Lenovo 2009 Annual Report Download - page 146

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2008/09 Annual Report Lenovo Group Limited
144
NOTES TO THE FINANCIAL STATEMENTS (Continued)
37 Retirement benefit obligations (continued)
(a) Pension benefits (continued)
The principal actuarial assumptions used are as follows:
Group
2009 2008
Discount rate 2.5%-5.5% 2.25%-5.25%
Expected return on plan assets 0%-4.25% 3.5%-6.0%
Future salary increases 2.2%-3.5% 2.2%-3.1%
Future pension increases 0%-1.75% 0%-2.0%
Cash balance crediting rate 2.5% 2.5%-5.0%
Life expectancy for those aged 60 82 82
The expected return on plan assets is derived by taking the weighted average of the long term expected rate of return
on each of the asset classes that the plan was invested in at the balance sheet date.
(b) Post-employment medical benefits
The Group operates a number of post-employment medical benefit schemes, principally in the U.S.. The method of
accounting, assumptions and the frequency of valuations are similar to those used for defined benefit pension schemes.
The U.S. plan (Lenovo Future Health Account and Retiree Life Insurance Program) is currently funded by a trust that
qualifies for tax exemption under U.S. tax law, out of which benefits to eligible retirees and dependents will be made.
The liabilities for post-employment medical benefits are not sensitive to changes in future medical cost trend rates.
The amounts recognized in the balance sheet are determined as follows:
Group
2009 2008
US$’000 US$’000
Present value of funded obligations 16,491 16,065
Fair value of plan assets (7,761) (8,018)
8,730 8,047
Present value of unfunded obligations 155 179
Liability in the balance sheet 8,885 8,226
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 8,226 6,978
Reclassification – (178)
Exchange adjustment (116) 991
Contributions by employer (13) –
Post-retirement expenses 1,021 1,253
Net actuarial gains (233) –
Others – (818)
At the end of the year 8,885 8,226