Financial review
NOTES TO THE FINANCIAL STATEMENTS
(Amounts in NOK million)
6. PENSION COSTS, PLAN ASSETS AND PENSION LIABILITIES Det Norske Veritas has both defined benefit pension plans and contribution pension plans. The defined benefit pension plans are covered through separate pension funds or through arrangements with insurance companies. The future pension benefits are based on the employee's salary level at the time of retirement and on the number of years of membership. The basis for calculating the pension cost and the pension liabilities included in the accounts is shown in this note. Contribution to the Group's pension plans are made in accordance with common actuarial methods in the country where the pension plan is administered. The pension assets in Norway are invested as follows: Market value of plan assets in Norway
31 Dec. 2004
31 Dec. 2003
31 Dec. 2002
Buildings and property Norwegian bonds, long-term Mutual equity funds Norwegian bonds, short-term Non-Norwegian bonds, short term Index linked bonds Bank accounts, other assets and liabilities
147.0 0.0 957.7 770.9 457.8 0.0 (214.1)
147.0 136.5 775.1 826.1 93.8 0.0 (156.4)
147.0 155.0 446.2 741.4 0.0 65.7 (76.9)
Total market value of plan assets
2 119.2
1 822.1
1 478.4
248.1
323.3
(129.9)
Actual return on plan assets Funded Norwegian defined benefit pension plans 2004 2003 2002
Other defined benefit pension plans 2004 2003 2002
135.5 120.3 (109.3) 20.6 97.4 0.0
134.5 118.6 (88.7) 23.2 112.7 0.0
107.7 120.9 (107.7) 17.0 61.3 0.0
53.1 42.8 (28.2) 1.2 8.3 (11.0)
45.3 35.3 (21.7) 1.2 19.6 (5.0)
81.0 34.9 (23.8) 1.2 10.8 0.0
Net pension cost
264.5
300.3
199.2
66.2
74.7
104.1
Plan assets and pension liabilities
Funded Norwegian defined benefit pension plans 2004 2003 2002
Net present value of this year's pension contribution Interest expense on pension liabilities Expected return on plan assets Payroll tax Amortisation Curtailment/pension plan changes
Other defined benefit pension plans 2004 2003 2002
2 119.2 (2 562.9) (62.6) 482.3
1 822.1 (2 593.6) (108.8) 974.9
1 478.4 (2 216.9) (104.1) 1 127.3
538.5 (929.5) (14.2) 106.0
451.2 (878.8) (13.8) 130.8
340.5 (706.2) (12.2) 112.2
Net prepaid pension (liabilities)
(24.0)
94.6
284.7
(299.2)
(310.6)
(265.7)
Hereof recorded as plan assets Hereof recorded as pension liabilities
0.0 (24.0)
94.6 0.0
284.7 0.0
0.0 (299.2)
0.0 (310.6)
17.9 (283.6)
The calculation of the pension liabilities in Norway is based on the following assumptions
2004
2003
2002
Discount rate Projected annual salary adjustment Projected annual increase in pension benefit Projected annual increase of Norwegian Government basis pension Expected annual return on plan assets
5.0% 4.0% 1.5% 1.5% 6.0%
5.0% 4.0% 1.5% 1.5% 6.0%
6.0% 4.5% 2.0% 2.0% 7.0%
Market value of plan assets Actuarial present value of pension liabilities Payroll tax Unrecognised net loss
Ordinary retirement age in Det Norske Veritas is 67 years. Some managers and employees are entitled to retire before the age of 67.
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