Siemens 2005 Annual Report Download - page 181

181
Pension benefits: Components of NPPC
The components of the NPPC for the fiscal years ended September 30, 2005 and 2004 were as
follows:
For the Siemens German Pension Trust, the determination of the expected return on plan
assets and the amortization of unrecognized net losses are based on a market-related value of
plan assets calculated using the average of historical market values of plan assets over four quar-
ters. This market-related value was €13,730 and €12,094 as of September 30, 2005 and 2004,
respectively, €449 below and €129 above, respectively, the fair value of plan assets of the Siemens
German Pension Trust. For all other plans, the market-related value of plan assets is equal to the
fair value of plan assets as of the measurement date. If any significant supplemental contribu-
tions are made after the measurement date, these contributions will be considered on a pro-rata
basis when determining the total expected return on plan assets for the respective fiscal year.
Net unrecognized gains or losses in excess of 10% of the greater of the projected benefit
obligation or the market-related value of plan assets are amortized over the average remaining
service period of active participants (generally 15 years). Prior service costs are amortized on a
straight-line basis over the average remaining service period of active participants to whom such
costs relate.
The amortization of unrecognized net losses is mainly due to negative developments in the
international capital markets during fiscal 2002 and 2001, as well as the effect of reductions in the
discount rate assumption used to calculate the PBO in fiscal 2003. Net actuarial losses increased
during fiscal 2005 predominantly due to a reduction of the discount rate assumption used to
measure the PBO, partially offset by actuarial gains resulting from pension assets where actual
returns exceed expected returns. The net effect did not impact NPPC for fiscal 2005 but will
increase amortization of unrecognized net losses in future periods. The supplemental cash con-
tributions in fiscal 2005 and 2004 resulted in an increase in expected absolute return on plan
assets.
Notes to Consolidated Financial Statements
Consolidated Financial Statements Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated
and per share amounts)
Year ended September 30, 2005 Year ended September 30, 2004
Total Domestic Foreign Total Domestic Foreign
Service cost 579 307 272 469 212 257
Interest cost 1,121 726 395 1,105 742 363
Expected return on plan assets (1,291) (905) (386) (1,154) (813) (341)
Amortization of:
Unrecognized prior service cost (benefits) (9) (19) 10 10 – 10
Unrecognized net losses 561 475 86 623 520 103
Unrecognized net transition obligation (asset) – – – (2) – (2)
Loss due to settlements and curtailments 3 – 3 – – –
Net periodic pension cost 964 584 380 1,051 661 390
Germany 584 661
U.S. 190 217
U.K. 149 132
Other 41 41