24. PENSION LIABILITIES           Pension schemes are classified as defined-benefit and defined-contribution schemes. Payments made into defined-contribution pension schemes are recognised in the income statement in the period to which the payment applies. In defined-benefit pension schemes, obligations are calculated using the projected unit credit method. Pension expenses are recognised as an expense over the employees' period of service based on calculations made by authorised actuaries. Actuarial gains and losses, in terms of the portion exceeding a certain limit, are recognised over the employees' average term of service. When calculating the present value of pension obligations the interest rate on government securities is used as the discount rate. The terms to maturity of government securities approximate to the terms to maturity of the related pension liabilities.           The Group's foreign sales offices and subsidiaries have various pension schemes that comply with the local rules and practices of the countries in question. All of the most significant pension schemes are defined-contribution schemes. As of 1 July 2005 the statutory pension cover of the employees of the Group's Finnish companies has been arranged in a Finnish pension insurance company. The pension cover is a defined-contribution scheme. The pension schemes of the parent company's President & CEO and members of the Board of Management as well as those of the managing directors of subsidiaries are individual schemes, and the retirement age under these agreements varies from 60 to 65 years. These pension schemes are also defined-contribution agreements. Up to 30 June 2005 the statutory pension cover of the Group's Finnish companies was handled in Finnair Plc's pension fund. Other (voluntary) pension cover has been arranged in Finnair Plc's Pension Fund, in which the pension schemes are defined-benefit schemes. The pension cover specified in these schemes relates to pension benefits, disability compensation, post-employment health-care and life insurance benefits as well as employment severance benefits. All of the Group's post-retirement benefits are defined-contribution benefits.           Defined-benefit pension schemes           Items recognised in the balance sheet       31.12. 31.12.   2005 2004 Present value of funded obligations 346.5 797.4 Fair value of scheme assets -370.0 -794.6   -23.5 2.8 Present value of unfunded obligations 0.0 0.0 Unrecognised net actuarial gains / losses (-) 36.2 0.5 Unrecognised costs based on past service 0.0 6.5 Net liability presented in balance sheet 12.7 9.8 The balance sheet pension liability for 2004 of 9.9 million euros includes items outside the Pension Fund totalling 0.1 million euros.           Pension scheme assets include Finnair Plc shares with a fair value of 1.1 million euros (0.5 million euros in 2004) and buildings used by the Group with a fair value of 10.9 million euros (77.7 million euros in 2004).                 Items recognised in the income statement           Current service costs for financial year 23.9 25.2 Interest costs 39.1 40.4 Excected return on plan assets gain -38.0 -35.6 Past service cost-vested benefits -0.3 -32.1 Adjustment item from compolsory TEL Foundations -8.2 0.0 Total, included in personnel expenses 16.5 -2.1       Net liability reconciliation statement           At beginning of financial year 9.8 37.3 Total expenses, presented above 16.5 -2.1 Paid contributions -13.6 -25.4 At end of financial year 12.7 9.8             Defined-benefit schemes: principal actuarial assumptions             31.12. 31.12.   2005 2004 Discount rate % 5.0 % 5.0 % Expected rate of return on assets % 5.0 % 4.8 % Annual rate of future salary increases % 3.0 % 3.0 % Future pension increases % 2.3 % 2.1 % Estimated remaining years of service 17 17