Toyota 2008 Annual Report Download - page 120

118 TOYOTA •Annual Report 2008 •
Financial Section
The minimum pension liability recognized as of March 31, 2007 was eliminated upon the adoption of the provisions regarding recognition
of funded status and disclosure under FAS 158, and after the adoption, no minimum pension liability had been recognized.
Weighted-average assumptions used to determine benefit obligations as of March 31, 2007 and 2008 are as follows:
March 31,
2007 2008
Discount rate .............................................................................................................................................................. 2.7% 2.8%
Rate of compensation increase ................................................................................................................................ 0.1–10.0% 0.1–10.0%
Weighted-average assumptions used to determine net periodic pension cost for the years ended March 31, 2006, 2007 and 2008 are
as follows:
For the years ended March 31,
2006 2007 2008
Discount rate ............................................................................................................................. 2.6% 2.6% 2.7%
Expected return on plan assets................................................................................................ 2.9% 3.0% 3.4%
Rate of compensation increase................................................................................................ 0.1–9.7% 0.1–11.0% 0.1–10.0%
Toyota’s policy and objective for plan asset management is to
maximize returns on plan assets to meet future benefit payment
requirements under risks which Toyota considers permissible.
Asset allocations under the plan asset management are deter-
mined based on Toyota’s plan asset management guidelines
which are established to achieve the optimized asset composi-
tions in terms of the long-term overall plan asset management.
Prior to making individual investments, Toyota performs in-
depth assessments of corresponding factors including risks,
transaction costs and liquidity of each potential investment
under consideration. To measure the performance of the plan
asset management, Toyota establishes bench mark return rates
for each individual investment, combines these individual bench
mark rates based on the asset composition ratios within each
asset category, and compares the combined rates with the cor-
responding actual return rates on each asset category.
Toyota expects to contribute ¥153,030 million ($1,527 million)
to its pension plan in the year ending March 31, 2009.
The following pension benefit payments, which reflect expect-
ed future service, as appropriate, are expected to be paid:
The expected rate of return on plan assets is determined
after considering several applicable factors including, the com-
position of plan assets held, assumed risks of asset manage-
ment, historical results of the returns on plan assets, Toyota’s
principal policy for plan asset management, and forecasted
market conditions.
Toyota’s pension plan weighted-average asset allocations as
of March 31, 2007 and 2008, by asset category are as follows:
Plan assets at March 31,
2007 2008
Equity securities ......................................................................................................................................................... 67.2% 60.5%
Debt securities ........................................................................................................................................................... 20.8 25.2
Real estate .................................................................................................................................................................. 0.7 1.3
Other........................................................................................................................................................................... 11.3 13.0
Total ........................................................................................................................................................................ 100.0% 100.0%
The estimated prior service costs, net actuarial loss and net
transition obligations that will be amortized from accumulated
other comprehensive income (loss) into net periodic pension
cost during the year ending March 31, 2009 are ¥(17,100) million
($(171) million), ¥6,500 million ($65 million) and ¥1,900 million
($19 million), respectively.
Prior to the adoption of the provisions regarding recognition
of funded status and disclosure under FAS 158 as of March 31,
2007, Toyota had recorded a minimum pension liability for
plans where the accumulated benefit obligation net of plan
assets exceeded the accrued pension and severance costs.
Changes in the minimum pension liability are reflected as
adjustments in other comprehensive income for the years
ended March 31, 2006 and 2007 as follows:
Yen in millions
For the years ended March 31,
2006 2007
Minimum pension liability adjustments, included in other
comprehensive income ........................................................................................................................................... ¥4,937 ¥3,499