KONGSBERG has a service pension plan which covers all Group employees in Norway. At 31 December 2007, 3 199 employees were covered by the scheme, prior to the settlement of the pension plan for employees under age 52. The pension plan is insured through Vital - DnB NOR. Parts of pensions are covered by payments from the National Insurance Scheme. Such payments are calculated using the National Insurance Scheme's basic amount (G), stipulated annually by the Norwegian parliament. Pension benefits depend on the individual employee's number of years of service and salary level upon retirement. Pension costs are distributed over the employee's vested period. The scheme provides 65 per cent of salary, including National Insurance benefits, until the age of 77, when the service pension level is reduced by 50 per cent.

Members of corporate management have an early retirement agreement from the age of 60. The benefits give them 90 per cent of their salary upon retirement at age 60, diminishing by 10 per cent per year to 60 per cent of their salary from age 63 to 67. As from 2006, new rules apply to severance pay for new employees in such positions. The new rules rescind the obligation to work after the age of 62, that the period of accrual is increased from 10 to 15 years, and that the benefit is reduced to 65 per cent.

As from 1 January 2008, it has been decided that all new employees and employees under the age of 52 will have defined contribution pension plans. This has led to a net reduction in pension liabilities. The one-off effect is recognised at the settlement of the pension scheme in 2007. Employees aged 52 and older will remain in the defined benefit scheme. The calculation of future pensions is based on the following assumptions:

	31 Dec 07	31 Dec 06	31 Dec 05
Financial assumptions
Discount rate	5.0%	4.5%	4.0%
Expected return on plan assets	6.0%	5.5%	5.0%
Future salary increases	4.5%	4.0%	3.0%
Future base level increases	4.5%	4.0%	3.0%
Future pension increases	2.0%	1.5%	3.0%

	31 Dec 07	31 Dec 06
Demographic assumptions
Mortality	K 2005	K 2005
Disability	IR 73	IR 73
Turnover	4.5% for all ages	4% for all ages
Early retirement	40% at age 62	20% at age 62

The mortality and disability assumption is based on official tables and observations regarding disability at KONGSBERG.

The probability that an employee in a given age group will become disabled or die within one year and life expectancy is as follows:

	Disability (%)		Mortality (%)		Projected life expectancy
Age	Man	Woman	Man	Woman	Man	Woman
20	0.1	0.2			80	84
40	0.3	0.4	0.1	0.1	80	84
60	1.4	1.8	0.6	0.5	82	85
80			6.2	4.5	87	89

The disability rate in IR 73 was chosen because it offers the best approach to KONGSBERG's disability statistics. This is based on KONGSBERG's historical figures, where about 25 per cent of the annual premium has been reimbursed through an international pool.

The year's pension costs were calculated as follows:

Amounts in MNOK	2007	2006	2005
Service cost	110	95	75
Interest cost on pension liabilities	75	63	63
Expected return on pension plan assets	(53)	(47)	(50)
Amortisation of past service cost		1	1
Accrued social security expenses	19	16	12
	151	128	101
Settlement of the pension plan, including social security tax	(341)
Total net pension expenses	(190)	128	101
Expenses related to defined contribution pension plans	10	8	5

Change in net pension liabilities recognised on the balance sheet

	2007			2006
Amounts in MNOK	Funded	Unfunded	Total	Funded	Unfunded	Total
Changes in gross pension liabilities
Gross pension liabilities at 1 Jan.	1 624	175	1 799	1 514	160	1 674
Net change in social security expenses	(45)	(5)	(50)	10	1	11
Acquisition/disposal of activities	-	-	-	11	-	11
Buy-out upon termination	-	-	-	(92)	-	(92)
Net current value of accruals for the year	99	11	110	87	8	95
Interest expenses on pension liabilities	68	7	75	58	5	63
Premium payments, plan changes	(299)	-	(299)	-	(14)	(14)
Actuarial losses/gains	(17)	25	8	54	22	76
Transition to proportionate consolidation method	(10)	-	(10)	-	-	-
Payments pensions/paid-up policies	(334)	(10)	(344)	(18)	(7)	(25)
Gross pension liabilities at 31 Dec.	1 086	203	1 289	1 624	175	1 799
Changes, gross pension fund assets
Fair value, pension plan assets at 1 Jan.	1 049	-	1 049	1 005	-	1 005
Acquisition/disposal of activities	-	-	-	8	-	8
Buy-out upon termination	-	-	-	(92)	-	(92)
Expected rate of return on pension funds	53	-	53	47	-	47
Actuarial losses/gains	31	-	31	(30)	-	(30)
Transition to proportionate consolidation method	(9)	-	(9)	-	-	-
Premium payments	160	-	160	129	-	129
Payments of pensions/paid-up policies	(334)	-	(334)	(18)	-	(18)
Fair value, pension plan assets at 31 Dec.	950	-	950	1 049	-	1 049
Net pension liabilities	(136)	(203)	(339)	(575)	(175)	(750)
Unrecognised plan changes	-	3	3	-	3	3
Net capitalised pension liabilities at 31 Dec.	(136)	(200)	(336)	(575)	(172)	(747)

The percentage distribution of pension plan assets by investment categories at
31 Dec. 2007 and earlier was:

	2007	2006	2005
Long-term bonds	28%	30%	27%
Money market	7%	5%	17%
Bonds	21%	20%	18%
Shares	25%	30%	23%
Property	16%	13%	12%
Other items	3%	2%	3%
Actual investment performance, pension plan assets	11,8%	7,5%	7,3%

Amounts in MNOK	2007	2006	2005
Net obligation 1 Jan.	(747)	(665)	(456)
Net change in social security expenses	50	(11)	(26)
Recognised pension expenses	(132)	(112)	(87)
Settlement of pension scheme, excl. social security expenses	299	-	-
Premium payments	160	129	150
Premium payments, plan changes	-	14	-
Disbursements, early retirement	10	7	7
Downsizing process	-	-	3
Purchases/sales	-	(3)	16
Transition to proportionate consolidation method	1	-	(9)
Actuarial gain/loss on pension expenses	23	(106)	(263)
Net capitalised pension liabilities at 31 Dec.	(336)	(747)	(665)

Actuarial losses/gains are taken directly to equity.

Historical information

Amounts in MNOK	2007	2006	2005	2005
Gross pension liabilities 31 Dec.	1 289	1 799	1 674	1 328
Fair value, pension plan assets 31 Dec.	950	1 049	1 005	868
Net pension liabilities 31 Dec.	(339)	(750)	(669)	(460)
Actuarial gains/losses on pension liabilities at 31 Dec.	8	76	234	77
Actuarial gains/losses on pension plan assets 31 Dec.	31	(30)	(29)	4

The age limit for taking an early retirement pension (AFP) is 62. The Group's extended pension liabilities are included in the accounts in accordance with actuarial standards based on a lower ordinary retirement age, 40 per cent signing propensity, 25 per cent employer financing and otherwise the same assumptions as apply to ordinary pensions. Changes in actual signing propensity as well as final funding can lead to changes in the final pension liabilities.

Pension expenses for the year are estimated based on the financial and actuarial assumptions that apply at the beginning of the year. Gross pension liabilities are based on the financial and actuarial assumptions made at year end.

Pension premium payments for the defined benefit scheme in 2008 are expected to total MNOK 40.

Most of the Group's Norwegian companies have collective service pension schemes that entitle employees to certain future pension benefits in accordance with net benefit plans.

Pension benefits depend on the individual employee's number of years of service and salary level upon reaching retirement age. The defined benefit plan requires 30 years' of accrual to qualify for a full pension. Shorter service time will result in pro rata reduction in the pension.

Net pension liabilities are stipulated on the basis of actuarial estimatespredicated on assumptions related to the discount rate, future wage growth, pension adjustments, expected return on pension fund assets, and voluntary resignation. These assumptions are updated annually. The discounting rate is stipulated on the basis of the long-term government bond interest rate with a mark-up of 30 basis points that reflect the time frame for paying out on the pension liability.

The balance sheet shows net pension liabilities including social security.

Sensitivity analysis on pension calculations

The following estimates are based on facts and circumstances that applied at 31 Dec. 2007, provided all other parameters are constant. The actual results may deviate significantly from these estimates.

	Discount rate		Annual wage growth / basic amount (G)		Annual adjustment of pensions		Retirement rate
Changes in % are percentage points	1%	-1%	1%	-1%	1%	-1%	1%	-1%
Changes in pension
Projected benefit obligation (PBO)	20–22%	20–22%	10–12%	10–12%	15–17%	15–17%	2–3%	2–3%
Net pension expenses during the period	22–24%	22–24%	18–20%	18–20%	10–12%	10–12%	2–3%	2–3%

Defined contribution pension plans

KONGSBERG's companies abroad generally have defined contribution plans. At 31 Dec. 2007, there were also 72 KONGSBERG employees in Norway covered by defined contribution plans. As from 1 January 2008, 2 460 employees in Norway will be covered by defined contribution plans.