36. Pension provisions

Pension provisions

Provisions for pensions and similar obligations are formed for commitments arising from both vested rights to future pension payments and current payments to current and former members of HHLA Group companies in Germany, plus 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. Alongside individual agreements, this primarily means the collective company pension agreement (BRTV). As part of the harmonisation of existing pension schemes, the “HHLA capital plan” labour agreement was also introduced with effect from 1 January 2018.

The BRTV is a total benefit plan (final salary pension). HHLA guarantees 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 notional net payment in the final wage or salary band, based on applicable social security data contribution levels for the year 1999. The current contribution assessment ceiling is always taken into account.

The HHLA capital plan provides employees with a uniform and transparent pension scheme offering a high degree of flexibility, both in terms of paying in and in the payout/benefit phase. Payments made into the HHLA capital plan are funded from gross income (deferred compensation). As such, employees forgo a part of their untaxed income at the time they pay into the scheme in favour of future retirement savings. A total of 27.50 % is added to the contributions paid in as part of the deferred compensation scheme. An annual interest rate of 3.00 % is also guaranteed in respect of the contributions. Various payout options are available to employees for the payout/benefit phase. In the event that an employee takes early retirement and chooses the monthly instalment payment option, a value adjustment is granted for components of retirement assets anchored in collective agreements.

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 and/or savings for future retirement and surviving dependants. External actuaries calculate the amount of the obligation using the projected unit credit method.

Pension obligations

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.

As of 31 December 2023, the weighted average term of the defined benefit obligation was 9.8 and 13.9 years respectively (previous year: 9.6 and 12.1 years respectively).

In addition, reimbursement rights of € 1,674 thousand (previous year: € 1,676 thousand) were concluded to cover the corresponding pension obligations. The expected income from these reimbursement rights amounts to € 66 thousand in the year under review, whereas the actual income amounts to € 125 thousand. In the 2023 financial year, € 127 thousand was paid out in reimbursement rights.

At the time the HHLA capital plan was introduced, no statistical precedents with regard to the likelihood of individual payout options being selected were available. The value adjustment mentioned above was therefore applied in full to the measurement of this provision. Given recent experiences, a reassessment was conducted of the likelihood of the various payout options being selected, which affects the amount of the value adjustment to be applied. As a result, actuarial gains arose during the reporting year resulting from changes in demographic assumptions.

Biometric data is drawn from the 2018 G mortality tables compiled by Professor Klaus Heubeck.

For measurements based on international financial reporting standards, the interest rate should be determined in accordance with the maturity of the liability on the basis of high-quality corporate bonds. For this reason, standard setters, auditors and actuaries generally use corporate bonds with AA ratings as high-quality corporate bonds. In the euro area, the assessor Mercer generates a spot rate yield curve based on bonds from the Refinitiv index. As the interest rate should only represent the “time value of money” in accordance with IAS 19.78, which by definition does not incorporate any greater risk of default, only bonds with no interest rate-distorting options are used, as would be the case with call or put options, for example. Bonds that offer much higher or lower interest rates in their risk categorisation compared to the other bonds are not considered either.

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 derived from the sensitivities stated.

Payments for pension obligations

In the 2023 financial year, HHLA made pension payments for plans totalling € 20,435 thousand (previous year: € 20,420 thousand). HHLA anticipates the following payments for pension plans over the next five years:

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 time and remuneration components deposited in 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 3.00 % 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 obligation covered by the funds saved is reported at the funds’ fair value. The additional benefits arising from collective labour agreements not covered by the funds saved are reported at the full present value of the obligation, including actuarial gains and losses.

As part of the harmonisation of existing pension schemes, which was completed in 2018, the existing funds from working lifetime accounts were largely transferred to the HHLA capital plan. The obligations arising from the remaining existing funds will fall steadily over time, with relevant disclosures following for reasons of materiality.

As of 31 December 2023, the weighted average term of the defined benefit obligation was 2.0 years (previous year: 3.0 years). The plan assets consist solely of shares in money market and investment funds.

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 from these commitments.

The costs incurred in connection with pension funds regarded as defined contribution pension plans amounted to € 2,460 thousand in the reporting year (previous year: € 2,785 thousand).

HHLA paid € 35,388 thousand into the state pension system as its employer’s contribution (previous year: € 33,729 thousand).