit plan that encompasses several employers. For the financial year of 2017 the company did not have the necessary information required to report its proportional share of the plan’s obligations, plan assets and expenses which has made it impossible to recognise this plan as a defined benefit plan. Therefore the ITP 2 pension plan which is secured through insurance from Alecta is reported as a defined contribution plan. Premiums for the defined benefit old age and family plans are calculated individually taking into account salary, previously earned pension and anticipated remaining employment period. Anticipated premiums for the next report period for ITP 2 insurance that are covered by Alecta amount to SEK 168 million (139). The Group’s share of total premiums for the plan and the Group’s share of the total number of active members of the plan are 0.96 percent (0.94) respective 0.61 percent (0.63).

The collective consolidation level is made up of the market value of Alecta’s assets as a percentage of the insurance obligations calculated in accordance with Alecta’s insurance methods and adjustment assumptions, which are not in accordance with IAS 19. Normally the collective consolidation level is permitted to vary between 125 and 155 percent. If Alecta’s collective consolidation level is less than 125 percent or exceeds 155 measures must be taken aimed at returning the consolidation level to the normal interval. If the consolidation level is low one measure may be raising the agreed price for new subscriptions and expanding existing benefits. If the consolidation level is high one measure may be implementing premium reductions. At the end of 2017, Alecta’s surplus in the form of the collective consolidation level amounted to 154 percent (149).

Defined contribution plans

The Group has defined contribution plans which are entirely paid for by the companies. Payments to these plans are made on a current basis according to the rules of each plan.

Group Parent company
MSEK 2017 2016 2017 2016
Expenses for defined contribution plans 702 614 38 33
Of which ITP 2 plans financed in Alecta 178 150 6 5