Mega Bank Annual Report 2017

64 Mega Bank -64- Discount rate Rate of future salary increases Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25% (In US Thousand Dollars) December 31, 2017 Effect on present value of defined benefit obligation ( $ 13,136 ) $ 13,641 $ 13,339 ( $ 12,917 ) Discount rate Rate of future salary increases Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25% (In NT Thousand Dollars) December 31, 2016 Effect on present value of defined benefit obligation ( $ 396,082 ) $ 370,000 $ 365,391 ( $ 353,712 ) The sensitivity analysis above is based on other conditions that are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same. (F) Expected contributions to the defined benefit pension plans of the Bank for the year ending December 31, 2018 amounts to NT$420,000 thousand. (G) As of December 31, 2017, the weighted average duration of that retirement plan is 9 years. B. Defined contribution plans (A) Effective July 1, 2005, the Bank has established a funded defined contribution pension plan (the “New Plan”) under t he Labor Pension Act (the “Act”). Employees have the option to be covered under the New Plan. Under the New Plan, the Bank contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The payment of pension benefits is based on the employees’ individual pension fund accounts and the cumul ative profit in such accounts, and the employees can choose to receive such pension benefits monthly or in lump sum. (B) The pension costs under the defined contribution pension plan for the years ended December 31, 2017 and 2016 were NT$97,181 thousand and NT$88,147 thousand, respectively. For employees working overseas, pension expenses under defined contribution plans are recognized according to the respective local regulations. For the years ended December 31, 2017 and 2016, pension expenses were NT$19,276 thousand and NT$23,093 thousand, respectively. C. The Bank’s payment obligations of fixed -amount preferential savings of retired employees and current employees after retirement are in compliance with the internal “Rules Governing Pension Preferential Savings of Staff of Mega International Commercial Banks”. The excessive interest arising from the interest rate upon retirement agreed with the employees in excess of general market interest rate should be accounted for in accordance with IAS 19, “Employee Benefits”. (A) Adjustment of assets and liabilities recognized in the consolidated balance sheets, present value of defined benefit obligation, and fair value of plan assets: December 31, 2017 December 31, 2016 NT$ US$ NT$ Present value of defined benefit obligation $ 4,001,749 $ 134,975 $ 3,544,046 Less: Fair value of plan assets - - - $ 4,001,749 $ 134,975 $ 3,544,046 (B) 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 $ 3,544,046 $ - $ 3,544,046 Interest expense 135,249 - 135,249 3,679,295 - 3,679,295 Remeasurements: Change in demographic assumptions 581,719 - 581,719 Experience adjustments 458,528 - 458,528 1,040,247 - 1,040,247 Pension fund contribution - ( 717,793 ) ( 717,793 ) Paid Pension ( 717,793 ) 717,793 - Balance at December 31 $ 4,001,749 $ - $ 4,001,749