Lenovo 2012 Annual Report Download - page 99

2011/12 Annual Report Lenovo Group Limited 97
Defined Benefit Pensions Plans (continued)
Germany – Pension Plan (continued)
The plan is partially funded by company and employee contributions to an insured support fund with DBV-Winterthur up to the
maximum tax-deductible limits. In line with standard practice in Germany, the remainder is unfunded (book reserve).
For the year ended March 31, 2012, an amount of EUROS 1,357,032 was charged to the income statement with respect to this
plan.
The principal results of the most actuarial valuation of the plan at March 31, 2012 were the following:
• TheactuarialvaluationwaspreparedbyKern,Mauch&Kollegen.TheactuariesinvolvedarefullyqualifiedunderGermanlaw.
• TheactuarialmethodusedwastheProjectedUnitCreditCostmethodandtheprincipalactuarialassumptionswere:
– Discount rate: 3.25%
– Future salary increases: Age-group based
– Future pension increases: 1.75%
• Theplanwas64%fundedattheactuarialvaluationdate.
• TherewasadeficitofEUROS10,404,281underthisplanattheactuarialvaluationdate.
Defined Contribution Plans
United States of America (“US”) – Lenovo Savings Plan
U.S. regular, full-time and part-time employees are eligible to participate in the Lenovo Savings Plan, which is a tax-qualified
defined contribution plan under section 401(k) of the Internal Revenue Code. The Company matches 50 percent of the employee’s
contribution up to the first 6 percent of the employee’s eligible compensation. In addition, for employees who have also completed
one year of service and who do not participate in the Lenovo Pension Plan, the Company provides a profit sharing contribution of 5
percent of eligible compensation. Employee contributions are voluntary. All contributions, including the Company match, are made
in cash, in accordance with the participants’ investment elections.
The Company match is immediately vested. However the 5% Company profit sharing contribution is subject to 3 years vesting.
Forfeitures of Company contributions arising from employees who leave before they are fully vested in Company contributions are
used to reduce future Lenovo contributions. For the period April 1, 2011 to March 31, 2012, the amount of forfeitures accumulated
was US$231,351 while an amount of US$859,978 had been used to reduce Lenovo contributions, leaving US$84,164 at March
31, 2012 to be used to reduce Lenovo contributions in the future.
US Lenovo Executive Deferred Compensation Plan
The Company also maintains an unfunded, non-qualified, defined contribution plan, the Lenovo Executive Deferred Compensation
Plan(“EDCP”),whichallowseligibleexecutivestodefercompensation,andtoreceiveCompanymatchingcontributions,with
respect to amounts in excess of Internal Revenue Service limits for tax-qualified plans. Compensation deferred under the plan, as
well as Company matching contributions are recorded as liabilities.
Deferred compensation amounts may be directed by participants into an account that replicates the return that would be received
had the amounts been invested in similar Lenovo Savings Plan investment options. Company matching contributions, are directed
to participant accounts and fluctuate based on changes in the stock prices of the underlying investment portfolio.
United Kingdom (“UK”) – Lenovo Stakeholders Plan
UK regular, full-time, part-time and fixed term Lenovo contract employees are eligible to participate in the Lenovo Stakeholders
Plan,whichisatax-qualifieddefinedcontribution“stakeholder”plan.ForemployeeshiredafterApril30,2005,theCompany
contributes 6.7% of an employee’s eligible salary to the employee’s pension account each year until he/she is 35, and then
contributes 8.7% of salary after that age. The Employer Contributions are dependent on Employee paying no less that 3% of salary
to the same fund.
Prior employees of IBM receive Company contributions varying from 6.7% to 30% of eligible compensation depending on their
service and the prior IBM plan they participated in.