Page 64 - CPC 2018 Annual Report

62 CPC Corporation, Taiwan 2018
5. EMPLOYEE BENEFITS
1. Defined contribution plans
The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act.
The pension costs incurred from the contributions to the to the Bureau of the Labor Insurance amounted to 668,426 thousand and 695,264 thousand for the years ended December 31, 2017 and 2016, respectively.
2. Defined benefit plans
The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Benefits under the plans are based on employee’s length of service and average monthly salaries of the last three months before retirement (for the length of service before the LSL was enacted) or six months before retirement (for the length of service after the LSL was enacted).
Personnel employed by the Company are referred to as either appointees or employees. The appointees’ retirement fund (ARF), established under the guidelines of the Ministry of Economic Affairs, requires monthly contributions of amounts equal to 15% of monthly salaries and is administered by a pension plan committee. The ARF is deposited in the committee’s name in a bank.
Based on an actuarial report, since the contribution surplus in plan assets exceeded the defined benefit obligation, the Company need not continue to contribute to the plan assets starting from July 2012. The employees’ retirement fund (ERF) entails monthly contributions by the Company to a fund at amounts equal to a fixed percentage of 15% of salaries and wages. The ERF is administered by a monitoring committee and is deposited in the committee’s name in the Bank of Taiwan. Based on an actuarial report, the Company should contribute to the ERF amounts equal to a fixed percentage of 2% of taxable payroll starting from July 2013. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.
The Company awarded specific retired employees consolation benefits in accordance with corporate policies.
The Company adopted an insurance system called the Government Employee and School Staff Insurance (“GESSI”), which is a state-managed insurance plan. Under GESSI, an entity makes monthly contributions based on the employee’s monthly insurance salary.
Reconciliation of defined benefit obligation at present value and plan asset at fair value are as follows:
December 31, 2017
December 31, 2016
Present value of the defined benefit obligations $41,497,992
4,537,706
Net defined benefit liabilities $4,537,706
43,114,597
4,041,232
4,041,232
Fair value of plan assets
(36,960,286)
(39,073,365)
The effect of the asset ceiling
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