NOTE 11 – PENSION COST AND PENSION LIABILITIES

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A B C D E F G H I J
NOTE 11 – PENSION COST AND PENSION LIABILITIES
Funded plans
The group has a general pension plans in a life insurance company. The plan entitles its members to defined future benefits. These benefits are mainly dependent on number of years of employment, salary at the end of ordinary employment and the size of the benefits from the National Insurance Scheme. Full retirement pension will amount to approximately 66% of the basis for pension (limited to 12G), and the plan also includes entitlement to disability and children’s pensions. Retirement age is 67 years. The company has the right to alter the pension plan. The benefits accruing under the scheme are funded. The pension plan has 29 members. The defined benefit pension plan for Solvang ASA has been closed for new employees. New employees are members of a defined-contribution pension plan.This pension plan together with the defined contribution pension plan meets the requirement in the Act on Mandatory company pension.
Non-funded plans
The group also has non-funded pension obligations for 2 pensioners, and for the Managing Directors of IGC and Solvang, which are not covered by the general pension plan. The pension obligations for the Managing Director include early retirement pension and pension for salary exceeding 12 G.
Assumptions
Pension liabilities and pension costs are calculated by a third party independent actuary, and are valued according to Revised IAS 19. Changes in pension liabilities due to actuarial assumptions and differences between actual and expected return on plan a assets are recognized in other comprehensive income. The following Assumptions were used:
2014 2013
Discount rate 2.30% 4.00%
Expected salary increases 2.75% 3.75%
Rate of pension increases 0.00% 0.60%
Increase of National Insurance Basic amount (G) 2.50% 3.50%
Expected return on plan assets 2.30% 4.00%
Social Security Tax 14.10% 14.10%
Disability tariff KU KU
Mortality tariff K2013 K2013
Net periodic pension cost: Non-funded plans Funded plans
2014 2013 2014 2013
Current service cost 1 349 1 014 2 991 2 398
Net interest expense /(income) 264 194 216 76
Avkastning på pensjonsmidler 0 0 0 0
Kostnader ved tidligere perioders pensjonsopptjening 0 0 0 0
Administrative expenses 0 0 65 161
Social Security Tax 227 170 452 349
Estimatendring 0 0 0 0
Net pension cost 1 840 1 378 3 725 2 983
Actual return on plan assets 5.00% 5.50%
Present value of benefit obligation Non-funded plans Funded plans
2014 2013 2014 2013
Present value of benefit obligation at January 1 6 777 5 021 27 179 19 866
Remeasurements 675 349 10 164 4 292
Present value of the service cost 1 349 1 014 2 991 2 398
Net interest cost on benefit obligation 264 194 1 084 772
Kostnader ved tidligere perioders pensjonsopptjening 0 0 0 0
Pensions paid during the year -113 -110 -148 -148
Present value of benefit obligation at December 31 8 952 6 467 41 271 27 179
Fair value of plan assets Non-funded plans Funded plans
2014 2013 2014 2013
Fair value of plan assets at January 1 19 585 17 389
Remeasurements -859 -1 238
Actual return on plan assets 868 696
Company contributions 4 422 3 296
Administrative expenses -353 -410
Pensions paid during the year -148 -148
Fair value of plan assets at December 31 0 0 23 515 19 585
Status of pension plans reconciled to the balance sheet
Non-funded plans Funded plans
2014 2013 2014 2013
Present value of pension obligations -8 952 -6 467 -41 271 -27 179
Fair value of plan assets 0 0 23 515 19 585
Funded status of plans at December 31. -8 952 -6 467 -17 756 -7 594
Ikke amortiserte estimatendringer 0 0 0 0
Social Security Tax -1 262 -912 -2 504 -1 071
Translation differences 0 0 0 0
Net pension obligations as at December 31 -10 214 -7 379 -20 259 -8 665
2014 2013
Total net pension liability non-funded and funded plans recognised at Dec. 31 -30 473 -16 044
Composition of plan assets on major investment categories
The company’s pension funds are managed by an independent life insurance company that invests the funds of the plan according to Norwegian law. The major categories of plan assets as a percentage of the fair value of plan assets are as follows:
2014 2013
Shares and other equity instruments 10.80% 13.30%
Bonds 62.00% 45.30%
Money market and similar 10.00% 25.80%
Properties and real estate 15.00% 15.60%
Other 2.20% 0.00%
Total 100.00% 100.00%
Expected payments related to the pension plans in 2015
The Group’s estimate contribution to the funded pension plan for the fiscal year 2015 is NOK 3 561 731.
The Company’s estimated payments for non-funded pension plans are NOK 745 910 for the fiscal year 2015.
The value adjusted return on plan assets (secured pension plan) was 5% per 31.12.2014, and for 2013 the value adjusted return was 5,5%.
Development of deficit/surplus in the plan and actuarial loss / gain the last five years
2014 2013 2012 2011 2010
As of 31st December
Present value of benefit obligation 50 223 33 646 24 887 20 363 25 281
Fair value of plan assets 23 515 19 585 17 389 12 070 12 460
Deficit / (surplus) in the plan 26 707 14 061 7 498 8 293 12 822
Experience adjustments on plan assets 10 839 4 640 -6 739 -3 935 -309
Experience adjustments on plan assets 859 1 238 -73 1 904 1 579
Sensitivity
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Impact on defined benefit obligation
Change in assumption Increase in assumption Decrease in assumption
Discount rate 0.50% Decrease 10 % Increase 12 %
Salary growth rate 0.50% Increase 6 % Decrease 5 %
Changes in pension from the Norwegian National Insurance 0.50% Decrease 1 % Increase 1 %
Pension growth rate 0.50% Increase 7 % Decrease 0 %
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
Defined-contribution pension plan
The defined benefit pension plan for Solvang ASA has been closed for new employees. New employees are members of a defined-contribution pension plan. Per 31.12.2014 this plan had 15 members. Paid contributions in 2014 was NOK 643 845.
Pension liability from subsidiary, Solvang Maritime AS
Solvang Maritime´s pension liabilities are charged to the shipping companies and therefore represents no cost to the Group. A receivable towards the shipping companies matching the pension liability is therefore recognized in the balance sheet making the net pension liability zero out. Pension obligations from Solvang Maritime is thus not included in the figures above.

 

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