Mega Bank Annual Report 2017

62 Mega Bank -62- (19) Provisions December 31, 2017 December 31, 2016 NT$ US$ NT$ Liabilities reserve for employee benefits $ 11,161,036 $ 376,451 $ 9,262,357 Reserve for guarantee liabilities 3,659,834 123,443 3,691,076 Total $ 14,820,870 $ 499,894 $ 12,953,433 Liabilities reserve for employee benefits are as follows: December 31, 2017 December 31, 2016 NT$ US$ NT$ Recognized in consolidated balance sheet: -Defined benefit plans $ 7,159,287 $ 241,476 $ 5,718,311 -Employee preferential savings plans 4,001,749 134,975 3,544,046 Total $ 11,161,036 $ 376,451 $ 9,262,357 A. Defined benefit plans (A) The Bank has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ servi ce years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Bank and subsidiaries contribute monthly an amount equal to 9.622% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Bank would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Bank will make contributions to cover the deficit by next March. (B) The amounts recognized in the balance sheet are determined as follows: December 31, 2017 December 31, 2016 NT$ US$ NT$ Present value of funded obligations $ 16,470,771 $ 555,544 $ 15,585,176 Fair value of plan assets ( 9,311,484 ) ( 314,068 ) ( 9,866,865 ) Net defined benefit liability $ 7,159,287 $ 241,476 $ 5,718,311 (C) Movements in net defined benefit liabilities are as follows: Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability (In NT Thousand Dollars) 2017 Balance at January 1 $ 15,585,176 ( $ 9,866,865 ) $ 5,718,311 Current service cost 452,603 - 452,603 Interest expense (income) 152,236 ( 97,646 ) 54,590 16,190,015 ( 9,964,511 ) 6,225,504 Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) - 3,819 3,819 Change in financial assumptions 1,461,253 - 1,461,253 Experience adjustments 274,553 - 274,553 1,735,806 3,819 1,739,625 Pension fund contribution - ( 805,842 ) ( 805,842 ) Paid Pension ( 1,455,050 ) 1,455,050 - Balance at December 31 $ 16,470,771 ( $ 9,311,484 ) $ 7,159,287