36. Pension Provisions
Pension Obligations
Provisions for pensions and similar obligations are formed for commitments arising from both vested rights to future pension payments and current payments to active and former members of HHLA Group companies in Germany and any surviving dependants who are entitled to receive such benefits. A distinction is made between defined benefit and defined contribution company pension plans.
Defined Benefit Pension Plans
In the case of defined benefit plans, the Group is obliged to make the agreed payments to current and former employees. HHLA’s pension scheme is financed by both provisions and funds.
Company retirement benefits are paid on the basis of various entitlements. As well as individual agreements these are primarily the collective company pension agreement (BRTV) and the so-called “port pension”, which is governed by a collective labour agreement for port workers in German seaports.
The BRTV is a total benefit plan. HHLA guarantees the participating employees a certain amount of benefits, which are made up of the statutory pension and the company pension. The amount of total benefits is determined by a variable percentage (according to years of service) of a fictitious net payment in the final wage or salary band based on the applicable social security data contribution levels for the year 1999. The current contribution assessment ceiling is always taken into account.
The amount of the port pension depends on the years in service and is determined by the collective labour agreement for German seaports.
Based on these pension plans, the Group forms provisions for pensions and similar obligations for the amount of expected future retirement and surviving dependants’ pensions. External actuaries calculate the amount of the obligation using the projected unit credit method.
in € thousand |
31.12.2015 |
31.12.2014 |
||
Present value of pension commitments |
403,613 |
436,227 |
||
Obligations from working lifetime accounts |
11,995 |
7,331 |
||
|
415,608 |
443,558 |
Pension Commitments
The balance sheet shows the full present value of pension obligations including actuarial gains and losses. The reported pension obligation relates to an unfinanced plan.
in € thousand |
2015 |
2014 |
||
Present value of pension obligations as of 1. January |
436,227 |
360,921 |
||
Current service expense |
5,038 |
3,960 |
||
Past service expense |
547 |
0 |
||
Interest expense |
7,461 |
12,280 |
||
Pension payments |
- 19,487 |
- 19,773 |
||
Actuarial gains (+), losses (-) due to amendments in biometric assumptions |
2,060 |
- 10,580 |
||
Actuarial gains (+), losses (-) due to amendments in financial assumptions |
- 28,233 |
89,419 |
||
Present value of pension obligations as of 31. December |
403,613 |
436,227 |
in % |
2015 |
2014 |
||
Current employees |
37.4 |
39.3 |
||
Former employees |
3.0 |
1.9 |
||
Pensioners |
59.6 |
58.8 |
||
|
100.0 |
100.0 |
As of 31 December 2015, the weighted average term of the defined benefit obligation was 13.8 years (previous year: 14.5 years).
in € thousand |
2015 |
2014 |
||
Current service expense |
5,038 |
3,960 |
||
Past service expense |
547 |
0 |
||
Interest expenses |
7,461 |
12,280 |
||
|
13,046 |
16,240 |
in € thousand |
2015 |
2014 |
||
Actuarial gains (+)/losses (-) as of 1 January |
- 65,983 |
12,856 |
||
Changes in the financial year due to amendments in biometrical assumptions |
- 2,060 |
10,580 |
||
Changes in the financial year due to amendments in financial assumptions |
28,233 |
- 89,419 |
||
Actuarial gains (+)/losses (-) as of 31 December |
- 39,810 |
- 65,983 |
in % |
31.12.2015 |
31.12.2014 |
||
Discount rate |
2.25 |
1.75 |
||
Projected salary increase |
3.00 |
3.00 |
||
Projected increase in pensions (without BRTV) |
2.00 |
2.00 |
||
Projected increase in pensions (monthly pensions under BRTV) |
1.00 |
1.00 |
||
Fluctuation rate |
2.10 |
2.10 |
||
Rate of inflation |
2.00 |
2.00 |
||
Adjustment of Social Security Pension according to Pension Insurance Report |
2015 |
2014 |
The biometric data is drawn from the 2005 G actuarial tables by Prof. Dr. Klaus Heubeck.
HHLA derives the interest rates used for discounting from corporate loans with a very good credit rating whose terms and payouts match HHLA’s pension plans.
|
Change in parameter |
Effect on present value |
||||||||||
|
|
31.12.2015 |
31.12.2014 |
in € thousand |
31.12.2015 |
31.12.2014 |
||||||
Discount rate |
Increase of |
0.5 % |
0.5 % |
Decrease of |
24,729 |
27,569 |
||||||
|
Decrease of |
0.5 % |
0.5 % |
Increase of |
27,525 |
30,808 |
||||||
Payment trend |
Increase of |
0.5 % |
0.5 % |
Increase of |
4,407 |
5,321 |
||||||
|
Decrease of |
0.5 % |
0.5 % |
Decrease of |
4,305 |
5,180 |
||||||
Adjustment to state pension |
Decrease of |
20.0 % |
20.0 % |
Increase of |
1,606 |
2,309 |
||||||
Expected mortality |
Decrease of |
10.0 % |
10.0 % |
Increase of |
15,260 |
16,888 |
Actuarial calculations for the valuation parameters classed as material are performed in isolation, i.e. if several parameters change simultaneously, the individual effects are not cumulative due to correlation. In the case of a change to the parameters, a linear trend for the defined benefit obligation cannot be drawn from the sensitivities stated.
Pension Payments
In the 2015 financial year, HHLA made pension payments for plans totalling € 19,487 thousand. HHLA anticipates the following payments for pension plans over the next five years.
in € thousand |
|
|
2016 |
21,017 |
|
2017 |
20,966 |
|
2018 |
20,998 |
|
2019 |
20,781 |
|
2020 |
20,884 |
|
|
104,646 |
Obligations from Working Lifetime Accounts
In the 2006 financial year, the affiliated companies in Germany undertook to set up working lifetime accounts due to collective labour agreements. Staff could elect to have remuneration components paid into money market or investment funds by the Group until 31 December 2013. Capital has been invested within the company since 1 January 2014. The funds saved in the employee’s account are used to give them paid leave before they enter retirement. The amount of pay to which employees are entitled during their early retirement depends on the amount of funds saved, which in turn depends on the performance of the fund assets – based on the model for contributions up to 31 December 2013 and taking the return guaranteed in the collective labour agreement into account for contributions as of 1 January 2014 – plus other contractually agreed social benefits during the early retirement phase.
The portion of the obligations covered by the funds saved is reported at the funds’ fair value. The additional benefits arising from collective labour agreements which are not covered by the funds saved are reported at the full present value of the obligation including actuarial gains and losses.
in € thousand |
31.12.2015 |
31.12.2014 |
||
Present value of obligations |
24,767 |
20,266 |
||
Present value of plan assets (fund shares) |
- 12,772 |
- 12,935 |
||
Uncovered allocations |
11,995 |
7,331 |
in € thousand |
2015 |
2014 |
||
Present value of the obligations from working lifetime accounts as of 1 January |
20,266 |
16,547 |
||
Current service expense |
3,432 |
3,888 |
||
Interest expenses |
388 |
557 |
||
Actuarial gains (-), losses (+) due to amendments in biometric assumptions |
1,770 |
- 683 |
||
Actuarial gains (-), losses (+) due to amendments in financial assumptions |
- 1,042 |
365 |
||
Capital payments |
- 47 |
- 408 |
||
Present value of the obligations from working lifetime accounts as of 31 December |
24,767 |
20,266 |
As of 31 December 2015, the weighted average term of the defined benefit obligation was 20.0 years (previous year: 20.0 years).
in € thousand |
2015 |
2014 |
||
Fair value of plan assets from working lifetime accounts as of 1 January |
12,935 |
13,054 |
||
Expected income from plan assets |
230 |
435 |
||
Proceeds |
0 |
167 |
||
Actuarial gains (-), losses (+) due to amendments in financial assumptions |
- 351 |
- 378 |
||
Capital payments |
- 42 |
- 343 |
||
Fair value of plan assets from working lifetime accounts as of 31 December |
12,772 |
12,935 |
The plan assets consist solely of shares in money market and investment funds. Losses of € 148 thousand were recorded on the plan assets in the financial year (previous year: € 145 thousand).
in % |
31.12.2015 |
31.12.2014 |
||
Discount rate |
2.25 |
1.75 |
||
Anticipated return on invested capital |
2.25 – 3.00 |
1.75 – 3.00 |
||
Forecast increase in pay |
3.00 |
3.00 |
The biometric data is drawn from the 2005 G actuarial tables by Prof. Dr. Klaus Heubeck, taking into account age-related fluctuation.
in € thousand |
2015 |
2014 |
||
Current service expense including salary conversion |
3,432 |
3,888 |
||
thereof gathered at costs as uncovered part |
301 |
823 |
||
thereof gathered at funds as covered part |
3,131 |
3,065 |
||
Interest expenses |
388 |
557 |
||
Expected income from the plan assets |
- 230 |
- 435 |
||
Benefits paid (service expense) |
- 5 |
- 65 |
||
|
3,585 |
3,945 |
in € thousand |
2015 |
2014 |
||
Actuarial gains (+)/losses (-) as of 1. January |
252 |
312 |
||
Changes in the financial year due to amendments in biometrical assumptions |
- 1,770 |
683 |
||
Changes in the financial year due to amendments in financial assumptions |
691 |
- 743 |
||
Actuarial gains (+)/losses (-) as of 31 December |
- 827 |
252 |
|
Change in parameter |
Effect on present value |
||||||||||||
|
|
31.12.2015 |
31.12.2014 |
in € thousand |
31.12.2015 |
|
31.12.2014 |
|||||||
Discount rate |
Increase of |
0.5 % |
0.5 % |
Decrease of |
852 |
Decrease of |
782 |
|||||||
|
Decrease of |
0.5 % |
0.5 % |
Increase of |
972 |
Increase of |
897 |
|||||||
Payment trend |
Increase of |
0.5 % |
0.5 % |
Increase of |
62 |
Increase of |
27 |
|||||||
|
Decrease of |
0.5 % |
0.5 % |
Decrease of |
69 |
Decrease of |
30 |
|||||||
Expected mortality |
Decrease of |
10.0 % |
10.0 % |
Decrease of |
12 |
Increase of |
26 |
Actuarial calculations for the valuation parameters classed as material are performed in isolation, i.e. if several parameters change simultaneously, the individual effects are not cumulative due to correlation. In the case of a change to the parameters, a linear trend for the defined benefit obligation cannot be drawn from the sensitivities stated.
The obligations from working lifetime accounts were financed by paying a portion of employees’ remuneration into the unit-linked pension plan by 31 December 2013. For 2016, HHLA expects payments in the amount of € 3.2 million.
in % |
2015 |
2014 |
||
Money market funds |
52 |
52 |
||
Mixed funds |
32 |
30 |
||
Funds of funds |
15 |
16 |
||
Annuity funds |
1 |
2 |
||
|
100 |
100 |
Payments for Obligations from Working Lifetime Accounts
In the financial year under review, HHLA made payments for plans totalling € 47 thousand. In return, the company acquired corresponding securities holdings worth € 42 thousand. The outflow of funds therefore amounted to € 5 thousand in the year under review.
in years in € thousand |
|
|
2016 |
263 |
|
2017 |
367 |
|
2018 |
430 |
|
2019 |
568 |
|
2020 |
545 |
|
|
2,173 |
Defined Contribution Pension Plans
In the case of defined contribution plans, the relevant companies merely make payments to dedicated funds. There are no further obligations. HHLA does not incur any financial or actuarial risks arising from these commitments.
The costs incurred in connection with pension funds which are to be regarded as defined contribution pension plans amounted to € 4,454 thousand in the reporting year (previous year: € 4,333 thousand).
HHLA paid € 26,005 thousand (previous year: € 26,046 thousand) into the state pension system as its employer’s contribution.
Performance-oriented pension obligations arising from the accrued and estimated pension rights of active and former members of staff as at settlement day, allowing for probable future changes in pensions and emoluments.
Performance-oriented pension obligations arising from the accrued and estimated pension rights of active and former members of staff as at settlement day, allowing for probable future changes in pensions and emoluments.