Lenovo 2013 Annual Report Download - page 178
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NOTES TO THE FINANCIAL STATEMENTS
Lenovo Group Limited 2012/13 Annual Report
176
36 Retirement benefit obligations (continued)
(a) Pension benefits
The amounts recognized in the consolidated balance sheet are determined as follows:
2013 2012
US$’000 US$’000
Present value of funded obligations 405,537 329,335
Fair value of plan assets (275,422) (224,497)
Deficit of funded plans 130,115 104,838
Present value of unfunded obligations 19,104 86,575
Liability in the balance sheet 149,219 191,413
Representing:
Pension benefits obligation 149,340 192,461
Pension plan assets (121) (1,048)
149,219 191,413
The principal actuarial assumptions used are as follows:
2013 2012
Discount rate 1.75%-3.5% 2%-3.25%
Expected return on plan assets 2%-5% 2%-3.25%
Future salary increases 2%-5% 2%-5%
Future pension increases 0%-1.8% 0%-1.75%
Cash balance crediting rate 2%-2.2% 2.4%-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:
2013 2012
US$’000 US$’000
Present value of funded obligations 18,676 18,111
Fair value of plan assets (5,878) (6,445)
12,798 11,666
Present value of unfunded obligations 1,866 1,739
Liability in the balance sheet 14,664 13,405