Page 204 - TSMC 2018 Annual Report

Through the defined benefit plans under the R.O.C. Labor Standards Law, the Company is exposed to the following risks:
1) Investment risk: The pension funds are invested in equity and debt securities, bank deposits, etc.
The investment is conducted at the discretion of the government’s designated authorities or under
the mandated management. However, under the R.O.C. Labor Standards Law, the rate of return on assets shall not be less than the average interest rate on a two-year time deposit published by the local banks and the government is responsible for any shortfall in the event that the rate of return is less than the required rate of return.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.
Assuming a hypothetical decrease in interest rate at the end of the reporting period contributed to a decrease of 0.5% in the discount rate and all other assumptions were held constant, the present value of the defined benefit obligation would increase by NT$921,750 thousand and NT$890,116 thousand as of December 31, 2018 and 2017, respectively.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
Assuming the expected salary rate increases by 0.5% at the end of the reporting period and all other assumptions were held constant, the present value of the defined benefit obligation would increase by NT$901,629 thousand and NT$873,801 thousand as of December 31, 2018 and 2017, respectively.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability.
The Company expects to make contributions of NT$233,534 thousand to the defined benefit plans in
the next year starting from December 31, 2018. obligation is 13 years.
24. GUARANTEEDEPOSITS
Capacity guarantee
Receivables guarantee
Others 245,731
The weighted average duration of the defined benefit
December 31, 2018
December 31, 2017
$ 13,346,550 2,427,548 306,521
$ 16,080,619
$ 8,493,829 7,586,790
$ 16,080,619
$ 9,289,628 653,686
Current portion (classified under accrued expenses and other current liabilities)
Noncurrent portion
$ 10,189,045
$ 6,835,667 3,353,378
$ 10,189,045
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