Notes to Consolidated Financial Statements10

HOKURIKU ELECTRIC POWER COMPANY AND CONSOLIDATED SUBSIDIARIES
March 31, 2017

12. Employees' Retirement Benefits

 The Company and its consolidated subsidiaries have the defined benefit plans, including lump-sum retirement benefit plan, defined benefit corporate pension plan, welfare pension fund plan and company sponsored pension plan´╝îand they also provides employees with the options of either the defined contribution pension plan or the prepayment plan other than the defined benefit plan. The Company also pays employees lump-sum retirement benefit extra accordingly.
 Some subsidiaries adopt a short-cut method in computing projected benefit obligation and retirement benefit expense.

(1) Defined benefit plan

 The changes in the retirement benefit obligation during the year ended March 31, 2017 and 2016 are as follows:

Millions of yen  /  Millions of yen / Thousands of U.S. dollars

201720162017
Retirement benefit obligation at April 1¥105,368¥96,524$939,111
Service cost4,5464,28840,525
Interest cost1,0091,3729,000
Actuarial loss5487,5874,891
Retirement benefit paid(4,937)(4,404)(44,003)
Retirement benefit obligation at March 31¥106,536¥105,368$949,524

 The changes in plan assets during the year ended March 31, 2017 and 2016 are as follows:

Millions of yen  /  Millions of yen / Thousands of U.S. dollars

201720162017
Plan assets at April 1¥90,614¥89,643$807,619
Expected return on plan assets1,8121,79216,152
Actuarial loss247(1,157)2,204
Contributions by the Company2,0032,04117,856
Retirement benefits paid(2,080)(1,705)(18,540)
Plan assets at March 31¥92,597¥90,614$825,292

 The following table sets forth the funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2017 and 2016 for the Company's and the consolidated subsidiaries' defined benefit plans:

Millions of yen  /  Millions of yen / Thousands of U.S. dollars

201720162017
Funded retirement benefit obligation¥75,011¥74,057$668,550
Plan assets at fair value(92,597)(90,614)(825,292)
¥(17,586)¥(16,557)$(156,742)
Unfunded retirement benefit obligation¥31,525¥31,310$280,974
Net liability for retirement benefits in the balance sheet¥13,938¥14,753$124,232
Liability for retirement benefits¥31,525¥31,310$280,974
Asset for retirement benefits¥(17,586)¥(16,557)$(156,742)
Net liability for retirement benefits in the balance sheet¥13,938¥14,753$124,232

 The components of retirement benefit expense for the year ended March 31, 2017 and 2016 are as follows:

Millions of yen  /  Millions of yen / Thousands of U.S. dollars

201720162017
Service cost¥4,546¥4,288$40,525
Interest cost1,0091,3729,000
Expected return on plan assets(1,812)(1,792)(16,152)
Amortization of actuarial loss2,245(5,264)20,012
Retirement benefit expense¥5,989¥(1,397)$53,386

 In addition, additional retirement benefit expense of ¥1,707 million ($15,218 thousand) and ¥1,888 million was accounted for as an operating expense for the year ended March 31,2017 and 2016.


 Prior service cost and Actuarial loss included in accumulated other comprehensive income (before tax effect) as of March 31, 2017 and 2016 are as follows:

Millions of yen  /  Millions of yen  /  Thousands of U.S. dollars

201720162017
Actuarial gain or loss1,943(14,009)17,325
Total¥1,943¥(14,009)$17,325

 Unrecognized prior service cost and unrecognized actuarial loss included in accumulated other comprehensive income (before tax effect) as of March 31, 2017 and 2016 are as follows:

Millions of yen  /  Millions of yen / Thousands of U.S. dollars

201720162017
Unrecognized actuarial gain or loss¥1,438¥3,382$12,820

 Fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2017 and 2016 are as follows:

20172016
Stock30%36%
Bonds24%24%
General account of life insurance39%39%
Others7%1%
Total100%100%

 The expected return on assets has been estimated based on the anticipated allocation to each asset class and the expected long-term returns on assets held in each category.


The assumptions used in accounting for the above plans were as follows:

20172016
Discount ratesMainly 1.0%Mainly 1.5%
Expected rates of return on plan assets2.0%2.0%

(2) Defined contribution pension plan and prepaid retirement benefit plan

 Contributions related to defined contribution pension plan were accounted ¥705 million ($6,285 thousand) and ¥709 million , the payments related to prepaid retirement benefit plan were accounted ¥52 million($470 thousand) and ¥53 miliion for the year ended March 31, 2017 and 2016.

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