Lenovo 2013 Annual Report Download - page 177
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2012/13 Annual Report Lenovo Group Limited 175
36 Retirement benefit obligations
Group
2013 2012
US$’000 US$’000
Pension obligation included in non-current liabilities
Pension benefits 149,219 191,413
Post-employment medical benefits 14,664 13,405
163,883 204,818
Expensed in income statement
Pension benefits (Note 10) 22,601 18,350
Post-employment medical benefits 1,055 1,333
23,656 19,683
Net actuarial loss recognized as a component of
other comprehensive income for the year 17,174 37,537
Cumulative actuarial losses recognized as a component of
other comprehensive income 65,716 48,542
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 labor 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.
On the business combinations of NEC personal computer division and Medion, the Group assumed the cash balance
pension liability and end-of-employment benefit obligation for all employees from the then NEC personal computer division
and pension commitment for the two Medion’s management board members. Each Medion’s management board member is
entitled to a lifelong pension upon leaving Medion after turning 60 or due to prolonged disability and consequently termination
of the employment relationship with Medion. The pension liability in Medion is unfunded.
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 other comprehensive income in the period they arise.