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 2020.
Summary of pension costs
(NOK million) 2020 2019
Pension costs defined contribution plans and other severance schemes 162 154
Pension costs defined benefit plans 14 16
Total pension costs recognised in the income statement, ref. Note 2.3 177 170
Actuarial gain / loss (-) recognised in other comprehensive income (net of tax) -13 -8
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 61 per cent and 27 per cent, respectively, of
the Group’s net pension obligation as of 31 December 2020. 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 82 per cent of the other severance scheme obligation.
Actuarial assumptions
Norway Indonesia
2020 2019 2020 2019
Discount rate in % 1.0 1.3 7.4 7.3
Expected return in % 1.0 1.3 4.0 5.0
Wage adjustment in % 2.0 2.25 6.0 6.0
Inflation / increase in social security basic amount (G) in % 1.75 2.0 2.6 3.0
Pension adjustment in % 0.0-2.0 0.7-2.25 - -
Schemes with net pension obligations
Pension plan
assets
Defined benefit
obligations
Net pension
obligations
(NOK million) 2020 2019 2020 2019 2020 2019
Balance as of 1 January 440 366 -575 -487 -135 -121
Translation difference at the beginning of the period 2 15 - -18 2 -2
Recognised in the income statement
Pension earnings for the year - - -11 -12 -11 -12
Interest income / cost (-) - - -13 -15 -13 -15
Expected return on pension plan assets 9 11 - - 9 11
Recognised in the income statement 9 11 -23 -28 -14 -16
Other movements 20 47 -13 -43 8 6
Net pension obligation defined benefit plans 471 440 -611 -575 -140 -136
Other severance schemes - - -103 -85 -103 -85
Balance as of 31 December 471 440 -715 -660 -243 -221
Breakdown of net pension liabilities in funded and unfunded schemes
(NOK million) 31.12.2020 31.12.2019
Present value of funded pension obligations -504 -473
Pension plan assets 471 440
Net funded pension obligations -33 -34
Present value of unfunded pension obligations -211 -187
Capitalised net pension assets / liabilities (-) -243 -221
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 2021 are expected to be approximately
NOK 12.3 million.
Breakdown of pension plan assets (fair value)
31.12.2020 31.12.2019
Cash and cash equivalents in % 0.4 1.1
Bonds in % 54.7 52.7
Shares in % 40.6 41.3
Property in % 4.3 4.8
Total pension plan assets 100.0 100.0
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Jotun Group
40 I Jotun Annual Report 2020