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83
Hitachi, Ltd. Annual Report 2010
11. RETIREMENT AND SEVERANCE BENEFITS
(a) Defined benefit plans
The Company and its subsidiaries have a number of contributory funded defined benefit pension plans and unfunded lump-
sum payment plans to provide retirement and severance benefits to substantially all employees.
The Company and certain subsidiaries make contributions to a number of contributory funded defined benefit pension plans.
The Company and certain subsidiaries adopted cash balance plans, and certain subsidiaries amended certain of their defined
benefit plans to cash balance plans during the years ended March 31, 2010, 2009 and 2008.
Under the cash balance plans, each employee has a notional account which represents pension benefits. The balance in the
notional account is based on principal credits, which are accumulated as employees render services, and interest credits,
which are determined based on the market interest rates.
Under unfunded lump-sum payment plans, employees are entitled to lump-sum payments based on their earnings and the
length of service at retirement or termination of employment for reasons other than dismissal for cause.
Net periodic benefit cost for the funded benefit pension plans and the unfunded lump-sum payment plans for the years ended
March 31, 2010, 2009 and 2008 consists of the following components:
Millions of yen
Thousands of
U.S. dollars
2010 2009 2008 2010
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 71,777 ¥ 72,064 ¥ 71,577 $ 771,796
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,352 54,701 56,079 595,183
Expected return on plan assets for the period . . . . . . . . . . . . . . (33,564) (45,804) (44,911) (360,903)
Amortization of prior service benefit . . . . . . . . . . . . . . . . . . . . . . (22,005) (21,103) (23,627) (236,613)
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,399 71,857 58,326 1,036,548
Transfer to defined contribution pension plan . . . . . . . . . . . . . . . 39 (1,289) (1,611) 419
Curtailments gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (227) – (388) (2,441)
Settlements loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603 – – 6,484
Employees’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (164) (489) (346) (1,763)
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥168,210 ¥129,937 ¥115,099 $1,808,710
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, 2011 are as follows:
Millions of yen
Thousands of
U.S. dollars
Prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(22,315) $(239,946)
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,656 974,796