26. Pensions and post-retirement benefits

26. Pensions and post-retirement benefits

Defined contribution schemes

TSN participates in a number of defined contribution plans on behalf of personnel. Any expense recognised in relation to these schemes represents the value of contributions payable during the period by TSN at rates specified by the rules of those plans. The only amounts included in the balance sheet are those relating to the prior month’s contributions that were not due to be paid until after the end of the reporting period. The total cost charged to the income statement in 2026 amounted to €120 million (2025: €119 million). Of the total cost of €120 million, €111 million (2025: €111 million) related to payments to the Stichting Pensioenfonds Hoogovens (‘SPH’) pension scheme.

Defined benefit schemes

TSN operates a number of defined benefit pension and post-retirement schemes. There are multiple plans, the most significant of which are in Germany and the USA. Benefits offered by these schemes are largely based on pensionable pay and years of service at retirement. With the exception of plans in Germany and France, the assets of these schemes are held in administered funds that are legally separated from the company. The trustees of the pension fund are required by law to act in the interest of the fund and of all relevant stakeholders of the scheme and are responsible for the investment policy with regard to the assets of the fund.

Within Germany, there are three types of defined benefit pension schemes, two of which are closed to new entrants. All of the schemes are unfunded. The scheme for active members in Germany is a pension commitment based on a percentage of the yearly income paid via the pension organisation ‘Essener Verband’. The defined benefit schemes in the USA are closed for future accrual. TSN makes sufficient contributions required to fund the cost of benefits provided by the USA schemes and to increase the funding ratio to 100% over a period of 15 years. Pension provision for new entrants in the USA is by means of a defined contribution scheme.

TSN accounts for all pension and post-retirement benefit arrangements using IAS 19 ‘Employee benefits’ with independent actuaries being used to calculate the costs, assets and liabilities to be recognized in relation to these schemes. The present value of the defined benefit obligation, the current service cost and past service costs are calculated by these actuaries using the projected unit credit method. However, the ongoing funding arrangements of each scheme, in place to meet their long-term pension liabilities, are governed by the individual scheme rules and national legislation. The accounting and disclosure requirements of IAS 19 do not affect these funding arrangements.

Actuarial assumptions

A range of assumptions must be used to determine the IAS 19 amounts and the values to be included in the balance sheet and income statement can vary significantly with only small changes in these assumptions. Furthermore, the actuarial assumptions used may vary according to the country in which the plans are situated.

The key assumptions applied at the end of the reporting period for the purposes of the actuarial valuations were as follows:

The discount rate is set with reference to the current rate of return on AA rated corporate bonds of equivalent currency and term to the scheme liabilities. Projected inflation rates and pension increases are long-term predictions based mainly on the yield gap between long-term fixed interest and government bond securities.

Demographic assumptions are set having regard to the latest trends in life expectancy, plan experience and other relevant data, including externally published actuarial information within each national jurisdiction. The assumptions are reviewed and updated as necessary as part of the periodic actuarial funding valuations of the individual pension and post-retirement plans. There are no changes in the calculation method compared to prior year.

Income statement costs

Under IAS 19 costs in relation to pension and post-retirement plans mainly arise as follows:

• The current service cost is the actuarially determined present value of the pension benefits earned by employees in the current period.

• It excludes any charges or credits in respect of any deficit or surplus in the scheme respectively and so the cost is unrelated to whether, or how, the scheme is funded.

• Net interest cost / (income) on the liability or asset recognised in the balance sheet. These items are treated as a net operating cost in the income statement within employment costs.

Variations from expected costs, arising from the experience of the plans or changes in actuarial assumptions, are recognised immediately in the statement of comprehensive income. Examples of such variations are differences between the discount rate used for calculating the return on scheme assets and the actual return, the remeasurement of scheme liabilities to reflect changes in discount rates, changes in demographic assumptions such as using updated mortality tables, or the effect of more employees leaving service than forecast.

Income statement pension costs arose as follows:

Plan assets

The asset classes of plan assets of the Groups’ defined benefit schemes include national and international equities, fixed income government and non-government securities and real estate. The pension funds invest in diversified asset classes to maximise returns while reducing volatility. The percentage of total plan assets for each category of investment was as follows:

Balance sheet measurement

In determining the amounts to be recognised in the balance sheet the following approach has been adopted:

• Pension scheme assets are measured at fair value (for example for quoted securities this is the bid-market value on the relevant public exchange).

• Pension liabilities include future benefits that will be paid to pensioners and deferred pensioners, and accrued benefits which will be paid in the future for members in service taking into account projected earnings. As noted above, the pension liabilities are discounted with reference to the current rate of return on AA rated corporate bonds of equivalent currency and term to the pension liability.

Amounts recognised in the balance sheet arose as follows:

The movements in the present value of plan assets and defined benefit obligations in 2026 and 2025 were as follows:

Included within other schemes above are post-retirement medical and similar net obligations of €4 million (2025: €4 million).

Actuarial gains recorded in the Statement of Comprehensive Income for the period were €3 million (2025: gain of €1 million).