Lenovo 2009 Annual Report Download - page 145

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2008/09 Annual Report Lenovo Group Limited
143
37 Retirement benefit obligations (continued)
In the United States, the Group operates a final-salary pension plan that covers approximately 25% of all employees. These
were former participants in the IBM U.S. pension plan. In addition, the Group operates a supplemental defined benefit plan
that covers certain executives transferred from IBM and is intended to provide benefits in excess of certain U.S. tax and labour
law limits that apply to the pension plan. Both plans are frozen to new participation. However, benefits continue to accrue.
In Germany, the Group operates a sectionalized plan that has both defined contribution and defined benefit features, including
benefits based on a final pay formula. This plan is closed to new entrants.
Participant benefits under the Group plans depend on the provisions of the former IBM plan under which the participant had
been covered. The Group’s major plans are valued by qualified actuaries annually using the projected unit credit method.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited
to equity in the period they arise. The cumulative amount of actuarial gains and losses recognized in equity is a net gain of
US$7,025,000. Actuarial gains and losses were recognized immediately in the income statements in prior periods.
(a) Pension benefits
The amounts recognized in the balance sheet are determined as follows:
Group
2009 2008
US$’000 US$’000
Present value of funded obligations 188,720 197,210
Fair value of plan assets (134,852) (127,142)
53,868 70,068
Present value of unfunded obligations 5,247 7,196
Liability in the balance sheet 59,115 77,264
Pension plan asset in the balance sheet – –
The movements in the liability recognized in the balance sheet are as follows:
Group
2009 2008
US$’000 US$’000
At the beginning of the year 77,264 95,970
Reclassification – (12,595)
Exchange adjustment (2,566) 6,330
Pension expense 11,032 6,931
Contributions by employer (19,823) (19,595)
Net actuarial gains (6,792) –
Others – 223
At the end of the year 59,115 77,264
The amounts recognized in the income statement are as follows:
Group
2009 2008
US$’000 US$’000
Current service cost 7,522 8,273
Interest cost 6,186 6,027
Expected return on plan assets (4,066) (4,219)
Actuarial gains – (2,954)
Curtailment losses/(gain) 1,390 (196)
Total expense recognized in the income statement 11,032 6,931