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 Blue-collar w ork er s are co v ered b y the SAF -L O collectiv e pension plan, an indus tr y - wide multi-emplo 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 multi-emplo 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 25.1 (22.4 and 22.5). 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 multi-emplo 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 0.1 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 0.1 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 non-material defned beneft plans of M SEK 20.6 (9.6 and 9.2). The cos ts for defned contribution plans w ere M SEK 539.1 (471.6 and 467.3). The actual return on plan assets w as M SEK 217.1 (-15.4 and 142.3). 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 101.3 85.7 57.4 Interes t cos ts 121.1 140.8 127.4 Expected return on assets -108.8 -125.4 -93.9 R ecogniz ed actuarial gain / loss 1 1.3 0.4 4.7 R ecogniz ed pas t ser vice cos ts 6.4 -0.3 -0.3 Set tlements, curt ailments and terminations -63.2 -1.3 -0.1 T ot al pension cos ts 58.1 99.9 95.2 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 84.4 65.9 56.1 Sellin g and adminis tr ativ e e xpenses -26.3 1 34.0 39.1 T ot al pension cos ts allocated per function 58.1 99.9 95.2 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