28. Employee benefits

The non-current employee benefits comprise:

• other long-term employee benefits, including long-service awards;

• obligations resulting from occupational disability and supplements to social security payments;

• obligations relating to defined benefit plans.

Pension liabilities

The staff of the NS Group companies are covered by the pension plans of the following pension funds. The table also shows the numbers of active members.

The total amount of the pension contributions charged to the income statement in 2021 was €131 million (2020: €148 million).

Railway and Public Transport Pension Fund pension plan (defined contribution plan)

The pension plan for the railway industry is administered by the Railway and Public Transport Pension Fund (Pensioenfonds Rail en OV). As of 1 April 2020, the Railway Pension Fund (Spoorwegpensioenfonds) merged into the Railway and Public Transport Pension Fund. The plan qualifies for recognition in the financial statements as a defined contribution plan. The contribution agreed with the Railway and Public Transport Pension Fund is a fixed annual contribution agreed in advance and expressed as a percentage of the pensionable earnings. In 2021, NS paid the nominal pension contribution of 24% to the pension fund. Two-thirds of the pension contributions paid to the Railway and Public Transport Pension Fund are paid by the company and one-third is paid by the employees. After payment of the agreed contribution, the company has no obligation to pay additional amounts should there be a deficit in the pension fund. The actuarial risks and investment risks are borne by the pension fund and its members.

At the end of 2015, the Group made new agreements with the pension fund for dealing with the contribution build-up that came into effect on 1 January 2017. This led to a receivable from Railway and Public Transport Pension Fund of about €240 million that was received in two years (2016 and 2017). The employees’ part of the contribution build-up (one third of the amount) is recognised as a debt and will be settled with the employees over the next few years up to and including 2022. The employer’s part of the contribution build-up (two thirds of the amount) has been added to the lump-sum payment for wage increases and will be credited to the pension costs up to 2035 (note 27).

There is a defined contribution plan for Abellio London & Surrey and the Servex supplementary pension plan.

Industry pension funds (hotel and catering, food)

The basic pension for each employee is covered by multi-employer funds in which other companies also participate on the basis of legal obligations. These funds have an indexed average salary scheme and are therefore defined benefit plans. Since these funds are not equipped to provide the required information on the Group’s proportionate share of the pension liabilities and plan assets, the defined benefit plans are accounted for as defined contribution plans. The Group is obliged to pay the predetermined contribution for these plans. The Group is not allowed to not recover any surplus. The Group cannot recover excess payments and is not obliged to make up any shortfall except through adjustment of future contributions.

Defined benefit plans United Kingdom

Abellio Greater Anglia, Abellio ScotRail, Abellio West Midlands, Abellio East Midlands and Abellio Transport Holdings have arranged for pensions for their staff to be administrated by the Railways Pension Scheme. The fund in question can be considered as a company pension fund and the pension plan as a defined benefit plan.

Every company is a designated employer for one or more cost-sharing agreements within the Railways Pension Scheme. Such cost-sharing agreements are geared to a lifelong pension. The amount of the pension depends on how long an employee was an active member of the pension plan and on their salary when leaving the plan (final salary plan).

Because of the nature of the cost-sharing agreements, the amounts payable to cover both the costs of the accrued pension entitlements and any shortfall between the value of the assets and the value of the pension liabilities are borne jointly by the employer and the contributing members in a ratio of 60% to 40% respectively. As a consequence, the employer recognises 60% of the total pension costs and pension liabilities in the balance sheet. The Railways Pension Scheme is administered by the Trustee, the Railways Pension Trustee Company Limited. The plans’ assets are invested via investment funds, each with a different risk and return profile.

The pension liabilities and the pension assets are based on actuarial calculations that were performed as at 31 December. At year-end 2021, the net liabilities of Abellio Transport Holdings Limited were €7 million (year-end 2020: €5 million). The average term for the pension liabilities is about 24 years.

To reflect the nature of the franchise, the shortfalls between the pension liabilities and the pension assets for Abellio Greater Anglia, Abellio ScotRail, Abellio East Midlands and Abellio West Midlands have been included in ‘Non-current liabilities’ to the extent that they concern the term of the franchise. The remaining amount at the end of the term of the franchise is not recognised in the balance sheet because it will constitute part of the debts of the next franchise holder. At year-end 2021, the net liabilities were nil (year-end 2020: nil). The average term for both pension liabilities is about 20 years.

In determining the pension costs, only the costs that are expected to be borne by the franchisee (the Group) during the term of the franchise are recorded in the income statement. These net pension costs are therefore calculated while taking into account that part of the costs that will be borne by the employees (40%) and by other parties after the end of the current term of the franchise. This net calculation also takes into account any allocation within the term of the franchise that may possibly occur in connection with the triennial assessments during the term of the franchise, as well as any adjustments to the annual contributions over the term of the franchise.

Basic assumptions for defined benefit plans

The following assumptions were used for determining the pension liabilities and the pension assets (based on a weighted average):

Mortality table: S3NA tables with CMI 2019 projections plus long-term expectation of +1.25%.

Breakdown  

The breakdown of the pension liabilities is as follows.

Sensitivity analysis

Reasonably likely changes in one of the relevant actuarial assumptions on the balance-sheet date, while keeping all other assumptions constant, would have the following effect on the gross liability pursuant to the defined benefit entitlements.

A change in life expectancy of one year would lead to a change in the gross liability of about €160 million (31 December 2020: €150 million).

The impact of these changes on the Group’s net liabilities during the term of the franchise is expected to be limited, given the transfer of liabilities at the end of the franchise.

Movement

The changes in the pension assets and liabilities are as follows.

Breakdown of pension assets

The breakdown of the pension assets is as follows.

Pension costs recognised in the income statement

Based on current accounting policies, the Group expects to recognise pension costs for Abellio of €36 million for the above defined benefit plans in 2022.

Unrealised actuarial gains and losses

Long-service award obligations

The AG2020 mortality table is used for the calculation of the long-service award obligations.

The changes in the provision were as follows:

The current portion of this provision is €3 million.

The sensitivities are as follows.

Temporary early retirement scheme

At the end of 2021, an amount of €17 million was added to the liability related to the temporary early retirement scheme that came into effect in 2021.

The sensitivities are as follows.