Lenovo 2012 Annual Report Download - page 170
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2011/12 Annual Report Lenovo Group Limited
168
NOTES TO THE FINANCIAL STATEMENTS
36 Retirement benefit obligations (continued)
(a) Pension benefits
The amounts recognized in the consolidated balance sheet are determined as follows:
2012 2011
US$’000 US$’000
Present value of funded obligations 329,335 228,275
Fair value of plan assets (224,497) (174,241)
Deficit of funded plans 104,838 54,034
Present value of unfunded obligations 86,575 9,086
Liability in the balance sheet 191,413 63,120
Representing:
Pension benefits obligation 192,461 64,362
Pension plan assets (1,048) (1,242)
191,413 63,120
The principal actuarial assumptions used are as follows:
2012 2011
Discount rate 2%-3.25% 2.25%-5.0%
Expected return on plan assets 2%-3.25% 0%-5%
Future salary increases 2%-5% 2.2%-3.5%
Future pension increases 0%-1.75% 0%-1.75%
Cash balance crediting rate 2.4%-2.5% 2.5%
Life expectancy for male aged 60 23 23
Life expectancy for female aged 60 27 27
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 US. The method of
accounting, assumptions and the frequency of valuations are similar to those used for defined benefit pension schemes.
The US plan (Lenovo Future Health Account and Retiree Life Insurance Program) is currently funded by a trust that
qualifies for tax exemption under US tax law, out of which benefits to eligible retirees and dependents will be made.
Changes in future medical cost trend rates has no effect on the liabilities for post-employment medical benefits
The amounts recognized in the consolidated balance sheet are determined as follows:
2012 2011
US$’000 US$’000
Present value of funded obligations 18,111 17,037
Fair value of plan assets (6,445) (6,562)
11,666 10,475
Present value of unfunded obligations 1,739 1,275
Liability in the balance sheet 13,405 11,750