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Notes to the Accounts

31 Employee Benefits
               
           
Employee benefits
Sampo has defined benefit plans in P&C insurance business in Sweden and Norway.
 
In addition to statutory retirement pension insurance, the Group has certain voluntary defined benefit plans. The voluntary defined benefit plans are intra-Group and included in the insurance liabilities of Mandatum Life. The amount is negligible and they have no material impact on the Group profit or loss or equity.
               
Employee benefit obligations of P&C Insurance 31 Dec.
EURm         2010 2009
Present value of estimated pension obligation 458 424
Fair value of plan assets         326 272
Net obligation/liability         132 152
Net cumulative unrecognised            
actuarial gains/losses         -46 -67
Net pension obligation recognised in the balance sheet 85 85
Provision for social security         20 19
Provision for pensions 31 Dec.         105 104
               
IAS 19 Employee benefits is applied in the accounting for the defined benefit plans from the beginning of the financial year 2005.
 
Pension obligations, and the pension cost accrued during the fiscal period, are calculated using actuarial methods. Earned pension rights are calculated on a straight-line basis during the employment period. The calculation of pension obligations is based on anticipated future pension payments and includes assumptions regarding mortality, employee turnover and salary growth. The nominally calculated liability is discounted to present value using an interest rate based on the current market rate and adjusted to take into account the duration of the company’s pension obligations. After deducting plan assets, a net asset or liability is entered in the balance sheet. The net obligation reported in the closing balance pertained to defined-benefit pension plans for employees in Sweden and Norway. The pension benefits arising in the other countries covered by the Group’s operations have been classified as defined contribution plans.
 
The following actuarial assumptions have been used for the calculation of defined benefit pension plans in Sweden and Norway:
               
        Sweden Sweden Norway Norway
      31.12.2010 31.12.2009 31.12.2010 31.12.2009
Discount interest rate     5.00 % 4.00 % 4.00 % 4.50 %
Anticipated return     4.50 % 4.50 % 4.75 % 5.00 %
Future pay increases     3.25 % 3.25 % 3.75 % 4.00 %
Price inflation     2.00 % 2.00 % 2.25 % 2.50 %
               
The expected rate of return on the plan assets has been calculated based on the following division of investment assets:
               
Debt instruments     42 % 43 % 65 % 66 %
Equity instruments     39 % 42 % 16 % 9 %
Property     10 % 10 % 16 % 17 %
Other     9 % 5 % 3 % 8 %
               
Analysis of the employee benefit obligation
  2010 2009
EURm Funded plans Unfunded plans Total Funded plans Unfunded plans Total
Present value of estimated pension obligation 395 63 458 367 56 424
Fair value of plan assets 326 - 326 272 - 272
Net obligation/liability 69 63 132 95 56 152
Net cumulative unrecognised            
actuarial gains/losses -41 -5 -46 -64 -2 -67
Net pension obligation recognised in the balance sheet 27 58 85 31 54 85
             
Recognised in Income Statement            
EURm         2010 2009
Current service cost         14 15
Interest cost         19 17
Expected rate of return on plan assets at the begninning of the year         -14 -13
Actuarial gains (-) or losses (+) recognised during the financial year         2 5
Losses (+) or gains (-) on curtailments and settlements         0 1
Pension costs         22 26
             
Analysis of the change in net liability recognised in the balance sheet
EURm         2010 2009
Pension obligations:            
At the beginning of the year         424 390
Earned during the financial year         14 14
Interest cost         19 17
Actuarial gains or losses         -19 -42
Losses or gains on curtailments and settlements         0 1
Exchange differences on foreign plans         35 32
Benefits paid         -16 11
Defined benefit plans at 31 Dec.         458 424
             
Reconciliation of plan assets:            
At the beginning of the year         272 220
Expected return on assets         15 13
Actuarial gains or losses         2 -7
Contributions         24 23
Exchange differences on foreign plans         23 32
Benefits paid         -11 -9
Plan assets at 31 Dec.         326 272
             
             
Other short-term employee benefits
There are other short-term staff incentive schemes in the Group, the terms of which vary according to country, business area or company. Benefits are recognised in the profit or loss for the year they arise from. An estimated amount of these profit-sharing bonuses, social security costs included, for 2010 is EURm 38.
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