The Company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except for the plans of the Company’s operations in the Netherlands and Japan.
The Company’s employees in the Netherlands, approximately 143 employees, participate in a multi-employer union plan, 'Pensioenfonds van de Metalektro' ('PME') determined in accordance with the collective bargaining agreements effective for the industry in which ASMI operates. This collective bargaining agreement has no expiration date. This multi-employer union plan covers approximately 1,260 companies and 145,000 contributing members. ASMI’s contribution to the multi-employer union plan is less than 5% of the total contribution to the plan as per the annual report for the year ended December 31, 2013. The plan monitors its risks on a global basis, not by company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multi-employer union plan must be monitored against specific criteria, including the coverage ratio of the plan assets to its obligations. This coverage ratio must exceed 104.3% for the total plan. Every company participating in a Dutch multi-employer union plan contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same percentage contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multi-employer union plan. The pension rights of each employee are based upon the employee’s average salary during employment.
ASMI’s net periodic pension cost for this multi-employer union plan for any period is the amount of the required contribution for that period. A contingent liability may arise from, for example, possible actuarial losses relating to other participating entities because each entity that participates in a multi-employer union plan shares in the actuarial risks of every other participating entity or any responsibility under the terms of a plan to finance any shortfall in the plan if other entities cease to participate.
The coverage ratio of the multi-employer union plan decreased to 102.0% as of December 31, 2014 (December 31, 2013: 103.4%). Because of the low coverage ratio PME prepared and executed a so-called 'Recovery plan' which was approved by De Nederlandsche Bank, the Dutch central bank, which is the supervisor of all pension companies in the Netherlands. Due to the low coverage ratio and according the obligation of the 'Recovery plan' the pension premium percentage is 23.6% in 2014 (2013: 24.1%). The coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities and is based on actual market interest.
The Company accounts for the multi-employer plan as if it were a defined contribution plan as the manager of the plan, PME, stated that its internal administrative systems do not enable PME to provide the Company with the required Company-specific information in order to account for the plan as a defined benefit plan. The Company's net periodic pension cost for the multi-employer plan for a fiscal period is equal to the required contribution for that period.
A contingent liability may arise from, for example, possible actuarial losses relating to other participating companies because each company that participates in a multi-employer plan shares in the actuarial risks of other participating companies or any responsibility under the terms of a plan to finance any shortfall in the plan if other companies cease to participate. The plan thus exposes the participating companies to actuarial risks associated with current and former employees of other companies with the result that no consistent and reliable basis for allocating the pension obligation, plan assets and cost to individual companies participating in the plan exists.
Defined benefit plan
The Company’s employees in Japan participate in a defined benefit plan. The Company makes contributions to defined benefit plans in Japan that provide pension benefits for employees upon retirement. These are average-pay plans, based on the employees' years of service and compensation near retirement.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at December 31, 2014. The present value of the defined benefit obligation and the related current service cost and passed service cost were measured using the Projected Unit Credit Method. Significant actuarial assumptions for the determination of the defined obligation are discount rate, future general salary increases and future pension increases.
The net liability of the plan developed as follows:
|Defined benefit obligations||(7,604)||(8,079)|
|Fair value of plan assets||5,127||6,297|
|Net liability for defined benefit plans||(2,477)||(1,782)|
The changes in defined benefit obligations and fair value of plan assets are as follows:
|Defined benefit obligations|
|Balance January 1||8,357||7,604|
|Current service cost||529||515|
|Interest on obligation||113||69|
|Foreign currency translation effect||(1,927)||(43)|
|Balance December 31||7,604||8,079|
|Fair value of plan assets|
|Balance January 1||4,794||5,127|
|Foreign currency translation effect||(1,204)||7|
|Balance December 31||5,127||6,297|
The remeasurement results on the defined benefit obligations consist solely of experience assumptions of €98. The remeasurement gains on the plan assets relates to changes in financial assumptions.
The history of the experience adjustments is as follows:
|Present value of defined benefit obligation||8,808||9,485||8,357||7,604||8,079|
|Fair value of plan assets||3,189||4,090||4,794||5,127||6,297|
The defined benefit cost consists of the following:
|Current service cost||529||516|
|Net interest costs||39||17|
|Net defined benefit cost||456||464|
The actual return on plan assets was €112 for the year ended December 31, 2013 (2013: €382).
The assumptions in calculating the actuarial present value of benefit obligations and net periodic benefit cost are as follows:
|Discount rate for obligations||0.90%||0.90%|
|Expected rate of compensation increase||2.93%||2.93%|
The main risk on the pension plan relates to the discount rate. The defined benefit obligation is sensitive to a change in discount rates, a relative change of the discount rate with 25 basis points would have resulted in a change of the defined benefit obligation with 2.6%.
The allocation of plan assets is as follows:
The investment strategy is determined based on an asset-liability study in consultation with investment advisers and within the boundaries given by regulatory bodies for pension funds. Equity securities consist primarily of publicly traded Japanese companies and common collective funds. Publicly traded equities are valued at the closing prices reported in the active market in which the individual securities are traded (level 1). Common collective funds are valued at the published price (level 1) per share multiplied by the number of shares held as of the measurement date.
Fixed income (bonds and loans) consists of corporate bonds, government securities and common collective funds. Corporate and government securities are valued by third-party pricing sources (level 2). Common collective funds are valued at the net asset value per share (level 2) multiplied by the number of shares held as of the measurement date.
Real estate fund and other values are primarily reported by the fund manager and are based on valuation of the underlying investments (level 3) which include inputs such as cost, discounted cash flows, independent appraisals and market based comparable data.
The plan assets do not include any of the Company’s shares.
Retirement plan costs
ASMI contributed €1,162 to the defined benefit plan in 2014. The Company expects to pay benefits for years subsequent to December 31, 2014 as follows:
|Expected contribution defined benefit plan|
|Aggregate for the years 2020-2024||2,860|
Retirement plan costs consist of the following:
|Defined contribution plans||2,043||2,478|
|Defined benefit plans||527||464|
|Total retirement plan costs||3,844||4,162|
The Company does not provide for any significant post-retirement benefits other than pensions.