21. Employee benefit obligations
Most of Fiskars Group’s pension plans are defined contribution plans. The defined benefit plans in the US, Great Britain and Germany are closed plans, and future pay increases will not impact the valuation. The Group also has supplementary pension plans in Finland which are classified as defined benefit plans. Authorized actuaries have performed the actuarial calculations for the defined benefit plans. The Group is responsible for some post-employment benefits in Italy, but the liabilities recorded are final and as such they are classified as defined contribution plans.
The main non-funded plans are in US and Germany. Plans in Finland and Norway are taken care of by local pension insurance companies. The Group estimates its contributions to the plans during 2014 to be EUR 1.1 million.
| EUR million |
2013 |
2012 |
| Liabilities for post-employment benefits* |
2.7 |
1.6 |
| Defined benefit pension liabilities** |
5.9 |
5.7 |
| Pension liability total |
8.6 |
7.3 |
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* The liabilities for post-employment benefits: Italy EUR 1.3 (1.3) and Other 1.4 (0.3) million.
** The defined benefit liabilities consist of Germany EUR 1.2 (1.3), Norway -0.1 (-0.8), UK 0.0 (-0.2), USA 4.5 (5.2), Finland 0.1 (0.2) million and Thailand 0.1 million.
Amounts as of December 31
| EUR million |
2013 |
2012 |
2011 |
2010 |
2009 |
| Defined Benefit Obligation |
20.1 |
25.2 |
26.1 |
26.4 |
27.1 |
| Plan assets* |
14.3 |
19.5 |
19.6 |
19.7 |
20.0 |
| Deficit/(Surplus) in the plan |
5.9 |
5.7 |
6.5 |
6.7 |
7.1 |
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* Not including the surplus of EUR 2.2 million in UK due to asset ceiling in year 2013.
Charasteristics of the defined benefit plans and risks associated with them
| Plan |
Description and risks |
| Finland |
There are 50 eligible members in the Finnish pension plans. The plans are either funded insured pension plans, which are closed, or unfunded pension promises. Benefits of the plans are old age pension, disability pension, survivor's pension and funeral grant. Pension increases are based on either insurance companies' own indexes or TyEL index. Main risks are changes in bond yields, increase in life expectancy and inflation risk. |
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| Germany |
There are 92 eligible members in the German pension plans. The plans are either unfunded individual pension promises, or unfunded pension plans, which are closed. Benefits of the plans are old age pension, disability pension and widow's/widower's pension. Pension increases, if any, are based on inflation. Main risks are changes in bond yields, increase in life expectancy and inflation risk. |
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| Thailand |
There are 404 eligible members in the Thai pension plan, which is a retirement benefit plan. Benefit of the plan is severance pay. There are no pension increases. Main risks are changes in bond yields and inflation risk. |
| Norway |
There are 18 eligible members in the Norwegian pension plans. The plans are either funded insured pension plans, or unfunded pension plans, both of which are closed. Benefits of the plans are old age pension, disability pension, widow's/widower's pension, children's pension and early retirement. There are no guaranteed minimum pension increases. Main risks are changes in bond yields, increase in life expectancy and inflation risk. |
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| UK |
There are 180 eligible members in the British pension plan, which is a closed pension fund. The plan has surplus (asset) of EUR 2.2 million at end of 2013, which is not recognized as an assets due to asset ceiling. Benefits of the plan are old age pension, early retirement pension, widow's/widower's pension and death benefit. Pension increases are based on inflation. Main risks are asset volatility, changes in bond yields, increase in life expectancy and inflation risk. |
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| USA |
There is 1 eligible member in the American pension plan, which is an unfunded pension promise. Benefits of the plan are old age pension and widow's/widower's pension. There are no pension increases. Main risks are changes in bond yields and increase in life expectancy. |
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Changes in Defined Benefit Obligation and Plan Assets:
| EUR million |
2013 |
2012 |
| Change in defined benefit obligation: |
|
|
| Defined benefit obligation at the beginning of the year |
25.2 |
26.1 |
| Translation difference |
-1.1 |
0.5 |
| Service cost |
0.0 |
0.0 |
| Interest cost |
0.9 |
1.0 |
| Actuarial (gain)/loss, total, arising from: |
-0.3 |
1.8 |
|
Demographic assumptions |
0.0 |
0.1 |
|
Financial assumptions |
0.2 |
1.7 |
|
Experience assumptions |
-0.5 |
-0.0 |
| Settlements |
-3.7 |
-2.7 |
| Other changes |
0.1 |
-0.0 |
| Benefits paid |
-1.0 |
-1.6 |
| Defined benefit obligation, Dec 31 |
20.1 |
25.2 |
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| Changes in plan assets: |
| Fair value of plan assets at the beginning of the year |
19.5 |
19.6 |
| Translation difference |
-1.0 |
0.6 |
| Interest on plan assets |
0.7 |
0.9 |
| Return on plan assets excluding interest income |
1.6 |
0.4 |
| Benefits paid |
-1.0 |
-1.6 |
| Employer contributions |
1.1 |
1.2 |
| Settlements |
-4.2 |
-1.3 |
| Other changes |
-0.2 |
-0.4 |
| Fair value of plan assets, Dec 31 |
16.5 |
19.5 |
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Amounts recognized in the balance sheet
| EUR million |
2013 |
2012 |
| Defined Benefit Obligation |
-20.1 |
-25.2 |
|
Defined Benefit Obligation that is Wholly Unfunded |
-5.8 |
-6.7 |
|
Defined Benefit Obligation that is Wholly or Partly Funded |
-14.3 |
-18.5 |
| Fair Value of Plan Assets |
16.5 |
19.5 |
| Funded Status |
-3.6 |
-5.7 |
| Unrecognised asset due to asset ceiling |
-2.2 |
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| Net defined pension benefit liability at Dec 31 |
-5.9 |
-5.7 |
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Amounts recognized in the income statement
| EUR million |
2013 |
2012 |
| Service cost |
-0.6 |
-0.8 |
| Net interest cost |
-0.2 |
0.1 |
| Administration cost |
-0.0 |
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| Total |
-0.8 |
-0.7 |
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Amounts recognized directly in other comprehensive income
| EUR million |
2013 |
2012 |
| Actuarial gain/(loss) |
0.3 |
-1.2 |
| Return on plan assets excluding interest income |
1.6 |
0.4 |
| Unrecognized asset due to asset ceiling |
-2.2 |
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-0.2 |
-0.8 |
| Deferred tax on changes in obligations and assets |
0.0 |
0.3 |
| Change recognized in associated company net of tax |
-5.6 |
-1.0 |
| Total |
-5.8 |
-1.6 |
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Plan assets by asset category
| 2013 |
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| EUR thousand |
UK |
Norway |
Finland |
Total |
| Equity instruments |
13,568 |
59 |
|
13,627 |
| Bonds |
1,893 |
333 |
|
2,226 |
| Property |
237 |
64 |
|
301 |
| Insurance contracts |
|
|
206 |
206 |
| Cash and cash equivalents |
|
54 |
|
54 |
| Other |
79 |
27 |
|
106 |
| Total |
15,777 |
537 |
206 |
16,520 |
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| 2012 |
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| EUR thousand |
UK |
Norway |
Finland |
Total |
| Equity instruments |
9,279 |
1,017 |
|
10,296 |
| Bonds |
3,049 |
3,229 |
|
6,278 |
| Property |
265 |
897 |
|
1,162 |
| Insurance contracts |
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|
231 |
231 |
| Cash and cash equivalents |
|
598 |
|
598 |
| Other |
663 |
239 |
|
902 |
| Total |
13,256 |
5,980 |
231 |
19,467 |
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Principal actuarial assumptions at the balance sheet date
| Discount rate |
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| % |
2013 |
2012 |
| Great Britain |
4.3 |
4.4 |
| Germany |
3.2 |
3.0 |
| Finland |
3.4 |
3.0 |
| United States |
4.0 |
3.1 |
| Norway |
4.1 |
2.2 |
| Thailand |
4.8 |
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| Inflation rate |
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| % |
2013 |
2012 |
| Great Britain |
3.4 |
2.8 |
| Germany |
2.0 |
2.0 |
| Finland |
2.0 |
2.0 |
| United States |
n/a |
n/a |
| Norway |
1.8 |
1.8 |
| Thailand |
5.0 |
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| Future salary increases |
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| % |
2013 |
2012 |
| Great Britain |
n/a |
n/a |
| Germany |
0.0 |
0.0 |
| Finland |
2.5 |
2.5 |
| United States |
n/a |
n/a |
| Norway |
3.8 |
3.3 |
| Thailand |
6.0 |
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| Future pension increases |
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| % |
2013 |
2012 |
| Great Britain |
0-3.35 |
0–2.75 |
| Germany |
2.0 |
2.0 |
| Finland |
2.1 |
2.1 |
| United States |
0.0 |
0.0 |
| Norway |
0.6 |
0.0 |
| Thailand |
n/a |
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Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation as shown below. Sensitivity analysis is presented for Fiskars group and the relevant entities relating to risks.
|
Dec 31, 2013 |
|
Defined benefit obligation |
| EUR thousand |
Increase |
Decrease |
| Great Britain |
|
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| Discount rate (0.5% change) |
-555 |
596 |
| Future salary (0.5% change) |
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| Future pension (0.25% change) |
338 |
-325 |
| Mortality (5% change) |
-189 |
203 |
| Duration of the Defined benefit obligation: 18.0 |
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| United States |
|
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| Discount rate (0.5% change) |
-190 |
203 |
| Future salary (0.5% change) |
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| Future pension (0.25% change) |
|
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| Mortality (5% change) |
-63 |
63 |
| Duration of the Defined benefit obligation: 8.4 |
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| Other Fiskars, total |
|
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| Discount rate (0.5% change) |
-108 |
118 |
| Future salary (0.5% change) |
16 |
-15 |
| Future pension (0.25% change) |
38 |
-37 |
| Mortality (5% change) |
-36 |
38 |
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| Fiskars, total |
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| Discount rate (0.5% change) |
-846 |
906 |
| Future salary (0.5% change) |
20 |
-20 |
| Future pension (0.25% change) |
383 |
-363 |
| Mortality (5% change) |
-282 |
302 |
| The weighted average of the duration of the defined benefit obligation: 15.1 |
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Although the analysis does not take account of the full distribution of cash flows expected under the plan, it does provide an approximation of the sensitivity of the assumptions shown.
