17. Pension Plans

The Company and certain subsidiaries have contributory and non-contributory pension plans covering substantially all of their employees. Those contributory funded pension plans include defined benefit pension plans and defined contribution pension plans. Under the plans, employees are entitled to lump-sum payments at the time of termination of their employment or pension payments. Defined benefit pension plans consist of a plan of which the amounts of such payments are determined on the basis of length of service and remuneration at the time of termination and a cash balance plan.

The Company and its subsidiaries’ funding policy is to contribute annually the amounts actuarially determined. Assets of the plans are invested primarily in interest-bearing securities and marketable equity securities.

The funded status of the defined benefit pension plans, a substantial portion of which consists of domestic pension plans, as of March 31, 2010 and 2011 is as follows:


	Millions of yen						Millions of U.S. dollars
	2010			2011			2011
Change in benefit obligation:
Benefit obligation at beginning of year	¥	57,094		¥	56,390		$	679
Service cost		3,255			3,104			37
Interest cost		1,265			1,355			16
Plan amendments		210			0			0
Actuarial loss (gain)		(3,229	)		1,147			14
Foreign currency exchange rate change		(144	)		(415	)		(5	)
Benefits paid		(1,830	)		(2,423	)		(29	)
Plan Settlements		(64	)		(231	)		(3	)
Other		(167	)		(338	)		(4	)

Benefit obligation at end of year		56,390			58,589			705

Change in plan assets:
Fair value of plan assets at beginning of year		74,111			85,967			1,033
Actual return on plan assets		9,382			(449	)		(5	)
Employer contribution		4,291			2,556			30
Benefits paid		(1,713	)		(2,362	)		(28	)
Foreign currency exchange rate change		(104	)		(277	)		(3	)
Plan settlements		0			(39	)		0

Fair value of plan assets at end of year		85,967			85,396			1,027

The funded status of the plans	¥	29,577		¥	26,807		$	322

Amount recognized in the consolidated balance sheets consists of:
Prepaid benefit cost included in prepaid expenses	¥	32,589		¥	29,125		$	350
Accrued benefit liability included in accrued expenses		(3,012	)		(2,318	)		(28	)

Net amount recognized	¥	29,577		¥	26,807		$	322

Amount recognized in accumulated other comprehensive income (loss), pre-tax, at March 31, 2010 and 2011 consisted of:


	Millions of yen						Millions of U.S. dollars
	2010			2011			2011
Net prior service credit	¥	10,095		¥	8,910		$	107
Net actuarial loss		(25,010	)		(27,257	)		(328	)
Net transition obligation		(381	)		(382	)		(4	)

Total recognized in accumulated other comprehensive income (loss), pre-tax	¥	(15,296	)	¥	(18,729	)	$	(225	)

The estimated portions of the net prior service credit, net actuarial loss and net transition obligation above that will be recognized as a component of net pension cost in 2012 are ¥437 million ($5 million), ¥1,223 million ($15 million) and ¥58 million ($1 million), respectively.

The accumulated benefit obligations for all defined benefit pension plans were ¥51,086 million and ¥ 52,701 million ($634 million), respectively, at March 31, 2010 and 2011.

The aggregate projected benefit obligations, aggregate accumulated benefit obligations and aggregate fair values of plan assets for the plans with the accumulated benefit obligations in excess of plan assets were ¥5,565 million, ¥5,535 million and ¥2,616 million, respectively, at March 31, 2010 and ¥4,631 million ($56 million), ¥4,384 million ($53 million) and ¥2,375 million ($29 million), respectively, at March 31, 2011.

Net pension cost of the plans for fiscal 2009, 2010 and 2011 consists of the following:


	Millions of yen									Millions of U.S. dollars
	2009			2010			2011			2011
Service cost	¥	3,049		¥	3,255		¥	3,104		$	37
Interest cost		1,327			1,265			1,355			16
Expected return on plan assets		(2,033	)		(1,747	)		(2,025	)		(24	)
Amortization of transition obligation		(3	)		(3	)		(4	)		0
Amortization of net actuarial loss		724			2,098			1,036			12
Amortization of prior service credit		(1,208	)		(1,209	)		(1,193	)		(14	)
Plan curtailments and settlements		0			3			0			0

Net periodic pension cost	¥	1,856		¥	3,662		¥	2,273		$	27

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for fiscal 2009, 2010 and 2011 are summarized as follows:


	Millions of yen									Millions of U.S. dollars
	2009			2010			2011			2011
Current year actuarial gain (loss)	¥	(19,970	)	¥	11,275		¥	(3,446	)	$	(41	)
Amortization of net actuarial loss		724			2,098			1,036			12
Prior service credit due to amendments		(63	)		(183	)		8			0
Amortization of prior service credit		(1,208	)		(1,209	)		(1,193	)		(14	)
Amortization of transition obligation		(3	)		(3	)		(4	)		0
Plan curtailments and settlements		0			3			0			0
Foreign currency exchange rate change		60			69			166			2

Total recognized in other comprehensive income (loss), pre-tax	¥	(20,460	)	¥	12,050		¥	(3,433	)	$	(41	)

The Company and certain subsidiaries use March 31 as a measurement date for all of our material plans.

Significant assumptions of domestic and overseas pension plans used to determine these amounts are as follows:


Domestic	2009			2010			2011
Weighted-average assumptions used to determine benefit obligations at March 31:
Discount rate		1.9	%		2.1	%		2.1	%
Rate of increase in compensation levels		5.8	%		5.9	%		6.1	%
Weighted-average assumptions used to determine net periodic pension cost for years ended March 31:
Discount rate		2.2	%		1.9	%		2.1	%
Rate of increase in compensation levels		6.2	%		5.8	%		5.9	%
Expected long-term rate of return on plan assets		2.2	%		2.2	%		2.2	%

Overseas	2009			2010			2011
Weighted-average assumptions used to determine benefit obligations at March 31:
Discount rate.		7.1	%		6.0	%		5.5	%
Rate of increase in compensation levels		0.6	%		0.8	%		0.8	%
Weighted-average assumptions used to determine net periodic pension cost for years ended March 31:
Discount rate		6.5	%		7.1	%		6.0	%
Rate of increase in compensation levels		0.7	%		0.6	%		0.8	%
Expected long-term rate of return on plan assets		8.2	%		8.1	%		8.1	%

The Company and certain subsidiaries determine the expected long-term rate of return on plan assets annually based on the composition of the pension asset portfolios and the expected long-term rate of return on these portfolios. The expected long-term rate of return is designed to approximate the long-term rate of return actually earned on the plans’ assets over time to ensure that funds are available to meet the pension obligations that result from the services provided by employees. The Company and certain subsidiaries use a number of factors to determine the expected rate of return, including actual historical returns on the asset classes of the plans’ portfolios and independent projections of returns of the various asset classes.

The Company and certain subsidiaries’ investment policies are designed to ensure adequate plan assets are available to provide future payments of pension benefits to eligible participants. The Company and certain subsidiaries formulate a policy portfolio appropriate to produce the expected long-term rate of return on plan assets, and ensure that plan assets are allocated under this policy portfolio. The Company and certain subsidiaries periodically have an external consulting firm monitor the results of actual return and revise the policy portfolio if necessary.

Our policy for the portfolio of plans consists of four major components: approximately 40% is invested in equity securities, approximately 40% is invested in debt securities, approximately 10% is invested in alternative investments and approximately 10% is invested in other investment vehicles, primarily consisting of investments in life insurance company general accounts.

The three levels of input used to measure fair value are described in Note 2.

The fair value of pension plan assets at March 31, 2010 and 2011, by asset category, are as follows:

March 31, 2010


	Millions of yen
	Total		Level 1		Level 2		Level 3
Equity securities:
Japan
Japanese companies (1)	¥	903	¥	903	¥	0	¥	0
Pooled funds (2)		19,335		0		19,335		0
Other than Japan
Pooled funds (3)		11,514		0		11,514		0

Debt securities:
Japan
Pooled funds (4)		25,847		0		25,847		0
Other than Japan
Asset backed securities		1,060		0		1,060		0
Pooled funds (5)		7,416		0		7,416		0

Alternative investments:
Pooled funds (6)		11,122		0		6,394		4,728

Other assets:
Life insurance company general accounts (7)		5,291		0		5,291		0
Others (8)		3,479		0		3,479		0

	¥	85,967	¥	903	¥	80,336	¥	4,728

(1)	Equity securities of Japanese companies in which the Company and certain subsidiaries invest as pension plan assets include units of ORIX JREIT Inc. in the amounts of ¥36 million at March 31, 2010.

(2)	These funds invest in listing shares only.

(3)	These funds invest in listing shares only.

(4)	These funds invest approximately 70% in Japanese government bonds, approximately 10% in Japanese municipal bonds, and approximately 20% in Japanese corporate bonds.

(5)	These funds invest mainly in foreign government bonds.

(6)	These funds invest in hedge funds as alternative investments.

(7)	Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.

(8)	Others include mainly short-term instruments.

March 31, 2011


	Millions of yen
	Total		Level 1		Level 2		Level 3
Equity securities:
Japan
Japanese companies (1)	¥	1,016	¥	1,016	¥	0	¥	0
Pooled funds (2)		18,690		0		18,690		0
Other than Japan
Pooled funds (3)		11,864		0		11,864		0

Debt securities:
Japan
Pooled funds (4)		25,468		0		25,468		0
Other than Japan
Asset backed securities		1,076		0		1,076		0
Pooled funds (5)		7,655		0		7,655		0

Alternative investments:
Pooled funds (6)		11,633		0		6,685		4,948

Other assets:
Life insurance company general accounts (7)		5,386		0		5,386		0
Others (8)		2,608		0		2,608		0

	¥	85,396	¥	1,016	¥	79,432	¥	4,948

March 31, 2011


	Millions of U.S. dollars
	Total		Level 1		Level 2		Level 3
Equity securities:
Japan
Japanese companies (1)	$	12	$	12	$	0	$	0
Pooled funds (2)		225		0		225		0
Other than Japan
Pooled funds (3)		143		0		143		0

Debt securities:
Japan
Pooled funds (4)		306		0		306		0
Other than Japan
Asset backed securities		13		0		13		0
Pooled funds (5)		92		0		92		0

Alternative investments:
Pooled funds (6)		140		0		80		60

Other assets:
Life insurance company general accounts (7)		65		0		65		0
Others (8)		31		0		31		0

	$	1,027	$	12	$	955	$	60

(1)	Equity securities of Japanese companies in which the Company and certain subsidiaries invest as pension plan assets include units of ORIX JREIT Inc. in the amounts of ¥34 million ($0 million) at March 31, 2011.

(2)	These funds invest in listing shares only.

(3)	These funds invest in listing shares only.

(4)	These funds invest approximately 70% in Japanese government bonds, approximately 10% in Japanese municipal bonds, and approximately 20% in Japanese corporate bonds.

(5)	These funds invest mainly in foreign government bonds.

(6)	These funds invest in hedge funds as alternative investments.

(7)	Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on several contracts.

(8)	Others include mainly short-term instruments.

Each level into which assets are categorized is based on inputs used to measure the fair value of the assets.

Level 1 assets are comprised principally of equity securities, which are valued using unadjusted quoted market prices in active markets with sufficient volume and frequency of transactions. Level 2 assets are comprised principally of pooled funds that invest in equity, debt securities and hedge funds and investments in life insurance company general accounts. Pooled funds are valued at the net asset value per share at the measurement date. They are not redeemable at the net asset value per share at the measurement date but they are redeemable at the net asset value per share in the near term after the measurement date. Investments in life insurance company general accounts are valued at conversion value. Level 3 assets are comprised of pooled funds that invest in hedge funds that are measured at their net asset values. However, the hedge funds are not redeemable at the net asset values at the measurement date or within a near term after the measurement date.

The following table represents the reconciliation for the Level 3 plan assets during fiscal 2010 and 2011:


	Alternative investments
	Pooled funds
	2010		2011		2011
	Millions of yen		Millions of yen		Millions of U.S. dollars
Balance at beginning of year	¥	3,514	¥	4,728	$	57
Realized and unrealized return on plan assets		453		220		3
Purchases, sales and redemptions, net		761		0		0

Balance at end of year	¥	4,728	¥	4,948	$	60

The Company and certain subsidiaries expect to contribute ¥2,802 million ($34 million) to pension plans during the year ending March 31, 2012.

At March 31, 2011, the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five years thereafter are as follows:


Years ending March 31,	Millions of yen		Millions of U.S. dollars
2012	¥	1,878	$	23
2013		1,462		18
2014		1,506		18
2015		1,607		19
2016		1,711		22
2017-2021		10,930		130

Total	¥	19,094	$	230

The cost recognized for the defined contribution pension plans of the Company and certain of its subsidiaries for the years ended March 31, 2009, 2010 and 2011 were ¥1,530 million, ¥1,305 million and ¥1,578 million ($19 million), respectively.