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Hitachi, Ltd. Annual Report 2007 63
Net periodic benefit cost for the funded benefit pension plans and the unfunded lump-sum payment plans for the years
ended March 31, 2007, 2006 and 2005 consists of the following components:
Thousands of
Millions of yen U.S. dollars
2007 2006 2005 2007
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 72,648 ¥ 74,131 ¥ 85,500 $ 615,661
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,888 56,166 63,637 473,627
Expected return on plan assets for the period . . . . . . . . (40,253) (34,045) (33,749) (341,127)
Amortization of transition asset . . . . . . . . . . . . . . . . . . . ––(208) –
Amortization of prior service benefit . . . . . . . . . . . . . . . . (18,571) (17,381) (13,842) (157,381)
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . 56,388 67,678 100,274 477,864
Transfer to defined contribution pension plan . . . . . . . . 1,039 (87) 3,223 8,805
Derecognition of previously accrued salary progression
due to transfer of substitutional portion . . . . . . . . . . . . –(5,956) (16,235) –
Recognition of deferred actuarial losses due to
transfer of substitutional portion . . . . . . . . . . . . . . . . . . –26,193 105,758 –
Curtailment and settlement loss . . . . . . . . . . . . . . . . . . . ––173 –
Employees’ contributions . . . . . . . . . . . . . . . . . . . . . . . . (362) (731) (3,187) (3,068)
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . 126,777 165,968 291,344 1,074,381
Difference between the obligations settled and
the assets transferred due to transfer of
substitutional portion . . . . . . . . . . . . . . . . . . . . . . . . . . –(30,593) (165,247) –
¥126,777 ¥135,375 ¥126,097 $1,074,381
Prior to the adoption of the recognition of SFAS No. 158, unrecognized transition asset, unrecognized prior service benefit
and cost and unrecognized actuarial gain and loss were amortized using the straight-line method over the average remaining
service period of active employees.
The estimated prior service cost and actuarial loss for the defined benefit pension plans that will be amortized from
accumulated other comprehensive income (loss) into net periodic benefit cost during the year ending March 31, 2008 are
as follows:
Thousands of
Millions of yen U.S. dollars
Prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(15,136) $(128,271)
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,357 435,229
The Employees Pension Fund (EPF) stipulated by the Japanese Pension Insurance Law is one of the defined benefit
pension plans to which the Company and certain domestic subsidiaries had contributed. The pension plans under the
EPF are composed of the substitutional portion of Japanese Welfare Pension Insurance and the corporate portion which
is the contributory defined benefit pension plan covering substantially all of their employees and provides benefits in
addition to the substitutional portion. The Company, certain subsidiaries and their employees had contributed the pension
premiums for the substitutional portion and the corporate portion to each EPF. The plan assets of each EPF cannot be
specifically allocated to the individual participants nor to the substitutional and corporate portions.
On June 15, 2001, the Japanese government issued a new law concerning defined benefit plans. This law allows a
company, at its own discretion, to apply for an exemption from the future benefit obligation and return the past benefit
obligation of the substitutional portion of the EPF to the government. In accordance with the new law, the Company and
all the subsidiaries obtained approvals from the government for the exemption from the future benefit obligation and for
the return of the past benefit obligation through March 31, 2006. Consequently, the Company and all the subsidiaries
transferred the substitutional portion of each of their benefit obligations related to past service and the related portion of
the plan assets of the EPF to the government during the years ended March 31, 2006 and 2005.