Provisions are liabilities the amount or payment date of which are uncertain. Provisions are established on the basis of a current obligation following from past events, whose fulfillment will cause an outflow of resources embodying economic benefits. The provision amount is calculated on the basis of a reliable estimate of such outflow as at the balance sheet date.
Provisions for granted guarantees and sureties are calculated as the difference between the expected value of the balance sheet exposure which will result from a granted off-balance sheet liability and the present value of expected future cash flows obtained from the balance sheet exposure resulting from the granted liability.
The provision for restructuring costs is recognized only if, in addition to the general criteria for recognizing provisions, also the specific criteria pertaining to provisions for restructuring costs are satisfied. These include, among others, holding a detailed, formal restructuring plan and evoking a justified expectation of the parties to which the plan pertains that restructuring actions will be taken (through commencement of implementation of the plan or announcement of its key elements).
In connection with the adopted accounting policy and the fact that PZU Group companies have not spun off defined benefit plan assets, the carrying amount of defined benefit plan provisions equals to the present value of liabilities corresponding to them.
Defined contribution plans include the costs of contributions constituting statutory charges on employee salaries incurred by the employer. They include, among others, part of the contributions for retirement and disability pension insurance, Labor Fund, Guaranteed Employee Benefit Fund and the charge for the Company Social Benefit Fund. The costs of defined contribution plans are charged to the profit and loss account in the period to which they pertain.
Defined benefit plans include, among others, the costs of retirement severance pays and post-mortem benefits. The costs of defined benefit plans estimated using actuarial methods are recognized on an accrual basis by applying the forecast specific entitlements method.
Actuarial gains and losses are recognized in full in the period in which they occurred in the “Actuarial gains and losses related to provisions for employee benefits” item in other comprehensive income. More information is presented in section 40.3.1.
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