Sampo Group

30 Provisions
32 Other liabilities

Notes to the Group's Financial Statements

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31 EMPLOYEE BENEFITS
                 
Employee benefits
Sampo has defined benefit plans in P&C insurance business in Sweden and Norway.
                 
In addition to statutory retirement pension insurance, the Group has certain voluntary defined benefit plans. The voluntary defined benefit plans are intra-Group and included in the insurance liabilities of Mandatum Life. The amount is negligible and they have no material impact on the Group profit or loss or equity.
                 
Employee benefit obligations of P&C Insurance 31 Dec
                 
EURm         2011 2010
    Present value of estimated pension obligation         577 458
    Fair value of plan assets         347 326
    Net obligation/liability         230 132
    Net cumulative unrecognised actuarial gains/losses     -151 -46
  Net pension obligation recognised in the balance sheet     79 85
    Provision for social security         19 20
  Provision for pensions 31 Dec       98 105
                 
IAS 19 Employee benefits is applied in the accounting for the defined benefit plans from the beginning of the financial year 2005.
                 
Pension obligations, and the pension cost accrued during the fiscal period, are calculated using actuarial methods. Earned pension rights are calculated on a straight-line basis during the employment period. The calculation of pension obligations is based on anticipated future pension payments and includes assumptions regarding mortality, employee turnover and salary growth. The nominally calculated liability is discounted to present value using an interest rate based on the current market rate and adjusted to take into account the duration of the company’s pension obligations. After deducting plan assets, a net asset or liability is entered in the balance sheet. The net obligation reported in the closing balance pertained to defined-benefit pension plans for employees in Sweden and Norway. The pension benefits arising in the other countries covered by the Group’s operations have been classified as defined contribution plans.
                 
The following actuarial assumptions have been used for the calculation of defined benefit pension plans in Sweden and Norway:
             
          Sweden Sweden Norway Norway
          31 Dec 2011 31 Dec 2010 31 Dec 2011 31 Dec 2010
    Discount interest rate     3.75% 5.00% 2.75% 4.00%
    Anticipated return     3.00% 4.50% 3.75% 4.75%
    Future pay increases     3.00% 3.25% 3.75% 3.75%
    Price inflation     2.00% 2.00% 2.25% 2.25%
                 
The expected rate of return on the plan assets has been calculated based on the following division of investment assets:  
                 
    Debt instruments     43% 42% 64% 65%
    Equity instruments     34% 39% 15% 16%
    Property     11% 10% 17% 16%
    Other     12% 9% 4% 3%
                 
                 
Analysis of the employee benefit obligation
        2011     2010  
EURm Funded
plans
Unfunded
plans
Total Funded
plans
Unfunded
plans
Total
    Present value of estimated pension obligation 506 71 577 395 63 458
    Fair value of plan assets 347 - 347 326 - 326
    Net obligation/liability 159 71 230 69 63 132
    Net cumulative unrecognised actuarial gains/losses -138 -13 -151 -41 -5 -46
    Net pension obligation recognised in the balance sheet 21 58 79 27 58 85
                 
Recognised in Income Statement
                 
EURm         2011 2010
    Current service cost         14 14
    Interest cost         19 19
    Expected rate of return on plan assets at the begninning of the year     -16 -14
    Actuarial gains (-) or losses (+) recognised during the financial year     1 2
    Losses (+) or gains (-) on curtailments and settlements 1 0
    Pension costs         19 22
                 
Analysis of the change in net liability recognised in the balance sheet
                 
EURm         2011 2010
    Pension obligations:            
    At the beginning of the year         458 424
    Earned during the financial year         14 14
    Interest cost         19 19
    Actuarial gains or losses         100 -19
    Losses or gains on curtailments and settlements         1 0
    Exchange differences on foreign plans         3 35
    Benefits paid         -18 -16
    Defined benefit plans at 31 Dec       577 458
                 
    Reconciliation of plan assets:            
    At the beginning of the year         326 272
    Expected return on assets         16 15
    Actuarial gains or losses         -6 2
    Contributions         21 24
    Exchange differences on foreign plans         2 23
    Benefits paid         -13 -11
    Plan assets at 31 Dec       347 326
                 
                 
Other short-term employee benefits
There are other short-term staff incentive schemes in the Group, the terms of which vary according to country, business area or company. Benefits are recognised in the profit or loss for the year they arise from. An estimated amount of these profit-sharing bonuses, social security costs included, for 2011 is EURm 46.
30 Provisions
32 Other liabilities