20. Employee benefits

According to staff agreements, the Group contributes to pension plans and also provides additional benefits for its active and retired employees.

Defined contribution plans

The non–state pension fund NPF Telecom–Soyuz maintains the defined contribution plan of Group. In 2013 the Group expensed 124 (2012: 193; 2011: 205) in relation to defined contribution plans.

Defined benefit plans and other long–term employee benefits

To become eligible for benefits under the plan upon retirement the participant must achieve the statutory retirement age, which is currently 55 for women and 60 for men and fulfil certain minimum seniority requirements.

As at 31 December 2013, the Group employed 160,219 participants of defined benefit plan (2012: 163,532; 2011: 173,878) and supported 47,378 pensioners eligible for post–employment benefit(2012: 53.421; 2011: 59,410).

As at 31 December 2013, management estimated that employees’ average remaining working period was 10 years (2012 – 10 years; 2011 – 9 years)

As at 31 December 2013, 2012 and 2011 net defined benefit plan liability comprised the following:


  2013 2012 2011
Present value of obligations on defined benefit plans 9,783 10,870 11,050
Fair value of plan assets (9) (9) (4)
Present value of unfunded obligations 9,774 10,861 11,046

Net expenses/ gains for the defined benefit plan recognized in 2013, 2012 and 2011 were as follows:


  2013 2012 2011
Current service cost 495 516 605
Interest cost 769 946 1,025
Expected return on plan assets (1) (1)
Other expenses 600
Curtailment effect (241) (4,868)
Net expense/(gain) for the defined benefit plan 1,863 1,220 (3,238)

Net expense/ gain for the defined benefit plan, excluding interest cost and return on plan assets, is included in the consolidated statement of comprehensive income in the line “Wages, salaries, other benefits and payroll taxes”. Return on plan assets and interest cost are recognized in “Other investing and financing gain” and “Finance costs” line items of these consolidated statements of comprehensive income.

Curtailment effect occurred due to introduction of the new collective labour agreement in December 2011. The agreement abolished certain social benefits in regard of the former Company’s employees and other miscellaneous social payments.

The following table summarizes movements in the present value of defined benefit obligations for the above plan in 2013, 2012 and 2011:


  2013 2012 2011
Present value of defined benefit obligations as at 1 January 10,870 11,050 16,592
Curtailment of liabilities (241) (4,868)
Interest cost 769 946 1,025
Current service cost 495 516 605
Other expenses 600
Benefits paid (1,097) (1,071) (1,472)
Actuarial (gains)/losses (1,854) (330) (832)
Present value of defined benefit obligations as at 31 December 9,783 10,870 11,050

The following table summarizes movements in the fair value of defined benefit plan assets in 2013, 2012 and 2011:


  2013 2012 2011
Fair value of plan assets as at 1 January 9 4 1
Expected return on plan assets 1 1
Actuarial (gains)/losses (1) (1)
Benefits paid (1,097) (1,071) (1,472)
Contributions by the employer 1,097 1,076 1,475
Fair value of plan assets as at 31 December 9 9 4

As at 31 December 2013, 2012 and 2011 the principal actuarial assumptions used in determining the amounts for the defined benefit plan were as follows:


  2013 2012 2011
Discount rate 8.00% 7.00% 8.50%
Future salary increases 9.20% 9.20% 9.72%
Rate used for calculation of annuity value 4.00% 4.00% 4.00%
Increase in financial support benefits 5.00% 5.00% 5.50%
Staff turnover 5% for aged 50 and below
0% for aged above 50
5% for aged 50 and below
0% for aged above 50
5% for aged 50 and below
0% for aged above 50
Mortality tables (source of information) 1985/86 1985/86 1985/86

The amounts of experience adjustments and present value of defined benefit obligation and defined benefit assets for the current annual period and previous two annual periods are as follows:


  2013 2012 2011
Defined benefit obligations 9,783 10,870 11,050
Defined benefit assets (9) (9) (4)
Plan deficit 9,774 10,861 11,046
Experience adjustments on defined benefit plan liabilities (1,084) (1,038) (613)
Experience adjustments on defined benefit plan assets (1) (1)

The Group expects to contribute 1,318 to its non–state pension funds in 2014 in respect of defined benefit plans.

The following net pension liabilities are in consolidated statements of financial position in 2013, 2012 and 2011:


  2013 2012 2011
Net defined benefit obligations as at 1 January 10,861 11,046 16,591
Total defined benefit plan expenses, net 1,863 1,221 (3,239)
Contributions by the employer (1,097) (1,076) (1,474)
Remeasurement of pension liabilities (1,853) (330) (832)
Net defined benefit obligations as at 31 December 9,774 10,861 11,046

Remeasurement of pension liabilities consists of:


  2013 2012 2011
Actuarial (gains)/losses on liabilities (1,854) (331) (832)
Actuarial (gains)/losses on assets 1 1
Remeasurement of pension liabilities (1,853) (330) (832)