N O TE 31 P ro visions for pensions and similar commitments The Group oper ates or participates in a number of defned beneft and defned contribution pension and other lon g term emplo y ee beneft plans throug hout the w orld These plans are s tructured in accor dance with local rules and pr actices The o v er all cos t of these plans for the Group is pro vided in note 12 US A The ma jorit y of the Group s U S emplo y ees are elig ible to join their respec tiv e emplo y er s defned contribution retirement arr an g ements under which the emplo y er matches emplo y ee contributions up to cert ain limits althoug h enrollment r ates are lo w The Group s u S oper ations also oper ate t w o defned beneft pension plans which are closed to new entr ants and future beneft accruals One of these plans is funded with assets held separ ately from those of the emplo y er S witz erland The emplo y ees in the Group s S wiss subsidiar y are elig ible to participate in a pension plan that accor din g to IFRS is a defned beneft plan The plan which is funded has assets held separ ately from those of the emplo y er S w eden Bluecollar w ork er s are co v ered b y the SAF L O collectiv e pension plan an indus tr y wide multiemplo y er defned contribution arr an g ement White collar w ork er s are co v ered b y the indus tr y wide ITP plan which is also based on a collectiv e a greement and oper ated indus tr y wide on a multi emplo y er basis Accor din g to a s t atement UFR 3 issued b y the S w edish Financial R eportin g Boar d this is a multiemplo y er defned beneft plan Alect a the insur ance compan y that oper ates this plan has been unable to pro vide Securit as or other S w edish companies with sufcient information to determine its share of the tot al assets and liabilities for this arr an g ement Consequently this arr an g ement is accounted for on a defned contribution basis The cos t for 2012 amounts to M SEK 251 224 and 225 The sur plus in Alect a can be allocated to the insured emplo y er and or the insured emplo y ees Alect a s le v el of consolidation w as 129 percent 113 and 146 as of December 31 2012 The le v el of consolidation is calculated as the fair v alue of Alect a s plan assets as a percent a g e of the obligations calculated accor din g to Alect a s actuarial assumptions This calculation is not in line with IAS 19 Nor w a y The defned beneft arr an g ements are closed to new entr ants and currently co v er about 15 percent of the emplo y ees New emplo y ees are ins tead co v ered b y defned contribution plans The defned beneft plans comprise both funded and unfunded arr an g ements The old AFP plans w ere closed in 2010 follo win g chan g es in le g islation and emplo y ees ha v e joined a new AFP plan as of Januar y 1 2011 The new AFP plan oper ates as a funded multiemplo y er plan Since the compan y is unable to separ ately identif y its share of tot al assets and liabilities the new AFP plan is accounted for on a defned contribution basis Other countries There are also defned beneft arr an g ements in countries other than those mentioned abo v e The countries with material plans are Canada F r ance G erman y the Netherlands and the U nited Kin g dom The defned beneft arr an g ement in the guar din g oper ations in the Netherlands has been a m e n d e d durin g the y ear The amendment has resulted in that the arr an g e m e n t i s n o w accounted for as a defned contribution plan thus resultin g in a curt ailment of the defned beneft plan This defned contribution plan is n ow c l o s e d t o n e w entr ants New emplo y ees will be enrolled in a new defned contribution plan Sensitivit y analysis A reduction of the discount r ate b y 01 percent a g e points w ould increase the pro vision for pensions and similar commitments b y appro ximately M SEK 49 An increase in the infation r ate b y 01 percent a g e points w ould increase the pro visions for pensions and similar commitments b y appro xi mately M SEK 5 An increase in the a v er a g e e xpected life span b y one y ear w ould increase the pro vision for pensions and similar commitments b y appro ximately M SEK 82 An increase of one percent a g e point in the assumed medical cos t trend r ate w ould increase the pro vision for pos t retirement medical plans in Canada b y appro ximately M SEK 37 and increase the a g gre gate of the ser vice cos t and interes t cos t components b y appro ximately M SEK 2 A decrease of one percent a g e point in the assumed medical cos t trend r ate w ould decrease the pro vision for pos t retirement medical plans in Canada b y appro ximately M SEK 28 and decrease the a g gre gate of the ser vice cos t and interes t cos t components b y appro ximately M SEK 2 Chan g es in the discount r ate the infation r ate and the a v er a g e e xpected life span are accounted for as actuarial gains and losses whereb y the chan g e with the e x ception of the impact on other lon g term emplo y ee benefts w ould be recogniz ed in the s t atement of comprehensiv e income and thus w ould not bur den the net income for the y ear Chan g es in assumptions will ho w e v er impact the pension cos t and consequently the net income for the follo win g y ear P ension cos ts The t able belo w sho ws the tot al cos ts for defned beneft plans The set tle ments curt ailments and terminations durin g 2012 are related to curt ailments in the Netherlands The set tlements curt ailments and terminations durin g 2011 are related to set tlements mainly in F r ance The set tlements curt ail ments and terminations durin g 2010 are related to set tlements in G erman y and Aus tria cos t and curt ailments in Nor w a y income Included in the t able belo w are pension cos ts for nonmaterial defned beneft plans of M SEK 206 96 and 92 The cos ts for defned contribution plans w ere M SEK 5391 4716 and 4673 The actual return on plan assets w as M SEK 2171 154 and 1423 P ENSION C OS T S f OR DE f INED BENE f IT PL ANS M SEK 2012 2011 2010 Current ser vice cos ts 1013 857 574 Interes t cos ts 1211 1408 1274 Expected return on assets 1088 1254 939 R ecogniz ed actuarial gain loss 1 13 04 47 R ecogniz ed pas t ser vice cos ts 64 03 03 Set tlements curt ailments and terminations 632 13 01 T ot al pension cos ts 581 999 952 1 R elates to other lon g term emplo y ee benefts PENSION C OS T S f OR DE f INED BENE f IT PL ANS ALL OCA TED PER fu NCTION M SEK 2012 2011 2010 Production e xpenses 844 659 561 Sellin g and adminis tr ativ e e xpenses 263 1 340 391 T ot al pension cos ts allocated per function 581 999 952 1 Includes curt ailment gain in the Netherlands 113 Annual R eport Notes and comments to the consolidated fnancial s t atements Securit as Annual R eport 2012