12. Pension assets and pension liabilities


Defined benefit plans - amounts recognised in the Consolidated statement of financial position





Pension Fund Other Pension Fund Other
EUR million, 31 Dec

2012 2012 2011 2011
Present value of funded obligations

217.4 6.8 215.4 6.2
Fair value of plan assets

-255.7 -6.1 -220.3 -5.4
Surplus (-) / deficit (+)

-38.3 0.7 -4.9 0.8
Present value of unfunded obligations
0.8
0.8
Unrecognised and actuarial gains (+) and losses (-) -1.3 -1.1 -32.5 -1.1
Net asset (-) / liability (+) recognised in the consolidated statement of financial position -39.6 0.3 -37.4 0.5







Amounts in the Consolidated statement of financial position





Pension Fund Other Pension Fund Other
EUR million, 31 Dec

2012 2012 2011 2011
Liabilities


0.6
0.8
Asset

-39.6 -0.3 -37.4 -0.2
Net asset (-) / liability (+) recognised in the consolidated statement of financial position -39.6 0.3 -37.4 0.5







Defined benefit plan pension expenses in Consolidated statement of comprehensive income





Pension Fund Other Pension Fund Other
EUR million

2012 2012 2011 2011
Current service cost

3.9 0.5 3.8 0.4
Interest expenses

10.0 0.3 9.6 0.3
Expected return on plan assets

-13.2 -0.3 -14.4 -0.3
Actuarial gains (-) and losses (+)

0.4 0.1 -1.7 0.0
Pension expense (+) / income (-) in the consolidated statement of comprehensive income 1.0 0.6 -2.6 0.4







The actual return on plan assets was EUR 37.4 (2011: -19.5) million in 2012.

Defined benefit plan pension expenses by function





Pension Fund Other Pension Fund Other
EUR million

2012 2012 2011 2011
Cost of goods sold

0.3
-0.8
Selling and marketing

0.2 0.2 -0.5 0.1
Research and development

0.4
-1.0
Administration

0.2 0.4 -0.4 0.3
Pension expense (+) / income (-) in the consolidated statement of comprehensive income 1.0 0.6 -2.6 0.4







Changes in present value of defined benefit obligation





Pension Fund Other Pension Fund Other
EUR million

2012 2012 2011 2011
Defined benefit obligation at 1 Jan

215.4 7.0 207.0 6.2
Current service cost

3.9 0.5 3.8 0.4
Interest expenses

10.0 0.3 9.6 0.3
Actuarial gains (-) and losses (+)

-6.9 -0.0 0.0 0.5
Foreign exchange differences


0.2
0.1
Benefits paid

-4.9 -0.3 -5.1 -0.4
Defined benefit obligation at 31 Dec

217.4 7.6 215.4 7.0







Changes in fair value of plan assets





Pension Fund Other Pension Fund Other
EUR million

2012 2012 2011 2011
Fair value of plan assets at 1 Jan

220.3 5.4 241.6 5.1
Expected return on plan assets

13.2 0.3 14.4 0.3
Actuarial gains (+) and losses (-)

24.0 0.0 -33.8 -0.4
Employer contributions

3.2 0.6 3.2 0.6
Foreign exchange differences


0.0
0.1
Benefits paid

-4.9 -0.2 -5.1 -0.3
Fair value of plan assets at 31 Dec
255.7 6.1 220.3 5.4

Fair values of the assets of the benefit plan arranged through the Orion Pension Fund by asset category as percentages of the fair value of all plan assets


%



2012 2011
European equity



42% 36%
North American equity



1%
Emerging market equity



9% 9%
Bonds



37% 41%
Properties



4% 2%
Certificates of deposits and commercial paper


4% 7%
Other



3% 5%
Total



100% 100%







In other benefit plans the insurance companies are responsible for the plan assets, and therefore it is not possible to present the categories of those assets.


The plan assets in 2012 include shares issued by the parent company Orion Corporation with fair value of EUR 36.3 (2011: 24.9) million, accounting for 14.2% (2011: 10.6%) of the plan assets.


Acturial assumptions used by Orion Pension Fund


%



2012 2011
Discount rate



4.0% 4.6%
Inflation rate



2.0% 2.0%
Expected return on plan assets



6.0% 6.0%
Future salary increases



2,0% – 2,5% 2.0%
Future pension increases



1,2% – 2,3% 2,1% – 2,7%







The objective of the Orion Pension Fund is a distribution of investments that spreads risk between different types of asset over the long term. Most of the assets are invested in shares and bonds.


The investment performance has been assessed for the entire assets of the Orion Pension Fund and primarily over the long term. Short-term and long-term target returns for investments have been set. The objective is to achieve 6% return on the plan assets for the long-term.

Amounts for the current and four previous financial years


Pension Fund Other Pension Fund Other Pension Fund Other
EUR million, 31 Dec 2012 2012 2011 2011 2010 2010
Present value of defined benefit obligation 217.4 7.5 215.4 7.0 207.0 6.2
Fair value of plan assets -255.7 -6.1 -220.3 -5.4 -241.6 -5.1
Surplus (-) / deficit (+) -38.3 1.4 -4.9 1.6 -34.7 1.0







Experience adjustments on plan liabilities, gains (-) / losses (+) -0.7 0.1 -0.1 -0.1 6.0 0.0
Experience adjustments on plan assets, gains (+) / losses (-) 24.0 0.1 -33.8 -0.3 19.8 0.1









Pension Fund Other Pension Fund Other
EUR million, 31 Dec

2009 2009 2008 2008
Present value of defined benefit obligation

178.8 6.1 149.6 5.0
Fair value of plan assets

-214.0 -4.5 -182.0 -3.7
Surplus (-) / deficit (+)

-35.2 1.5 -32.3 1.3







Experience adjustments on plan liabilities, gains (-) / losses (+)

-1.9 0.1 -0.9 0.5
Experience adjustments on plan assets, gains (+) / losses (-)

28.1 0.2 -48.5 0.2







The Group expects to contribute EUR 18 million to its pension plans in 2013 and the share of defined benefit plans is EUR 4 million.


The EUR 217.4 million liability of the Orion Pension Fund has been discounted at a discount rate of 4%. The impact on the liability of a change in the discount rate of +/- 0.5 percentage points (+/- 0.5%) would be EUR +19.1/-22.0 million.


An amendment of the IAS 19 standard was adopted with effect from 1 January 2013. Following this amendment, the treatment of actuarial gains and losses in calculating IFRS pension expenses will change (elimination of so-called corridor approach). As a result, actuarial gains and losses on liabilities and assets will be recognised annually through the statement of comprehensive income directly into equity. The equity at the end of 2011 is adjusted for the cumulative (2005-2011) actuarial gains and losses (EUR -32.5 million) up to the end of 2011 that arose during a transitional period. Correspondingly, the equity at the end of 2012 is adjusted for the actuarial gains and losses (EUR 33.9 million) for 2012.


Following an amendment to IAS 19 on calculating IFRS pension expenses, a discount rate will be used as the rate of return on investment activity. The difference between expected and actual returns on investments will also in future be recognised in the Group’s equity.


The official financial statement documents including notes to the parent company financial statements and unrounded figures are available in Finnish at www.orion.fi.