Sony 2001 Annual Report Download - page 117

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Sony Corporation Annual Report 2001
115
14. Pension and severance plans
Upon terminating employment, employees of Sony Corporation and subsidiaries in Japan are entitled, under most
circumstances, to lump-sum indemnities or pension payments as described below. For employees voluntarily retir-
ing, under normal circumstances, minimum payment is an amount based on current rates of pay and lengths of
service. In calculating the minimum payment for employees involuntarily retiring, including employees retiring due
to meeting mandatory retirement age requirements, Sony may grant additional benefits. With respect to directors’
and statutory auditors’ resignations, lump-sum severance indemnities are calculated using a similar formula and are
normally paid subject to the approval of Sony’s shareholders.
Sony Corporation and most subsidiaries in Japan have contributory funded defined benefit pension plans, which
are pursuant to the Japanese Welfare Pension Insurance Law. The contributory pension plans cover a portion of the
governmental welfare pension program, under which the contributions are made by the companies and their
employees, and an additional portion representing the substituted noncontributory pension plans. Under the
contributory pension plans, the defined benefits representing the noncontributory portion of the plans, in general,
cover 60% of the indemnities under the existing regulations to employees. The remaining indemnities are covered
by severance payments by the companies. The pension benefits are determined based on years of service and the
compensation amounts, as stipulated in the aforementioned regulations, are payable at the option of the retiring
employee in a lump-sum amount or on a monthly pension. Contributions to the plans are funded through several
financial institutions in accordance with the applicable laws and regulations.
The majority of foreign subsidiaries have defined benefit pension plans or severance indemnity plans which
substantially cover all of their employees, under which the cost of benefits is currently funded or accrued. Benefits
awarded under these plans are based primarily on the current rate of pay and length of service.
The components of net pension and severance costs for the years ended March 31, 1999, 2000 and 2001 were
as follows:
Japanese plans:
Dollars in
Yen in millions millions
Year ended
Year ended March 31 March 31,
1999 2000 2001 2001
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥41,743 ¥46,306 ¥46,400 $ 371
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,020 14,898 19,040 152
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,618) (11,236) (26,216) (209)
Amortization of net transition asset . . . . . . . . . . . . . . . . . . . . . . . (375) (375) (375) (3)
Recognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,032 5,733 7,447 60
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . 1,234 1,335 783 6
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥55,036 ¥56,661 ¥47,079 $ 377
Foreign plans:
Dollars in
Yen in millions millions
Year ended
Year ended March 31 March 31,
1999 2000 2001 2001
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥15,842 ¥17,836 ¥16,841 $135
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,333 6,095 6,805 55
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,475) (4,989) (6,492) (52)
Amortization of net transition asset . . . . . . . . . . . . . . . . . . . . . . . (122) (108) (36) (0)
Recognized actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . 342 (46) 555 4
Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . (274) (142) (341) (3)
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥16,646 ¥18,646 ¥17,332 $139