UPM Annual Report 2025

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Present value of obligation and fair value of plan assets

used may differ materially from actual results due to, among others, changing market and economic conditions, or changes in service period of plan participants. Significant differences in actual experience or significant changes in assumptions may affect the future amounts of the defined benefit obligation and future expense.

Key estimates and judgments

Pension and other post-employment benefits 2025

Pension and other post-employment benefits 2024

Several actuarial assumptions are used in calculating the expense and liability related to the defined benefit plans. Statistical information

Present value of obligation

Net defined benefit liability/ (Asset)

Present value of obligation

Fair value of plan assets

€ million

Actuarial assumptions The weighted average principal assumptions used in the valuations of the defined benefit obligations are detailed below:

Carrying value, at January 1

767

-293

474

810

-327

484

Current service cost

— — —

4 — -1

— — —

4 — -1

Finland

Germany

Other countries

Curtailments

-1 -1

Gains and losses arising from settlements

2025

2024

2025

2024

2025

2024

2025

2024

Interest expense (+) income (–)

-14 -14

16 17

30 33

-14 -14

16 19

Discount rate %

3.24

2.85

5.50

5.45

3.78

3.22

4.45

4.30

Total included in employee costs (Note 3.1)

Inflation rate %

1.88

1.90

2.95

3.20

2.00

2.02

Rate of salary increase %

1.88

1.89

—

2.32

2.31

2.50

Actuarial gains and losses arising from changes in demographic assumptions Actuarial gains and losses arising from changes in financial assumptions Actuarial gains and losses arising from experience adjustments Return on plan assets, excluding amounts included in interest expense (+) income (–) Total remeasurement gains (–) and losses (+) included in other comprehensive income

—

-1

—

-1

Rate of pension increase %

—

2.90

3.10

2.00

2.31

—

2.50

Expected average remaining working years of participants

-37

—

-37

-28

—

-28

—

7.6

8.3

7.0

7.8

8.2

8.6

-9

—

-9

-12

—

-12

—

-5

—

Sensitivity analysis of defined benefit obligations The sensitivity analysis shows the effect of the change in assumption. The analysis assume that all other assumptions remain unchanged. The projected unit credit method has been applied when calculating the obligation as well as these sensitivities.

€ million

0.5% Increase

0.5% Decrease

2025

2024

2025

2024

-44

-5

-49

-41

-7

Discount rate %

-39

-46

Benefits paid

-41

-5

-52

— —

Rate of salary increase %

-4

-5

Settlements paid

-1 —

—

— — —

—

Rate of pension increase %

-28

-32

Contributions by the employer

-19

-24

Plan assets by categories 2025

Life expectancy +1 year

—

Companies acquired Translation differences

—

Assets held by insurance companies 5%

-16

-3

-15

A negative change indicates a decrease in the defined benefit obligation. A positive change indicates an increase in the defined benefit obligation.

Other assets 6%

Carrying value, at December 31

698

-281

417

767

-293

474

Money market 13%

Plan assets by categories at December 31

Property 4%

Inflation risk In the UK, the pensions in payment are tied to Retail Price Index whilst being tied to Consumer Price Index during deferment. An increase of 0.5% in indexes will increase the liabilities by approximately €11 million. In Germany the pensions have to be adjusted in accordance with the Consumer Price Index. Salary risk The present value of the net retirement benefit assets and liabilities is calculated by reference to the expected future salaries of plan participants. An increase in the salary of the plan participants would increase the plan liabilities. In the UK, the changes in salary levels have no impact on the funding position as all defined benefit arrangements in the UK are closed to future accrual. In Germany, an increase of 0.5% in expected future salaries would increase the obligation by €4 million. Life expectancy Adjustments in mortality assumption have an impact on the Group’s defined benefit obligation. An increase in life expectancy by one year will increase the obligation in the UK by €9 million and in Germany by €14 million.

Actuarial risks

€ million

2025 2024 Quoted Unquoted Quoted Unquoted

Equity instruments 22%

Defined benefit plans typically expose the Group to the following actuarial risks:

Money market

—

Debt instruments 50%

Debt instruments

131

Investment risk (asset volatility) The Group is exposed to changes of assets’ values especially in the UK. The asset values of UK arrangements constitute 94% of total asset values in defined benefit plans within the Group. Interest risk Discount rates used in calculations are based on high-quality corporate bond yield curves in currency in which the benefits are paid. A decrease in the discount rate would increase the plan liabilities. The maturities of yields are reflecting the durations of the underlying obligations. The weighted average duration of Group’s defined benefit obligation is 12 years (13 years) at the end of 2025.

Equity instruments

—

Plan assets by categories 2024

Property

—

Assets held by insurance companies

—

Other assets 6%

Assets held by insurance companies 5%

Other assets

—

Money market 17%

Total

133

148

230

Property 7%

In 2025, plan assets include the company's ordinary shares with a fair value of €0 million (0 million). In 2026, contributions of €25 million are expected to be paid to Group’s defined benefit plans. In 2025, contributions of €19 million were paid to Group’s defined benefit plans.

Debt instruments 48%

Equity instruments 17%

UPM Financial Report 2025

284

UPM Financial Report 2025

285

284

285

UPM Annual Report 2025

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