Group notes

Note 24 Post-employment benefits

Epiroc provides post-employment defined benefit pension plans and other long-term employee benefits in most of its major locations. The most significant countries in terms of size of plans are Sweden, Germany and India.

The plans in the three countries are funded with different local financing vehicles, held separated from the Group for future benefit payments. In Sweden, the main ITP 2-plans retirement pension is funded by the Group’s pension foundation. In addition, the Epiroc family pension under ITP 2 is insured by a third-party insurer, Alecta. This plan is recognized as a defined contribution plan as sufficient information for calculating the net pension obligation is not available. Alecta’s surplus can be distributed among the policyholders and/or the insured. At the end of 2025, Alecta’s surplus of its so-called collective funding amounted to 167% (162). The collective funding consists of the fair value of Alecta’s assets as a percentage of the insurance obligations calculated in accordance with Alecta’s actuarial calculation assumptions.

The Group identifies a number of risks in the investments of pension plan assets. The main risks are interest rate risk, market risk, counter-party risk, liquidity risk, inflation risk and currency risk. The risk that the managed pension assets will not cover the pension commitments is also affected by life expectancy and any large wage increases. The Group works continuously to manage the risks and ensure that the investment orientations reflect Epiroc´s risk tolerance level and that the investments have a long-term investment horizon. The investment portfolio should be diversified, which means that multiple asset classes, markets and issuers should be utilized. An asset liability management assessment should be conducted periodically. The study should include a number of elements. The most important elements are the duration of the assets and the timing of settlement of liabilities, the expected return of the assets, the expected development of liabilities, the forecasted cash flows and the impact of a shift in interest rates on the obligation.

The net obligations for post-employment benefits and other long-term employee benefits have been recognized in the balance sheet as follows:

The tables show the Group’s obligations for post-employment benefits and other long-term employee benefits, the assumptions used to determine these obligations and the assets relating to these obligations for employee benefits, as well as the amounts recognized in the income statement and the balance sheet.

The net amount recognized in the balance sheet amounted to -69 (45). The weighted average remaining duration of the obligation is 19,6 (20.1) years. 

POST-EMPLOYMENT BENEFITS

PLAN CONSISTS OF THE FOLLOWING:

¹⁾ There are properties occupied and used by Epiroc.

¹⁾ There are properties occupied and used by Epiroc.

MOVEMENT IN PLAN ASSETS

THE PLAN ASSETS ARE ALLOCATED AMONG THE FOLLOWING GEOGRAPHIC AREAS

ASSET CEILING

MOVEMENT IN PRESENT VALUE OF THE OBLIGATIONS FOR DEFINED BENEFITS

Remeasurements recognized in other comprehensive income amount to -135 (-204) and 12 (23) in profit and loss. The Group expects to pay 92 (85) in contributions to defined benefit plans in 2026.

EXPENSES RECOGNIZED IN THE INCOME STATEMENT

The total benefit expense for defined benefit plans amounted to 125 (169), of which -123 (-161) has been charged to related functions under operating expenses and -2 (-8) to financial expenses. Expenses related to defined contribution plans amounted to 722 (617).

PRINCIPAL ACTUARIAL ASSUMPTIONS

The Group has identified discount rate, future salary increases, inflation rate and life expectancy as the primary actuarial assumptions for determining defined benefit obligations. Changes in those actuarial assumptions affect the present value of the net obligation. The discount rate is determined by reference to market yields at the balance sheet date using, if available, high quality corporate bonds (AAA or AA) matching the duration of the pension obligations. In countries where corporate bonds are not available, government bonds are used to determine the discount rate. In Sweden, in line with prior years, mortgage bonds are used for determining the discount rate.

Epiroc’s mortality assumptions are set by country, based on the most recent available mortality studies. Where possible, generational mortality assumptions are used, meaning that they include expected improvements in life expectancy over time.

The table below shows the sensitivity analysis for principal actuarial assumptions, and describes the potential effect on the present value of the defined pension obligation.

SENSITIVITY ANALYSIS OF PRINCIPAL ACTUARIAL ASSUMPTIONS