24. PENSION OBLIGATIONS
The Group has both defined contribution pension plans and defined benefit pension plans.

The defined benefit pension plans comprise the Group’s old supplementary pension plans for personnel, which have already been discontinued and closed. The benefits associated with them include both supplementary pension benefits and death benefits. The Group’s defined benefit pension plans include both funded and unfunded pension plans. The unfunded pension plans are direct supplementary pension obligations, primarily for old employees who have already retired.

The new supplementary pension benefits granted by the Group are defined contribution based pension plans. Talentum’s Swedish subsidiary has an ITP-type pension plan (Pressens Pensionkassa), which is treated as a defined contribution pension plan.
Present value of obligations and fair value of assets
MEUR 2015 2014
Present value of unfunded obligations 1.4 2.5
Present value of funded obligations 5.9 7.4
Fair value of assets -5.7 -7.2
Pension liability 1.5 2.7
The defined benefit pension obligation on the balance sheet is determined as follows:
MEUR 31 Dec 2015 31 Dec 2014
Present value of obligations at start of period 9.9 9.1
Business combinations 0.1
Service cost during period 0.0 0.1
Interest cost 0.2 0.3
Actuarial gains and losses -1.8 1.0
Payments of defined benefit obligations -1.2 -0.9
Adjustments 0.3
Present value of funded obligations at end of period 7.2 9.9
Fair value of plan assets at start of period 7.2 6.5
Business combinations
Expected return on plan assets 0.1 0.2
Actuarial gains and losses -0.6 0.7
Incentive payments 0.2 0.3
Payments of defined benefit obligations -1.2 -0.9
Adjustments 0.3
Fair value of plan assets at end of period 5.7 7.2
Defined benefit pension liabilities 1.5 2.7
The plan assets are invested primarily in fixed income or share-based instruments, and they have an aggregate expected annual return of 3.0%. A more detailed specification of the plan assets is not available. The plan assets are considered to be included in the payment made to the insurance company. The assets are the insurance company’s responsibility and part of the insurance company’s investment assets. Accordingly, no specification of the assets can be presented.
The defined benefit pension expense in the income statement is determined as follows
MEUR 2015 2014
Service cost during period 0.0 0.1
Interest cost 0.2 0.3
Expected return on plan assets -0.1 -0.2
Actuarial gains and losses and adjustments -1.2 0.3
Adjustments 0.0
Total -1.1 0.4
Changes in liabilities shown on balance sheet
MEUR 2015 2014
At beginning of period 2.7 2.6
Business combinations 0.1
Incentive payments paid -0.2 -0.3
Pension expense in income statement 0.1 0.2
Comprehensive income for the period -1.2 0.3
Defined benefit pension obligation on balance sheet 1.5 2.7
Specification of future pension premiums (not discounted)
MEUR Funded
pension plan
Unfunded pension plan
Under 1 year 0.5 0.2
1-5 years 1.8 0.5
5-10 years 1.7 0.4
10-15 years 1.2 0.2
15-20 years 0.8 0.1
20-25 years 0.4 0.1
25-30 years 0.2 0.1
Over 30 years 0.1 0.2
Total 6.8 1.7
A similar investment is expected to be made in the plan in 2015 as in 2014.
Sensitivity analysis of the funded pension plan
MEUR Present value of pension obligation, MEUR Change in present value of pension obligation, %
Change of +0.5%-p in the discount rate 5.6 -4.4
Change of +0.5%-p in the salary increase assumption 5.9 -0.1
Change of +0.5%-p in the pension increase rate 6.0 1.9
Sensitivity analysis of the unfunded pension plan
MEUR Present value of pension obligation, MEUR Change in present value of pension obligation, %
Change of +0.5%-p in the discount rate 1.3 -4.6
Change of +0.5%-p in the salary increase assumption 1.4 0.5
Change of +0.5%-p in the pension increase rate 1.5 4.5
The sensitivity analysis uses the same methods as the calculation of the pension obligation. Sensitivity is calculated for changes in the discount rate, the salary increase assumption, pension increases and the insurance company’s bonus index. Sensitivity has been calculated by changing one parameter at a time.
Actuarial assumptions used:
% 2015 2014
Discount rate 1.8 1.8
Future salary increase assumption 1.8 2.5
Inflation assumption 1.3 2.0
Future increase in pension benefit 1.5 2.1
Defined benefit plans expose the Group to several different risks, the most significant of which are the following:
Asset volatility
The calculation of the liabilities arising from the plans uses a discount rate based on the yield of bonds issued by the company. If the yield on the assets used for the plan is lower than this level, there will be a deficit.
Inflation risk
Some of the benefit obligations under the plans are tied to inflation, and higher inflation will lead to higher liabilities (although a ceiling for inflation adjustments has been set in most cases to protect the plan from unusually high inflation).
Life expectancy
As the majority of the obligations under the plans are related to providing lifelong benefits to the members, the expected increase in life expectancy will result in higher obligations under the plans.