Mazda 2007 Annual Report Download - page 73
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Thousands of
Millions of yen U.S. dollars
2006 2005 2006
As of March 31, 2007 March 31, 2006 March 31, 2007
Projected benefit obligation ¥(322,377 ¥(322,108 $(2,732,008
Unrecognized prior service costs 23,920 25,347 202,712
Unrecognized actuarial differences (55,911) (60,662) (473,822)
Less fair value of pension assets (181,514) (164,224) (1,538,254)
Prepaid pension cost 2,693 2,435 22,822
Liability for severance and retirement benefits ¥(111,565 ¥(125,004 $(0945,466
Severance and retirement benefit expenses included in the consolidated statements of income for the
years ended March 31, 2007, 2006 and 2005 consisted of the following: Thousands of
Millions of yen U.S. dollars
2006 2005 2004 2006
For the years ended March 31, 2007 March 31, 2006 March 31, 2005 March 31, 2007
Service costs–benefits earned during the year ¥11,048 ¥08,630 ¥10,454 $093,627
Interest cost on projected benefit obligation 6,543 10,809 15,369 55,449
Expected return on plan assets (5,333) (4,365) (8,081) (45,195)
Amortization of prior service costs (2,126) (2,302) (2,134) (18,017)
Amortization of actuarial differences 6,456 5,195 9,774 54,712
Severance and retirement benefit expenses ¥16,588 ¥17,967 ¥25,382 $140,576
The discount rates and the rates of expected return on plan assets used by the Domestic Companies
are primarily 2.0% and 3.0%, respectively, for the year ended March 31, 2007, and 2.0% and 3.0%,
respectively, for the year ended March 31, 2006. The estimated amount of all retirement benefits to
be paid at the future retirement dates is allocated equally to each service year using the estimated
number of total service years.
Employees of Japanese companies are compulsorily included in the Welfare Pension Insurance
Scheme operated by the government. Employers are legally required to deduct employees’welfare
pension insurance contributions from their payroll and to pay them to the government together with
employers’own contributions. For companies that have established their own Employees’Pension
Fund which meets certain legal requirements, it is possible to transfer a part of their welfare pension
insurance contributions (referred to as the “substitutional portion”of the government’s Welfare Pension
Insurance Scheme) to their own Employees’Pension Fund under the government’s permission and
supervision.
The newly enacted Defined Benefit Corporate Pension Law allows a company to transfer the
substitutional portion back to the government. In order to transfer the substitutional portion, a company
must obtain approval from the Minister of Health, Labor and Welfare (“MHLW”) for the exemption from
the payment of the benefits related to future employee service. In addition, a company must obtain
approval from the MHLW to be relieved from the remaining benefit obligation of the substitutional
portion which relates to past employee services. On obtaining that approval, a company will transfer
the remaining benefit obligation of the substitutional portion pertaining to past employee services and
the related plan assets to the government.
Based on the Defined Benefit Corporate Pension Law, the Company and certain other Domestic
Companies decided to restructure their Employees’Pension Fund and were permitted by the MHLW
on March 26, 2004 to be released from their future obligation for payments for the substitutional
portion. Upon such approval, as a transitional provision, a company is allowed to recognize the effect