NOTE 11 – PENSION COST AND PENSION LIABILITIES

< Back
A B C D E F G H I J
NOTE 11 – PENSION COST AND PENSION LIABILITIES  
 
Funded plans (Closed and settled as of 31.12.2016 – Replaced by hybrid arrangement from 01.01.2017)  
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 28 members.

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 and Director of Commercial operations, which are not covered by the general pension plan. The pension obligations for the Managing Director and Director of Commercial Operations 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:  
 
        2016 2015      
Discount rate 2.60% 2.70%      
Expected salary increases 2.50% 2.50%      
Rate of pension increases 0.00% 0.00%      
Increase of National Insurance Basic amount (G) 2.00% 2.25%      
Expected return on plan assets 2.60% 2.70%      
Social Security Tax 14.10% 14.10%      
Disability tariff KU KU      
Mortality tariff K2013 K2013      
             
Net periodic pension cost: Non-funded plans Funded plans  
2016 2015 2016 2015  
         
Current service cost 684 282 2 664 3 423  
Net interest expense /(income) 279 192 277 261  
Avkastning på pensjonsmidler         0 0 0 0  
Past service cost 2 646 0 -7 429 0  
Administrative expenses 0 0 39 47  
Social Security Tax 509 67 -633 519  
Estimatendring         0 0 0 0  
Net pension cost 4 119 542 -5 082 4 250  
         
Actual return on plan assets 4.00% 4.00%  
         
Present value of benefit obligation Non-funded plans Funded plans  
2016 2015 2016 2015  
         
Present value of benefit obligation at January 1 8 459 8 952 39 889 41 271  
Remeasurements -23 -161 -1 748 -5 357  
Present value of the service cost 684 282 2 664 3 423  
Net interest cost on benefit obligation 279 192 976 945  
Past service cost         2 646 0 -41 389 0  
Pensions paid during the year -710 -807 -392 -392  
Present value of benefit obligation at December 31 11 335 8 459 0 39 889  
                   
Fair value of plan assets Non-funded plans Funded plans  
2016 2015 2016 2015  
         
Fair value of plan assets at January 1 32 674 23 515  
Remeasurements -2 454 4 965  
Actual return on plan assets 699 684  
Company contributions 4 240 4 245  
Administrative expenses -484 -342  
Past service cost 0 0 -34 282 0  
Pensions paid during the year -392 -392  
Fair value of plan assets at December 31 0 0 0 32 674  
                 
                   
Status of pension plans reconciled to the balance sheet      
          Non-funded plans Funded plans  
2016 2015 2016 2015  
       
Present value of pension obligations -11 335 -8 459 0 -39 889  
Fair value of plan assets 0 0 0 32 674  
Funded status of plans at December 31. -11 335 -8 459 0 -7 215  
         
Ikke amortiserte estimatendringer         0 0 0 0  
Social Security Tax -1 598 -1 193 0 -1 017  
Translation differences         0 0 0 0  
Net pension obligations as at December 31 -12 933 -9 651 0 -8 232  
         
        2016 2015  
Total net pension liability non-funded and funded plans recognised at Dec. 31 -12 933 -17 883  
                   
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:  
 
 
          2016 2015      
Shares and other equity instruments 8.40% 9.10%      
Bonds 54.00% 39.90%      
Money market and similar 22.20% 34.40%      
Properties and real estate 12.10% 13.80%      
Other 3.30% 2.80%      
Total 100.00% 100.00%      
                   
Expected payments related to the pension plans in 2015  
The Group does not expect any payment to the secured pension scheme for the calendar year 2017 as it is closed and settled as of 31.12.2016. However, a payment of NOK 2 874 048 is expected for the new Hybrid pension arrangement in 2017.  
 
The Company's estimated payments for non-funded pension plans are NOK 711 090 for the fiscal year 2017.  
                   
The value adjusted return on plan assets (secured pension plan) was estimated at 4% per 31.12.2016, and for 2015 the value adjusted return was 4%.  
 
                   
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 11 335 33 646 24 887 20 363 25 281
Fair value of plan assets 0 19 585 17 389 12 070 12 460
Deficit / (surplus) in the plan 11 335 14 061 7 498 8 293 12 822
       
Experience adjustments on plan assets -1 771 4 640 -6 739 -3 935 -309
       
Experience adjustments on plan assets 2 454 1 238 -73 1 904 1 579
                   
                   
Sensitivity          
The sensitivity of the gross 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 10.51 % Increase 12.19 %
Salary growth rate 0.50% Increase 4.75 % Decrease 5.26 %
Changes in pension from the Norwegian National Insurance 0.50% Decrease 0.62 % Decrease 0.29 %
Pension growth rate 0.50% Increase 6.92 % 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 31.12.2016 this plan had 16 members. Paid contributions in 2016 was NOK 749 218.  
 
                   
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.  
 
 
 
                   
                   
This entry was posted in Notes konsern ENG and tagged . Bookmark the permalink.