NOTE 9 – PENSION COST AND PENSION LIABILITIES

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NOTE 9 – PENSION COST AND PENSION LIABILITIES    
             
Funded plans
The company is obligated to have a pension plan according to the Act on Mandatory company pension, and has a pension plan which follows the requirement as set in the Act on Mandatory company pension.

The company has a general pension plan in a life insurance company. The plan entitles its members to defined future benefits. These benefits are mainly dependent on number of years of employment, salary at the end of ordinary employment and the size of the benefits from the National Insurance Scheme. Full retirement pension will amount to approximately 66% of the basis for pension (limited to 12G), and the plan also includes entitlement to disability and children's pensions. Retirement age is 67 years. The company has the right to alter the pension plan. The benefits accruing under the scheme are funded. The pension plan has 22 members (2014: 22 members).

Non-funded plans
The company also has non-funded pension obligations for 2 pensioners and an additional defined contribution plan for CEO, which are not covered by the general pension plan.

Assumptions
Pension liabilities and pension costs are calculated by a third party independent actuary, and has been evaluated according to revised IAS 19. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited through Equity. The following assumptions were used:

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
  2015 2014        
Discount rate 2.70% 2.30%        
Expected salary increases 2.50% 2.75%        
Rate of pension increases 0.00% 0.00%        
Increase of National Insurance Basic amount (G) 2.25% 2.50%        
Expected return on plan assets 2.70% 2.30%        
Social Security Tax 14.10% 14.10%        
             
Net periodic pension cost: Non-funded plans Funded plans    
2015 2014 2015 2014    
   
Benefits earned during the year 191 175 309 2 151 2 183    
Interest cost 13 20 218 212    
Expected return on pension assets 0 0 0 0    
Past service costs 0 0 0 0    
Administrative expenses 0 0 39 40    
Social Security Tax 29 28 334 338    
Changes in estimates 0 0 0 0    
     
   
Net periodic pension cost 234 223 2 742 2 773    
         
Actual return on plan assets     4.00% 5.00%    
             
Overview of actuarial gains and losses recognized directly through other equity:    
2015 2014        
Net actuarial gains/losses 01.01 -11 660 -4 210        
Current year actuarial gains/losses 10 612 -10 205        
Tax -2 865 2 755        
Net actuarial gains/losses 31.12 -3 913 -11 660        
             
Status of pension plans reconciled to the balance sheet            
  Non-funded plans Funded plans    
2015 2014 2015 2014    
   
Present value of pension obligations -909 -804 -31 689 -33 759    
Fair value of plan assets 0 0 26 206 18 476    
Funded status of plans at December 31. -909 -804 -5 483 -15 282    
   
Unrecognised net changes in estimates 0 0 0 0    
Social Security Tax -128 -113 -773 -2 155    
   
Net pension liability recognised at December 31. -1 037 -917 -6 256 -17 437    
   
      2015 2014    
Total net pension liability non-funded and funded plans as of 31.12     -7 294 -18 355    
             
Composition of plan assets on major investment categories. The company's pension funds are managed by an independent life insurance company that invests the funds of the plan according to Norwegian law.

The major categories of plan assets as a percentage of the fair value of plan assets are as follows:

   
   
   
2015 2014        
Shares and other equity instruments 9.10% 10.80%        
Bonds 39.90% 62.00%        
Money market and similar 34.40% 10.00%        
Properties and real estate 13.80% 15.00%        
Other 2.80% 2.20%        
Total 100.00% 100.00%        
             
Defined-contribution pension plan            
The defined benefit pension plan for Solvang ASA has been closed for new employees. New employees are members of a defined-contribution pension plan. Per 31.12.2015 this plan had 15 members. Paid contributions in 2015 was NOK 731 841.    
   
   
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