Notes to the consolidated financial statements (IFRS)

22. PENSION PLAN
         
The Group operates through insurance companies defined benefit pension plans in Finland for approximately 300 active employees and in Sweden for approxximately 200 active employees. The employer has guaranteed to these employees a certain level of benefit after the retirement, which depends on the length of service and the salary basis. The salary basis is an average of last years’ salaries indexed with common salary index. After the retirement the benefit payable is indexed yearly.
         
In Sweden the Group’s risk is only on active employees, but in Finland the Group’s risk covers as well around 1100 non-actives. When a paid-up policy is realized, the final benefit is recalculated, which might cause additional expenses to the employer. In addition the effect of index increments between the beginning of the paid-up policy and the retirement date is charged in some cases when the retirement begins. According to some insurance policies the employee can retire earlier than at a normal retirement age when certain conditions are fulfilled. These additional expenses are charged when the retirement begins.
         
         
EUR million   31 Dec 2014   31 Dec 2013
Pension benefit plans        
Present value of funded pension obligations   114.7   94.4
Fair value of plan assets   -90.8   -81.1
Total provisions for pension obligations   23.9   13.3
         
 
Pension benefit plans amounts recognized in profit and loss
         
Service cost        
Current service cost   3.1   2.0
Settlements   0.7   0.2
Net interest   0.3   1.0
Expense recognized in profit or loss   4.1   3.2
         
Amounts in other comprehensive income        
Remeasurement   13.1   6.3
Amounts in total comprehensive income   17.2   9.5
         
 
Amounts recognized in the balance sheet
         
Present value of pension obligations        
At 1 Jan   94.4   108.1
Current service cost   3.1   2.0
Interest expense   3.2   3.6
Benefits paid   -1.3   -1.2
Curtailment and settlement   -2.6   -9.8
Actuarial gains/losses   21.3   -6.8
Exchange rate difference   -3.4   -1.5
At 31 Dec   114.7   94.4
         
Fair value of plan assets        
At 1 Jan   81.1   86.0
Interest income   2.9   2.6
Contribution   5.8   6.2
Benefits paid   -1.3   -1.2
Curtailment and settlement   -3.5   -10.6
Actuarial gains/losses   8.2   -0.4
Exchange rate difference   -2.4   -1.5
At 31 Dec   90.8   81.1
 
 
The defined benefit obligation and plan assets are composed by country as follows
         
  31 Dec 2014 31 Dec 2013
  Pension
obligations
Plan
assets
Pension
obligations
Plan
assets
Finland 66.6 43.3 55.6 37.2
Sweden 48.1 47.5 38.2 43.9
Other - - 0.6 -
Total 114.7 90.8 94.4 81.1
         
 
Asset allocation
         
  31 Dec 2014 31 Dec 2013
  EUR million % EUR million %
Plan assets are comprised as follows in Sweden        
Equity instruments 17.3 36.4 17.0 38.7
Debt instruments 20.4 43.0 16.6 37.8
Property 4.7 9.8 4.4 10.0
Other 5.1 10.8 5.9 13.5
Total 47.5 100.0 43.9 100.0
         
In Finland plans assets are considered to include the cover paid to the insurance company and accumulated by the reporting date. The assets are the responsibility of the insurance company and a part of the insurance company's investment assets. The distribution in categories is not possible to provide.
         
 
Actuarial calculation assumptions
         
    31 Dec 2014   31 Dec 2013
Finland      
Discount rate   1.9   3.1
Future salary increases   3.5   3.5
Future pension increases   2.1   2.1
Inflation rate   2.0   2.0
       
Sweden      
Discount rate   2.5   4.0
Future salary increases   3.5   3.5
Future pension increases   2.0   2.0
Inflation rate   2.0   2.0
         
 
Sensitivity analysis
         
Following table shows how possible change in one assumption, holding other assumptions constant, affect to the defined benefit obligation.
         
    Change in
assumption
Increase in assumption Decrease in assumption
Impact on defined benefit obligation in Finland
Discount rate   0.5% -8% 9%
Future salary increase   0.5% 1% -1%
Future pension increase   0.5% 7% -6%
Life expectancy   +1 year 4%  
         
Impact on defined benefit obligation in Sweden
Discount rate   0.5% -11% 13%
Future salary increase   0.5% 5% -5%
Future pension increase   0.5% 13% -12%
Life expectancy   +1 year 5%  
         
 
Maturity profile of the defined benefit obligation
         
The weighted average duration of defined benefit obligation is 19 years in Finland and 19 years in Sweden.
         
The following table shows the maturity profile of the future benefit payments which are the basis for the calculated undiscounted defined benefit obligation.
         
EUR million       31 Dec 2014
Maturity under 1 year       3.8
Maturity 1–5 years       15.9
Maturity 5–10 years       32.6
Maturity 10–30 years       63.9
Maturity over 30 years       27.5
  143.7
         
Expected contributions to post-employment benefit plans for the year ending 31 December 2015 are EUR 5.9 million.
         
The ITP pension plans operated by Alecta in Sweden are multi-employer defined benefit pension plans which pool the assets contributed by various entities that are not under common control and the assets provide benefits to employees of more than one entity. It has not been possible to get sufficient information for the calculation of obligations and assets by employer from Alecta, and therefore this plan has been accounted for as a defined contribution plan in the financial statements. In Tieto 2 391 employees are included in this pension plan. The yearly contribution is around EUR 8 million.