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»FINANCIAL SECTION
Nissan Annual Report 2006-2007
60
9. RETIREMENT BENEFIT PLANS
The Company and most of consolidated subsidiaries have defined benefit plans and/or defined contribution plans.
The Company and its domestic consolidated subsidiaries have defined benefit plans, i.e., welfare pension fund plans (“WPFP”), tax-qualified
pension plans and lump-sum payment plans, covering substantially all employees who are entitled to lump-sum or annuity payments, the amounts
of which are determined by reference to their basic rates of pay, length of service, and the conditions under which termination occurs.
Certain consolidated subsidiaries transferred a portion of the benefit obligations under the above defined benefit plans to defined contribution
plans during the years ended March 31, 2007 and 2006. In this connection, the pension assets of ¥4,493 million ($38,076 thousand) and
¥45,762 million were also transferred to the defined contribution plans during the years ended March 31, 2007 and 2006, respectively.
The following table sets forth the funded and accrued status of the plans, and the amounts recognized in the consolidated balance sheets as
of March 31, 2007 and 2006 for the Company ’s and the consolidated subsidiaries’ defined benefit plans: Thousands of
Millions of yen U.S. dollars
2006 2005 2006
As of Mar. 31, 2007 Mar. 31, 2006 Mar. 31, 2007
Retirement benefit obligation....................................................................................................................................... ¥(1,273,725) ¥(1,239,004) $(10,794,280)
Plan assets at fair value.................................................................................................................................................... 1,008,771 817,371 8,548,907
Unfunded retirement benefit obligation ............................................................................................................. (264,954) (421,633) (2,245,373)
Unrecognized net retirement benefit obligation at transition ........................................................... 89,822 99,966 761,203
Unrecognized actuarial loss........................................................................................................................................... 81,493 120,920 690,619
Unrecognized prior service cost................................................................................................................................. (54,049) (66,714) (458,042)
Net retirement benefit obligation .............................................................................................................................. (147,688) (267,461) (1,251,593)
Prepaid pension cost........................................................................................................................................................... 46,806 234 396,661
Accrued retirement benefits ........................................................................................................................................ ¥ (194,494) ¥ (267,695) $ (1,648,254)
The substitutional portion of the benefits under the WPFP has been included in the amounts shown in the above table.
Certain domestic subsidiaries received the approval from the Minister of Health, Labor and Welfare in the years ended March 31, 2006 and
2005 with respect to their application for an exemption from the obligation for benefits related to future employee services and for the return of
the past benefit obligation and related pension plan assets under the substitutional portion of the WPFP.
The components of retirement benefit expenses for the years ended March 31, 2007, 2006 and 2005 are outlined as follows:
Thousands of
Millions of yen U.S. dollars
2006 2005 2004 2006
For the years ended Mar. 31, 2007 Mar. 31, 2006 Mar. 31, 2005 Mar. 31, 2007
Service cost........................................................................................................................................................................... ¥51,696 ¥41,022 ¥47,802 $438,102
Interest cost ......................................................................................................................................................................... 41,209 36,809 33,288 349,229
Expected return on plan assets............................................................................................................................ (39,625) (29,581) (17,999) (335,805)
Amortization of net retirement benefit obligation at transition.................................................... 11,147 11,265 12,009 94,466
Amortization of actuarial loss.................................................................................................................................. 9,031 12,542 12,298 76,534
Amortization of prior service cost........................................................................................................................ (6,925) (5,967) (5,431) (58,686)
Other........................................................................................................................................................................................... 3,732 2,476 179 31,626
Retirement benefit expenses ................................................................................................................................. 70,265 68,566 82,146 595,466
Gain on return of the substitutional portion of welfare pension fund plans..................... —(772) (1,107) —
Net (gain) loss on implementation of defined contribution plans............................................. (18,782) 3,570 — (159,169)
Total............................................................................................................................................................................................. ¥51,483 ¥71,364 ¥81,039 $436,297
The assumptions used in accounting for the above plans were as follows:
2006 2005
For the years ended Mar. 31, 2007 Mar. 31, 2006
Discount rates Domestic companies....................................................................................................... 2.1% - 2.3% 2.1% - 2.3%
Foreign companies............................................................................................................ 2.8% - 6.2% 2.5% - 6.0%
Expected rates of return on plan assets Domestic companies ....................................................................................................... Mainly 3.0% Mainly 3.0%
Foreign companies............................................................................................................ 2.8% - 9.0% 3.0% - 9.0%
Amortization period of prior service cost ........................................................................................................................................................... Mainly 9-15 Mainly 9-15
years years
Recognition period of actuarial loss ........................................................................................................................................................... Mainly 9-18 Mainly 9-18
years years