Explanations on the statement of account for 2016 group pension

Transcription

1 Explanations on the statement of account for 2016 group pension Every company that has a group pension (defined benefit) in Storebrand, annually receives a statement of account for their pension scheme. The account shows the financial result for the pension scheme. It simultaneously shows the transactions and the development in the pension assets during the accounting year. The statement of account for 2016 was sent out in March For risk benefits attached to a defined contribution plan, the statement of account shows transactions on fund assets for the pension scheme. If there are members that receive pension (disability, survivors), the statement of account also shows the transactions on pension assets for these members. Risk benefits attached to a defined contribution plan are thus treated as a defined benefit plan for disability- and survivors pension being paid when it comes to the statement of account. What is accounting? Every single defined benefit scheme in Storebrand Livsforsikring has their account for the premium reserve. The annual accounting gives an overview on the transactions and the development in the pension scheme's assets from the beginning to the end of the accounting year. The transactions on the account are shown in the statement of account for the premium reserve, and include among others premiums, insurance paid, guaranteed yield and costs for the pensioners. In addition, the accounting includes calculation of the year's results, which consists of return added and result for insurance risk. Allocation of the return added and the result for insurance risk are shown in separate overviews. In addition there are statement of accounts for transactions on the additional statutory reserves and all assets on funds, such as premium fund and pension surplus fund. There are also statements of accounts for Allocated to long-life and for Lack of premium reserve. 1

2 Special notes on the accounting for 2016 On the first page there is an overview of the aggregated profit of the return added and result for insurance risk which is transferred to the group pension in 2016 before allocations to long life. In addition, the pension plan's total pension assets are shown on Due to the fact that we are living longer, the Norwegian Financial authorities has asked the life insurance companies to prioritize to allocate return added to long life reserves. The amounts that are allocated for each contract are shown in the overviews for return added and for insurance risk result. The development in the Long-life reserve and in the Lack of premium reserve is shown in separate statements of accounts. During 2016 the financing of the Lack of premium reserve was completed for the main part of the contracts. Storebrand's equity and Storebrand's equalization fund contributed to this financing. The balance on is now zero for both the Long-life reserve and for the Lack of premium reserve. Under the headline "Additional information" the status on financing the lack of premium reserve is shown. All the items in the accounting are numbered, and there are cross references to some of the items. This makes it easier to read the statement of account. 2

3 PENSION ASSETS These are the total pension assets for this group pension at the beginning and the end of the year. Transactions during the year are specified in the overviews. The premium reserve for pensioners is specified on disability-, survivors- and retirement-pensioners. PREMIUMS These are the premiums due to be paid during the year. RETURN ADDED This is a specification of the return added to the group pension in the accounting year and how it is allocated. 3

4 RESULT FOR INSURANCE RISK This is the result of incomes and costs for insurance risk. It also shows the allocation of the result for insurance risk. ADMINISTRATION AND MANAGEMENT COSTS These are the total administration- and management costs for the group pension for the accounting year. INSURANCE PAID This is an overview of the insurance paid from the group pension. 4

5 PREMIUM RESERVE 80 Balance on These are the pension assets at the beginning of the financial year that are sufficient for securing the future pension benefits and costs for pensioners and members that are to be signed out of the group pension. 81 Premiums This is the sum of premiums due to be paid during the year, deducted premiums reversed. Billed premiums for administration, management and interest guarantee are not included. 82 Guaranteed yield This is the guaranteed result which is transferred to the premium reserve in the financial year. 83 Administration and management costs for pensioners 84 Calculated cost for insurance risk ( death, disability etc.) 85 Calculated income for insurance risk (long life etc.) These are the costs for pensioners. These costs are financed from the premium reserve. This is the portion of the premium and the premium reserve to finance the annual risk for death, disability and withdrawal. The amount is transferred to the insurance community. This amount is transferred from the insurance community to the group pension's premium reserve to finance the annual risk for long life and being fit for work again. 86 Insurance paid This is the sum of pensions paid to the pensioners during the financial year. The amount includes pension transferred to premium fund and any premium exemption/waiver. 87 Changes in premium reserves due to an insurance event that has occurred 88 Changes in premium reserves due to other causes 89 Balance on If the premium reserve is not sufficient to secure the agreed benefits in the occurrence of death and disability, the shortfall will be transferred from the insurance community to the group pension. The premium reserve can exceed the sufficient premium reserve when an insurance event occurs. Examples are if the insured receives disability pension and recovers, or if the insured dies without survivors. In these examples amounts will be transferred from the group pension to the insurance community. This is the sum of all changes in the premium reserves during the financial year due to the following: Admission of new employees that transfers premium reserves from another group pension. Sign out of employees that transfers premium reserves to a paid up policy, or the premium reserve are transferred to the premium fund. Impairment of the lack of premium reserve. Reregistration, changes in the premium tariff, transfer etc. These are the pension assets at the end of the financial year that are sufficient for securing the future pension benefits and costs for pensioners and members that are to be signed out of the group pension. 5

6 ADDITIONAL STATUTORY RESERVES 90 Balance on This is the balance on the account for the group pension's additional statutory reserves at the beginning of the financial year. 91 Changes These are the changes in the statutory reserve during the accounting year. An example is additional statutory reserve that is transferred from another group pension, or additional statutory reserve that is transferred to a paid-up policy at sign out. 92 Transferred to premium fund 93 Transferred to pension surplus fund 94 Additional statutory reserves to cover deficit 95 Freed up long-life reserves 96 Profit transferred to additional statutory reserves These are additional statutory reserves that are freed up and transferred to the premium fund when the balance of the additional statutory reserves exceeds the maximum limit stipulated for pension schemes (12 percent of the pension scheme s premium reserve). If the pension scheme s total pension assets are reduced, the additional statutory reserves are to be reduced by the same percentage and the surplus amount is to be transferred to the pension scheme s premium fund and eventually to the pension surplus fund. These are additional statutory reserves that are freed up and transferred to the pension surplus fund when the balance of the additional statutory reserves exceeds the maximum limit stipulated for pension schemes (12 percent of the pension scheme s premium reserve). If the pension scheme s total pension assets are reduced, the additional statutory reserves are to be reduced by the same percentage and the surplus amount is to be transferred to the pension scheme s premium fund and eventually to the pension surplus fund. If the annual return added does not cover the guaranteed yield, the additional statutory reserves may be used to cover the shortfall. When the lack of premium reserve is fully amortized, the whole or a part of the long-life reserve will be transferred to the additional statutory reserve. If the annual return added on pension assets (premium reserve, allocated to long-life, additional statutory reserves) is high enough, some of it may be transferred to the additional statutory reserves. 97 Balance on This is the balance of the account for the group pension's additional statutory reserves at the end of the financial year. 6

7 PREMIUM FUND 100 Balance on This is the balance of the premium fund at the beginning of the financial year. The following amounts with interest date in the financial year are included: Surplus on the return added on premium fund in the previous year Insurance risk result for active members in the previous year Transferred additional statutory reserves These amounts are not included in the posting summary you received in January in the financial year. The amount in the statement of account may therefore differ from the amount in the posting summary. 101 Payments, transfers and withdrawals This is the sum of amounts which are paid or transferred to premium fund during the financial year. Transferred amounts may be premium exemption, credited pension, released premium reserve, reversed premium and returned payments. The item also shows premium fund used for payments, regulation of pensions, increasing the benefits etc. 102 Return added This is the sum of return added on premium fund and return added on the other pension assets transferred to premium fund. 103 Risk result for active This is the active members' share of the positive insurance risk result members 104 Additional statutory reserves transferred regarding death and long life. These are additional statutory reserves that are freed up and transferred to the premium fund when the balance of the additional statutory reserves exceeds the maximum limit stipulated for pension schemes (12 percent of the pension scheme s premium reserve). If the pension scheme s total pension assets are reduced, the additional statutory reserves are to be reduced by the same percentage and the surplus amount is to be transferred to the pension scheme s premium fund. 105 Freed up long-life reserves When the lack of premium reserve is fully amortized, the whole or a part of the long-life reserve will be transferred to the premium fund. 106 Balance on This is the balance of the premium fund at the end of the financial year. The following amounts with interest date in the financial year are included: Return added on premium fund in the accounting year (item 102) Insurance risk result for active members in the financial year (item 103) Transferred additional statutory reserves (item 104) These amounts are not included in the posting summary you received in January in the year after the financial year. The amount in the statement of account may therefore differ from the amount in the posting summary. 7

8 PENSION SURPLUS FUND 110 Balance on This is the balance of the pension surplus fund at the beginning of the financial year. The following amounts with interest date in the financial year are included: Surplus on the return added in the previous year Risk result for pensioners in the previous year Transferred from additional statutory reserves in the previous year These amounts are not included in the posting summary you received in January in the financial year. The amount in the statement of account may therefore differ from the amount in 111 Payments, transfers and withdrawals the posting summary. This is the sum of amounts which are paid or transferred to pension surplus fund during the financial year. The item also includes pension surplus fund used for regulation of the pensions for pensioners. 112 Return added This is the sum of return added on pension surplus fund and return added on the other pension assets transferred to pension surplus fund. 113 Risk result for pensioners 114 Transferred from additional statutory reserves 115 Freed up long-life reserves This is the pensioner's share of the positive insurance risk result regarding long life, disability, death and recovery. These are additional statutory reserves that are freed up and transferred to the pension surplus fund when the balance of the additional statutory reserves exceeds the maximum limit stipulated for pension schemes (12 percent of the pension scheme s premium reserve). If the pension scheme s total pension assets are reduced, the additional statutory reserves are to be reduced by the same percentage and the surplus amount is to be transferred to the pension scheme s premium fund and eventually to the pension surplus fund. When the lack of premium reserve is fully amortized, the whole or a part of the long-life reserve will be transferred to the pension surplus fund. 116 Balance on This is the balance of the pension surplus fund at the end of the financial year. The following amounts with interest date in the year after the financial year are included: Return added in the financial year (item 112) Risk result for pensioners in the financial year (item 113) Transferred from additional statutory reserves (item 114) These amounts are not included in the posting summary you received in January in the year after the financial year. The amount in the statement of account may therefore differ from the amount in the posting summary. 8

9 ALLOCATED TO LONG-LIFE 150 Balance on This is the balance of the long-life reserve at the beginning of the financial year. 151 Changes This is the sum of amounts which are paid or transferred to the long-life reserve during the financial year. An example is a sign out of employees which transfers a share of the long-life reserve to a paid up policy. 152 Transferred to additional statutory reserve 153 Transferred to premium fund 154 Transferred to pension surplus fund When the lack of premium reserve is fully amortized, the whole or a part of the long-life reserve will be transferred to the additional statutory reserve. When the lack of premium reserve is fully amortized, the whole or a part of the long-life reserve will be transferred to the premium fund. When the lack of premium reserve is fully amortized, the whole or a part of the long-life reserve will be transferred to the pension surplus fund. 155 Profit transferred to long-life reserve This is the sum of return added and result for insurance risk for 2016 transferred to long-life reserve From return added This is return added transferred to long-life reserve From result for This is result for insurance risk transferred to long-life reserve. insurance risk 156 This year's impairment of the lack of premium reserve Long-life reserve transferred to the account for lack of premium reserve. 157 Balance on This is the balance of the long-life reserve at the end of the financial year. 9

10 LACK OF PREMIUM RESERVE 160 Balance on This is the balance of the lack of premium reserve at the beginning of the financial year. 161 Changes This is the sum of amounts which are paid or transferred to the lack of premium reserve during the financial year. An example is a sign out of employees which transfers a share of the lack of premium reserve to a paid up policy. 162 This year's impairment of the lack of premium reserve This is the sum of amounts used to reduce of the lack of premium reserve Of which funded from: Long-life reserve Long-life reserve applied to cover this year's impairment of the lack of premium reserve Of which funded from: Storebrand's equity Added from Storebrand's equity to impairment of the lack of premium reserve Of which funded from: Temporary capital In some cases Storebrand gives temporay capital grants for funding impairment of the lack of premium reserve. grants from Storebrand Of which funded from: Insurance risk equalisation fund If the sum of 162.1, and isn't sufficient to cover this year's impairment of the lack of premium reserve, what is missing will be funded from the insurance equalization fund. 163 Balance on This is the balance of the lack of premium reserve at the end of the financial year. 10

11 ADDITIONAL INFORMATION Guaranteed yield Average guaranteed return on the premium reserve in Financing the lack of premium reserve The overview shows the status in financing the lack of premium reserve due to the fact that we live longer. The amounts that the customer and Storebrand finances are also shown. Remaining number of years to fully fund the lack of premium reserve is shown. 11