NOTE 20
The Group operates several retirement plans. In Finland, employees' pension insurance is partly arranged with insurance companies and partly by the Kesko Pension Fund, whose department A granting additional benefits was closed on 9 May 1998. Pension plans arranged with the Kesko Pension Fund have been treated as defined benefit plans.
As regards foreign subsidiaries, the plan adopted in the Norwegian subsidiary is the only pension plan classified as a defined benefit plan. The nature of the pension plan in Norway and Norwegian legislation changed during the 2008 accounting period to the effect that a significant number of the company's employees transferred from the defined benefit plan. At 31 December 2009, the net debt relating to the defined benefit plan in Norway was €0.4 million (€0.5 million).
The pension plans in other foreign subsidiaires are arranged in accordance with local regulations and practices. They do not contain significant defined benefit plans.
| The defined benefit liability recognised in the balance sheet in respect of the Kesko Pension Fund is determined as follows: | ||
| € million | 2009 | 2008 |
| Present value of funded obligations | -525.1 | -530.4 |
| Fair value of plan assets | 871.6 | 819.5 |
| Deficit/surplus | 346.5 | 289.1 |
| Unrecognised actuarial gains (-)/losses (+) | -31.4 | 11.1 |
| Net assets (+)/liabilities (-) recognised in the balance sheet | 315.2 | 300.3 |
| The movements of the present value of the obligation are as follows: | ||
| Plan obligation at 1 Jan. | 530.4 | 560.6 |
| Current services cost | 12.7 | 15.1 |
| Interest cost | 28.6 | 28.8 |
| Benefits paid | -27.7 | -27.2 |
| Actuarial gains (-)/losses (+) | -24.3 | -47.0 |
| Others | 5.5 | |
| Plan obligation at 31 Dec. | 525.1 | 530.4 |
| The movement in the fair value of plan assets is as follows: | ||
| Plan assets at 1 Jan. | 819.5 | 897.0 |
| Expected return on plan assets | 54.9 | 63.2 |
| Contributions to plan | 6.8 | 17.8 |
| Benefits paid | -27.7 | -27.2 |
| Actuarial gains (-)/losses (+) | 18.2 | -131.2 |
| Others | ||
| Plan assets at 31 Dec. | 871.6 | 819.5 |
| The amounts recognised in the income statement were as follows: | ||
| Current service cost | -12.7 | -15.1 |
| Interest cost | -28.6 | -28.8 |
| Expected return on plan assets | 54.9 | 63.2 |
| Change | -5.5 | |
| Actuarial gains (-)/losses (+) | 1.2 | |
| Total amount recognised in the income statement | 8.2 | 20.5 |
| Changes in net assets recognised in the balance sheet: | ||
| Opening balance | 300.3 | 262.1 |
| Income/costs recognised in the income statement | 8.2 | 20.5 |
| Contributions to plan | 6.8 | 17.8 |
| Closing balance | 315.2 | 300.3 |
| Pensions arranged with the Kesko Pension Fund | 2009 | 2008 | 2007 | 2006 | 2005 |
| Present value of plan obligation | -525.1 | -530.4 | -560.6 | -440.9 | -426.8 |
| Fair value of plan assets | 871.6 | 819.5 | 897.0 | 794.8 | 628.7 |
| Surplus/deficit | 346.5 | 289.1 | 336.4 | 353.9 | 201.8 |
| Experience adjustments on plan assets | 18.2 | -130.9 | 11.5 | 113.1 | 41.6 |
| Experience adjustments on plan liabilities | 4.3 | -15.6 | 23.2 | 4.8 | 5.9 |
The return on plan assets was €73.0 million (€-71.6 million).
In 2010, the Group expects to pay €53.0 million in contributions to defined benefit plans.
| Plan assets are comprised as follows, % of fair values of plan assets | 2009 | 2008 |
| Real estate | 47.5 % | 39.7 % |
| Shares | 23.2 % | 19.4 % |
| Long-term interest investments | 19.3 % | 20.6 % |
| Short-term interest investments | 7.9 % | 18.5 % |
| Other investments | 2.1 % | 1.8 % |
| Total | 100.0 % | 100.0 % |
| Plan assets, € million | ||
| Kesko Corporation shares included in fair value | 104.3 | 93.5 |
| Real estate leased and mostly subleased to retailers by the Kesko Group |
456.4 | 359.5 |
| Principal actuarial assumptions used: | 2009 | 2008 |
| Discount rate | 5.25 % | 5.25 % |
| Expected return on plan assets | 6.60 % | 6.60 % |
| Future salary increase assumption | 3.50 % | 3.50 % |
| Inflation | 2.00 % | 2.00 % |
| Expected average remaining service life | 14–23 | 15–20 |
When calculating the pension obligation of the Kesko Pension Fund's department B, the supplementary coefficient has been 1.5% for years 2010–2012, 1% for years 2013–2015, and 2.7% for 2016 and subsequent years.
When calculating the Pension Fund's expected return, the invested assets are divided into five categories. The total expected returns on the investment portfolio (6.6%) is composed of the compound returns on these assets. The returns expected on different assets is based on the parameters of an investment portfolio analysis model widely used in employee pension schemes, and calculated from long-term historical data. The most significant type of assets affecting the total returns is shares, further divided into nine geographical subgroups with expected returns ranging between 8.5%-12.3%.