Lenovo 2015 Annual Report Download - page 136

134 Lenovo Group Limited 2014/15 Annual Report
DIRECTORS’ REPORT
RETIREMENT SCHEME ARRANGEMENTS (continued)
Defined Benefit Pensions Plans (continued)
Germany – Pension Plan (continued)
For the year ended March 31, 2015, an amount of EUROS 1,274,421 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, 2015 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: 1.00%
– Future salary increases: Age-group based
– Future pension increases: 2.00%
• The plan was 34% funded at the actuarial valuation date.
• There was a net liability of EUROS 71,404,837 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 of Lenovo (United States) Inc. 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%
of the employee’s contribution up to the first 6% 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% 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 three-year vesting.
Forfeitures of Company contributions arising from employees who leave before they are fully vested are used to reduce future
Lenovo contributions. For the period April 1, 2014 to March 31, 2015, the amount of forfeitures accumulated was US$295,442
while an amount of US$431,432 had been used to reduce Company contributions, leaving US$189,829 at March 31, 2015 to be
used to reduce Company contributions in the future.
US Motorola Mobility 401(k) Plan
U.S. regular, full-time and part-time employees of Motorola Mobility LLC are eligible to participate in the Motorola Mobility 401(k)
Plan, which is a tax-qualified defined contribution plan under section 401(k) of the Internal Revenue Code. Motorola Mobility LLC
matches 100% of the employee’s contribution up to the first 4% of the employee’s eligible compensation. Employee contributions
are voluntary. All contributions, including the match, are made in cash, in accordance with the participants’ investment elections.
The Motorola Mobility match is subject to a one-year vesting schedule. Forfeitures of matching contributions arising from
employees who leave before they are fully vested are used to pay eligible plan expenses.
US Lenovo Executive Deferred Compensation Plan
The Company also maintains an unfunded, non-qualified, defined contribution plan, the Lenovo Executive Deferred Compensation
Plan, 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 than 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.