5.2 Pensions and other long-term employee benefits
The Group companies provide various retirement plans in accordance with local regulations and practices
in the countries in which they operate.
The majority of the Group’s pension plans are defined contribution plans, whereby the company’s
obligation is limited to annual contributions to the employees’ pension plans. The Group also has a
few, remaining defined benefit pension plans with net pension obligation. Costs related to these plans
account for less than 15 per cent of total pension costs in 2019.
Summary of pension costs
(NOK THOUSAND) 2019 2018
Pension costs defined contribution plans and other severance schemes 153 896 177 985
Pension costs defined benefit plans 16 491 17 372
Total pension costs recognised in the income statement, ref. Note 2.3 170 387 195 357
Actuarial gain / loss (-) recognised in other comprehensive income (net of tax) -8 290 8 171
The Group has defined benefit plans in a limited number of countries, including Norway, the UK,
Indonesia and in certain countries in South East Asia and the Middle East. In Norway, the defined benefit
schemes were replaced by defined contribution plans in 2004, and the defined benefit plan in the UK
was closed for new members in 2012.
Defined benefit plans in Norway and Indonesia account for around 59 per cent and 28 per cent,
respectively, of the Group’s net pension obligation as of 31 December 2019. In Norway, net pension
obligations are primarily related to previous early retirement schemes for the Group’s senior executives.
In certain countries in South East Asia and the Middle East, such as Indonesia, Thailand and Oman, there
are pension schemes based on a final salary principle in accordance with local regulations. These are
included in net pension obligations.
Other severance schemes comprise mainly obligations related to operating pension schemes for
employees in the Norwegian companies with an annual basic salary and pension base exceeding 12
times the basic amount (G). This accounts for 85 per cent of the other severance scheme obligation.
Actuarial assumptions
Norway Indonesia
2019 2018 2019 2018
Discount rate in % 1.3 2.0 7.3 9,1
Expected return in % 1.3 2.0 5.0 5.0
Wage adjustment in % 2.25 2.75 6.0 6.0
Inflation / increase in social security basic amount (G) in % 2.0 2.5 3.0 3.2
Pension adjustment in % 0.7-2.25 0.8-2.75 - -
Schemes with net pension obligations
Pension plan
assets
Defined benefit
obligations
Back to Notes for the Group
Net pension
obligations
(NOK THOUSAND) 2019 2018 2019 2018 2019 2018
Balance as of 1. January 365 866 369 641 -486 906 -502 441 -121 040 -132 798
Translation difference at the beginning of the period 15 442 1 125 -17 806 -390 -2 364 735
Recognised in the income statement
Pension earnings for the year - - -12 159 -14 278 -12 159 -14 278
Interest income / cost (-) - - -15 382 -13 783 -15 382 -13 783
Expected return on pension plan assets 11 050 9 852 - - 11 050 9 852
Recognised in the income statement 11 050 9 852 -27 541 -28 061 -16 491 -17 372
Actuarial gain / loss (-) recognised in other comprehensive income 45 176 -15 331 -55 093 25 436 -9 916 10 106
Other movements
Benefits paid -12 684 -14 871 20 923 29 036 8 240 14 166
Contribution paid to pension schemes 14 992 15 450 - - 14 992 15 450
Transfer to / from schemes with net pension liabilities - - -8 921 -10 486 -8 921 -10 486
Net pension obligation defined benefit plans 439 845 365 866 -575 343 -486 906 -135 499 -121 040
Other severance schemes - - -85 153 -76 649 -85 153 -76 649
Balance as of 31 December 439 845 365 866 -660 496 -563 555 -220 651 -197 688
Breakdown of net pension liabilities in funded and unfunded schemes
(NOK THOUSAND) 31.12.2019 31.12.2018
Present value of funded pension obligations -473 388 -392 704
Pension plan assets 439 845 365 866
Net funded pension obligations -33 543 -26 838
Present value of unfunded pension obligations -187 107 -170 851
Capitalised net pension assets / liabilities (-) -220 651 -197 688
Pension plan assets
Pension plan assets are mainly in bonds and shares. The estimated return will vary depending on the
composition of the various classes of assets. Contributions to pension plan assets during 2020 are
expected to be approximately NOK 15.1 million.
Breakdown of pension plan assets (fair value)
31.12.2019 31.12.2018
Cash and cash equivalents in % 1.1 0.5
Bonds in % 52.7 66.8
Shares in % 41.3 27.3
Property in % 4.8 5.4
Total pension plan assets 100.0 100.0
JOTUN GROUP
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