Lenovo 2010 Annual Report Download - page 141

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2009/10 Annual Report Lenovo Group Limited
139
36 Retirement benefit obligations
Group
2010 2009
US$’000 US$’000
Pension obligation included in other non-current liabilities
Pension benefits 70,235 59,115
Post-employment medical benefits 10,632 8,885
80,867 68,000
Expensed in income statement
Pension benefits 7,433 11,032
Post-employment medical benefits 1,841 1,021
9,274 12,053
Net actuarial (loss)/gain recognized in other comprehensive income (10,840) 7,025
On the acquisition of the personal computer business of IBM, the Group assumed a cash balance pension liability for
substantially all former IBM employees in Japan, and final salary defined benefit obligations for selected employees in other
countries.
In the United States, the Group operates a final-salary pension plan that covers approximately 20% of all employees.
These were former participants in the IBM US 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
US 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 net comprehensive income in the period they arise. The cumulative amount of actuarial gains and losses
recognized in other comprehensive income is a net loss of US$3,815,000 (2009: net gain of US$7,025,000).
(a) Pension benefits
The amounts recognized in the balance sheet are determined as follows:
Group
2010 2009
US$’000 US$’000
Present value of funded obligations 213,769 188,720
Fair value of plan assets (151,081) (134,852)
62,688 53,868
Present value of unfunded obligations 7,547 5,247
Liability in the balance sheet 70,235 59,115
Pension plan asset in the balance sheet – –