Pensions and other post-employment benefits

12 Months Ended

Dec. 31, 2023

Disclosure of defined benefit plans [abstract]

Pensions and other post-employment benefits

3.4. Pensions and other post-employment benefits

Accounting policies

Nokia has various post-employment plans in accordance with the local conditions and

practices in the countries in which it operates. Nokia’s defined benefit plans comprise

pension schemes as well as other benefit plans providing post-employment healthcare and

life insurance coverage to certain employee groups. Defined benefit plans expose Nokia to

various risks such as investment risk, interest rate risk, life expectancy risk, and regulatory/

compliance risk. The characteristics and extent of these risks vary depending on the legal,

fiscal and economic requirements in each country, as well as the impact of global events.

The plans are generally funded through payments to insurance companies or contributions

to trustee-administered funds as determined by periodic actuarial calculations.

The costs of defined benefit plans are assessed using the projected unit credit method.

The defined benefit obligation is measured as the present value of the estimated future

cash outflows using interest rates on high-quality corporate bonds or government bonds

with maturities most closely matching expected payouts of benefits. The plan assets

are measured at fair value at the reporting date. The liability or asset recognized in the

statement of financial position is the present value of the defined benefit obligation at the

reporting date less the fair value of plan assets adjusted for effects of any asset ceiling.

Actuarial valuations for defined benefit plans are performed annually or when a material

plan amendment, curtailment or settlement occurs. Service cost related to employees’

service in the current period and past service cost resulting from plan amendments and

curtailments, as well as gains and losses on settlements, are presented in cost of sales,

research and development expenses or selling, general and administrative expenses. Net

interest as well as pension plan administration costs not considered in determining the

return on plan assets, are presented in financial income and expenses. Remeasurements,

comprising actuarial gains and losses, the effect of the asset ceiling and the return

on plan assets, excluding amounts recognized in net interest, are recognized in other

comprehensive income. Remeasurements are not reclassified to profit or loss in

subsequent periods.

In a defined contribution plan, Nokia’s legal or constructive obligation is limited to the

amount that it agrees to contribute to the fund. Nokia’s contributions to defined

contribution plans, multi-employer and insured plans are recognized in the income

statement in the period to which the contributions relate. If a pension plan is funded

through an insurance contract where Nokia does not retain any legal or constructive

obligations, the plan is treated as a defined contribution plan. All arrangements that

do not fulfill these conditions are considered defined benefit plans.

Defined benefit plans

Nokia’s most significant defined benefit plans are in the United States, Germany, and the

United Kingdom. Together, they account for 93% of Nokia’s total defined benefit obligation

(91% in 2022) and 91% of Nokia’s total fair value of plan assets (90% in 2022).

Summary of defined benefit balances at 31 December

EURm	Defined benefit obligation	Fair value of  plan assets	Effects of asset ceiling	Net defined benefit balance
2023
United States, Pension	(11 325)	16 285	—	4 960
United States, OPEB	(1 471)	675	—	(796)
Germany	(2 037)	1 199	—	(838)
United Kingdom	(782)	957	—	175
Other	(1 253)	1 798	(87)	458
Total	(16 868)	20 914	(87)	3 959
2022
United States, Pension	(12 340)	17 726	—	5 386
United States, OPEB	(1 615)	637	—	(978)
Germany	(1 957)	1 179	—	(778)
United Kingdom	(730)	942	—	212
Other	(1 670)	2 207	(84)	453
Total	(18 312)	22 691	(84)	4 295

Funded status of defined benefit obligation:

EURm	2023	2022
Wholly funded	12 782	14 330
Partly funded	3 149	3 009
Unfunded	937	973
Total	16 868	18 312

United States

Nokia has significant defined benefit pension plans and a significant post-employment welfare

benefit plan (OPEB) providing post-employment healthcare benefits and life insurance coverage

in the United States.

Defined Benefit Pension Plans

The defined benefit pension plans include both traditional service-based programs and cash-

balance plans. Salaried, non-union-represented employees are covered by a cash-balance

program. All other legacy programs, including legacy service-based programs, were frozen by

31 December 2009. For former employees who, when actively employed, were represented

by a union, Nokia maintained two defined benefit pension plans, both of which are traditional

service-based programs. On 31 December 2021, these two plans were merged.

Other Post-Employment Benefit Plan

The other post-employment benefit plan provides welfare benefits for certain retired former

employees. Pursuant to an agreement with the Communications Workers of America (CWA) and

the International Brotherhood of Electrical Workers (IBEW) unions, Nokia provides post-employment

healthcare benefits and life insurance coverage for employees formerly represented by these

two unions. That agreement was renewed in 2020 and the contract expires on 31 December 2027.

Germany

Nokia maintains two primary plans in Germany which cover the majority of active employees:

the cash-balance plan Beitragsorientierter Altersversorgungs Plan (BAP) for the Group’s Nokia

employees and a similar cash-balance program (AVK Basis-/Matchingkonto) for the Group’s

former Alcatel-Lucent employees. Individual benefits are generally dependent on eligible

compensation levels, ranking within the Group and years of service. These plans are partially

funded defined benefit pension plans, the benefits being subject to a minimum return

guaranteed by the Group. The funding vehicle for the BAP is the NSN Pension Trust e.V.

The trust is legally separate from the Group and manages the plan assets in accordance with

the respective trust agreements.

All other plans have been frozen or closed in prior years and replaced by the cash-balance plans.

Benefits are paid in annual installments, as monthly retirement pension, or as a lump sum on

retirement in an amount equal to accrued pensions and guaranteed interest.

United Kingdom

Nokia maintains one primary plan in the UK, “Nokia Retirement Plan for former NSN & ALU

employees”, which is the result of the 2019 merger of the legacy Nokia plan where the plan

was merged and members’ benefits were transferred to the legacy Alcatel-Lucent plan. The

combined plan consists of both money purchase sections with Guaranteed Minimum Pension

(GMP) underpin and final salary sections. All final salary sections are closed to future benefit

accrual: the legacy Nokia plan closed on 30 April 2012 and the legacy Alcatel-Lucent plan

on 30 April 2018. Individual benefits for final salary sections are dependent on eligible

compensation levels and years of service. For the money purchase sections with GMP underpin,

individual benefits are dependent on the greater of the value of GMP at retirement date and

the pension value resulting from the individual’s invested funds. Nokia engages the services of

an external trustee service provider to manage all investments for the combined pension plan.

Movements in the defined benefit obligation, fair value of plan assets and the impact of the asset ceiling limitation for the years ended 31 December

Defined benefit obligation	2023				2022
EURm	United States pension	United States OPEB	Other pension	Total	United States pension	United States OPEB	Other pension	Total
1 January	(12 340)	(1 615)	(4 357)	(18 312)	(14 892)	(2 015)	(5 797)	(22 704)
Current service cost	(83)	—	(74)	(157)	(113)	—	(92)	(205)
Interest expense	(563)	(73)	(173)	(809)	(363)	(50)	(94)	(507)
Past service cost	(9)	—	3	(6)	—	—	2	2
Settlements(1)	—	—	501	501	—	—	54	54
Total	(655)	(73)	257	(471)	(476)	(50)	(130)	(656)
Remeasurements:
Gain/(loss) from change in demographic assumptions	66	1	(12)	55	—	(6)	2	(4)
(Loss)/gain from change in financial assumptions	(114)	(26)	(161)	(301)	2 689	398	1 447	4 534
Experience (loss)/gain	(43)	28	(11)	(26)	(159)	(12)	(149)	(320)
Total	(91)	3	(184)	(272)	2 530	380	1 300	4 210
Translation differences	431	57	(12)	476	(869)	(114)	54	(929)
Contributions from plan participants	—	(60)	(24)	(84)	—	(59)	(35)	(94)
Benefits paid	1 330	229	249	1 808	1 367	253	240	1 860
Other	—	(12)	(1)	(13)	—	(10)	11	1
Total	1 761	214	212	2 187	498	70	270	838
31 December	(11 325)	(1 471)	(4 072)	(16 868)	(12 340)	(1 615)	(4 357)	(18 312)
Weighted average duration of the defined benefit obligation (in years)	7.7	8.8	10.6	8.5	7.6	8.7	9.3	8.1

(1) In 2023, the settlement relates to transfer of liabilities from formerly Nokia managed Provident Fund to Indian government managed Provident Fund platform (EPFO).

Fair value of plan assets	2023				2022
EURm	United States pension	United States OPEB	Other pension	Total	United States pension	United States OPEB	Other pension	Total
1 January	17 726	637	4 328	22 691	20 987	759	5 382	27 128
Interest income	820	28	171	1 019	517	18	87	622
Administrative expenses and interest on asset ceiling	(17)	—	(4)	(21)	(18)	—	(5)	(23)
Settlements(1)	—	—	(494)	(494)	—	—	(44)	(44)
Total	803	28	(327)	504	499	18	38	555
Remeasurements:
Return on plan assets,  excluding amounts included in interest income	(186)	62	48	(76)	(3 577)	(110)	(959)	(4 646)
Total	(186)	62	48	(76)	(3 577)	(110)	(959)	(4 646)
Translation differences	(624)	(21)	28	(617)	1 271	38	(66)	1 243
Contributions:
Employers	27	7	41	75	28	9	47	84
Plan participants	—	60	24	84	—	59	35	94
Benefits paid	(1 330)	(229)	(181)	(1 740)	(1 367)	(253)	(138)	(1 758)
Section 420 transfer(2)	(131)	131	—	—	(117)	117	—	—
Other	—	—	(7)	(7)	2	—	(11)	(9)
Total	(2 058)	(52)	(95)	(2 205)	(183)	(30)	(133)	(346)
31 December	16 285	675	3 954	20 914	17 726	637	4 328	22 691

(1)In 2023, the settlement relates to transfer of assets from formerly Nokia managed Provident Fund to Indian government managed Provident Fund platform (EPFO).

(2)Refer to the Future cash flows section below for description of Section 420 transfers.

The impact of the asset ceiling limitation	2023				2022
EURm	United States pension	United States OPEB	Other pension	Total	United States pension	United States OPEB	Other pension	Total
1 January	—	—	(84)	(84)	—	—	(92)	(92)
Interest expense	—	—	(2)	(2)	—	—	—	—
Remeasurements:
Change in asset ceiling, excluding amounts included in interest expense	—	—	5	5	—	—	12	12
Translation differences	—	—	(6)	(6)	—	—	(4)	(4)
31 December	—	—	(87)	(87)	—	—	(84)	(84)

Net balances	2023				2022
EURm	United States pension	United States OPEB	Other pension	Total	United States pension	United States OPEB	Other pension	Total
31 December	4 960	(796)	(205)	3 959	5 386	(978)	(113)	4 295
Consisting of:
Net pension assets	5 217	—	1 041	6 258	5 658	—	1 096	6 754
Net pension liabilities	(257)	(796)	(1 246)	(2 299)	(272)	(978)	(1 209)	(2 459)

Recognized in the income statement

EURm	2023	2022	2021
Current service cost(1)	157	205	196
Past service cost(1)	6	(2)	(17)
Net interest(2)	(187)	(92)	(26)
Settlements(1)	(7)	(10)	4
Total	(31)	101	157

(1)Included in operating expenses within the income statement.

(2)Included in financial income within the income statement.

Recognized in other comprehensive income

EURm	2023	2022	2021
Return on plan assets, excluding amounts included in interest income	(76)	(4 646)	853
Gain/(loss) from change in demographic assumptions	55	(4)	(13)
(Loss)/gain from change in financial assumptions	(301)	4 534	989
Experience (loss)/gain	(26)	(320)	30
Change in asset ceiling, excluding amounts included in interest expense	5	12	1 181
Total	(343)	(424)	3 040

Actuarial assumptions and sensitivity analysis

Actuarial assumptions

The discount rates and mortality tables used for the significant plans:

	Discount rate		Mortality table
	2023	2022	2023
United States	4.7%	4.9%	Pri-2012 w/MP-2020 Mortality projection scale
Germany	3.2%	3.7%	Heubeck 2018G
United Kingdom(1)	4.5%	4.8%	CMI 2021
Total weighted average for all countries	4.4%	4.7%

(1)Mortality tables for United Kingdom have been adjusted with 1.5% long-term rate of improvement.

Assumptions regarding future mortality are set based on actuarial advice in accordance with

published statistics and experience in each country.

The principal actuarial weighted average assumptions used for determining the defined benefit

obligation and sensitivity of the defined benefit obligation to changes in these assumptions:

	2023	2022	Change in assumption	Increase in assumption(1) EURm	Decrease in assumption(1) EURm
Discount rate for determining present values	4.4%	4.7%	1.0%	1 279	(1 547)
Pension growth rate	3.3%	2.2%	1.0%	(266)	214
Inflation rate	2.3%	2.1%	1.0%	(294)	270
Life expectancy	87-88 yrs	87-89 yrs	1 year	(626)	587

(1)Positive movement indicates a reduction in the defined benefit obligation; a negative movement indicates an increase in the

defined benefit obligation.

Sensitivity analysis

When calculating the sensitivity of the defined benefit obligation to significant actuarial

assumptions, the present value of the defined benefit obligation is calculated using the

projected unit credit method. The sensitivity analyses are based on a change in an assumption

while holding all other assumptions constant and may not be representative of the actual impact

of changes. If more than one assumption is changed simultaneously, the combined impact

of changes would not necessarily be the same as the sum of the individual changes. If the

assumptions change to a different level compared with that presented, the effect on the defined

benefit obligation may not be linear. Increases and decreases in the principal assumptions, which

are used in determining the defined benefit obligation, do not have a symmetrical effect on

the defined benefit obligation primarily due to the compound interest effect created when

determining the net present value of the future benefit.

Key source of estimation uncertainty

The determination of pension and other post-employment benefit obligations and

expenses for defined benefit plans is dependent on a number of estimates and

assumptions, including the discount rate, future mortality rate, annual rate of increase

in future compensation levels, and healthcare costs trend rates and usage of services

in the United States where the majority of our post-employment healthcare plans are

maintained. Changes in assumptions and actuarial estimates may materially affect the

benefit obligation, future expense and future cash flow.

Investment strategies

The overall pension investment objective of Nokia is to

preserve or enhance the defined benefit pension plans’ funded

status through the implementation of an investment strategy

that maximizes return within the context of minimizing funded

status risk. In formulating the asset allocation for the plans,

multiple factors are considered, including, but not limited to,

the long-term risk and return expectations for a variety of

asset classes as well as current and multi-year projections

of the defined benefit pension plans’ demographics, benefit

payments, contributions and funded status. Local trustee

boards are responsible for conducting Asset-Liability

Management (ALM) studies, when appropriate; overseeing the

investment of plan assets; and monitoring and managing

associated risks under company oversight and in accordance

with local law. The results of the ALM framework are

implemented on a plan level.

Nokia’s pension investment managers may use derivative

financial instruments including futures contracts, forward

contracts, options and interest rate swaps to manage market

risk. The performance and risk profile of investments is

regularly monitored on a standalone basis as well as in the

broader portfolio context. One risk is a decline in the plan’s

funded status as a result of the adverse performance of plan

assets and/or defined benefit obligations. The application

of the ALM study focuses on minimizing such risks.

United States plan assets

The majority of Nokia’s United States pension plan assets are

held in a master pension trust. The OPEB plan assets are held

in two separate trusts. The Pension & Benefits Investment

Committee formally approves the target allocation ranges

every few years on the completion of the ALM study by

external advisers and Nokia’s investment management

company (NIMCO). The overall United States pension plan

asset portfolio, at 31 December 2023, reflects a balance of

investments split of approximately 20/80 between equity,

including alternative investments for this purpose, and fixed

income securities.

Disaggregation of plan assets

	2023				2022
EURm	Quoted	Unquoted	Total	%	Quoted	Unquoted	Total	%
Equity securities	1 242	—	1 242	6	1 086	—	1 086	5
Fixed income securities	14 952	140	15 092	72	16 070	164	16 234	71
Insurance contracts	—	807	807	4	—	790	790	4
Real estate	—	1 012	1 012	5	—	1 297	1 297	6
Short-term investments	397	—	397	2	482	—	482	2
Private equity and other	106	2 258	2 364	11	93	2 709	2 802	12
Total	16 697	4 217	20 914	100	17 731	4 960	22 691	100

Most short-term investments including cash, equities and fixed-income securities have quoted market prices in active markets.

Equity securities represent investments in equity funds and direct investments, which have quoted market prices in an active

market. Fixed income securities represent direct investments in government and corporate bonds, as well as investments in

bond funds, which have quoted market prices in an active market. Insurance contracts are customary pension insurance

contracts structured under domestic law in the respective countries. Real estate investments are investments in commercial

properties or real estate funds, which invest in a diverse range of real estate properties.

Short-term investments are liquid assets or cash, which are being held for a short period of time, with the primary purpose of

controlling the tactical asset allocation. Private equity net asset values (NAVs) are determined by the asset managers based on

inputs such as operating results, discounted future cash flows and market-based comparable data. Assets invested in alternative

asset classes such as private equity, real estate and absolute return, are measured using latest available valuations provided by

the asset managers, reviewed by Nokia, and adjusted for subsequent cash flows.

Future cash flows

Contributions

Group contributions to the pension and other post-employment benefit plans are made to

facilitate future benefit payments to plan participants. The funding policy is to meet minimum

funding requirements as set forth in the employee benefit and tax laws, as well as any such

additional amounts as Nokia may determine appropriate. Contributions are made to benefit

plans for the sole benefit of plan participants. Employer contributions expected to be paid in

2024 total EUR 56 million.

United States

Funding methods

Funding requirements for the two United States qualified defined benefit pension plans are

determined by the applicable statutes, namely the Employee Retirement Income Security Act of

1974 (ERISA), the Internal Revenue Code of 1986, and regulations issued by the Internal Revenue

Service (IRS). In determining funding requirements, ERISA allows assets to be either fair value

or an average value over a period of time; and liabilities to be based on spot interest rates or

average interest rates over a period of time. For the non-represented and formerly represented

defined benefit pension plans, Nokia does not foresee any future funding requirement for

regulatory funding purposes, given the plans’ asset allocation and the level of assets compared

to liabilities.

Post-employment healthcare benefits for both non-represented and formerly union

represented retirees are capped for those who retired after 28 February 1990. The benefit

obligation associated with this group of retirees is 98% of the total United States retiree

healthcare obligation at 31 December 2023. The US government’s Medicare program is the

primary payer for those aged 65 and older.

Section 420 transfers

Section 420 of the U.S. Internal Revenue Code (Section 420) allows for the transfer of pension

assets in excess of specified thresholds above the plan’s funding obligation (excess pension

assets) to a retiree health benefits account, a retiree life insurance account, or both, maintained

within the pension plan and to use the assets in such accounts to pay for, or to reimburse the

employer for the cost of providing applicable health or life insurance benefits, each as defined

in Section 420, for retired employees, and with respect to health benefits, their spouses and

dependents. Employers making such transfers are required to continue to provide healthcare

benefits or life insurance coverage, as the case may be, for a certain period of time (cost

maintenance period) at levels prescribed by regulations. Pursuant to Section 420, Nokia has

transferred EUR 131 million during 2023 (EUR 117 million in 2022). Section 420 is currently set

to expire on 31 December 2032.

Benefit payments

The following table summarizes expected benefit payments from the defined benefit pension

plans and other post-employment benefit plans until 2033. Actual benefit payments may differ

from expected benefit payments.

	US Pension			US OPEB		Other countries	Total
EURm	Management	Occupational	Supplemental plans	Formerly union represented	Non-union represented
2024	1 058	217	25	65	57	273	1 695
2025	950	202	25	56	57	248	1 538
2026	909	190	24	55	58	252	1 488
2027	861	177	23	47	58	252	1 418
2028	811	165	23	77	58	252	1 386
2029-2033	3 374	655	99	309	292	1 391	6 120

Benefits are paid from plan assets where there is sufficient funding available to the plan to cover

the benefit obligation. Any payments in excess of the plan assets are paid directly by Nokia.

Direct benefit payments expected to be paid in 2024 total EUR  111 million.