SALARIES AND EMPLOYEE BENEFITS

PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003, April 30, 2003 and December 31, 2002 Expressed in millions of Rupiah, unless otherwise stated 131

42. EMPLOYEE ALLOWANCES AND BENEFITS

Under the Bank’s policy, in addition to salaries, the employees are entitled to allowances and benefits, such as: holiday allowance THR, pre-retirement MBT allowance, medical reimbursements, death allowance, leave allowance, functional allowance for certain levels, pension plan for permanent employees, incentives based on employee’s and the Bank’s performance, and post-employment benefits based on prevailing Labor Law. Pension Plan Bank Mandiri has five pension plans in the form of Employer Pension Plans as follows: a. One defined contribution pension plan, Dana Pensiun Pemberi Kerja-Program Pensiun Iuran Pasti DPPK-PPIP or the Bank Mandiri Pension Plan Dana Pensiun Bank Mandiri DPBM established on August 1, 1999. The DPBM’s regulation was legalized based on the decision letter of the Minister of Finance of the Republic of Indonesia No. KEP300KM.0171999 dated July 14, 1999 and was included in the Addendum to the State Gazette of the Republic of Indonesia No. 62 dated August 3, 1999 and Bank Mandiri’s Directors’ Resolution No. 004KEP.DIR1999 dated April 26, 1999. Bank Mandiri and the employees contribute 10 and 5 of the Base Pension Plan Employee Income, respectively. The President Director and the members of the Supervisory Board of DPBM are active employees of Bank Mandiri; therefore, in substance Bank Mandiri has control over DPBM. As a consequence, transactions between DPBM and Bank Mandiri are considered related party transactions. DPBM invests some of its financial resources in Bank Mandiri time deposits, which balances as of December 31, 2003, April 30, 2003 and December 31, 2002 are Rp2,900, Rp101,100 and Rp150,000, respectively. The interest rates on these time deposits are similar to those of arms- length transactions. The Bank paid pension contributions totaling Rp79,329, Rp26,586 and Rp63,294 for the eight- month period ended December 31, 2003, the four-month period ended April 30, 2003 and the year ended December 31, 2002, respectively. b. Four employer defined benefit pension plans, Dana Pensiun Pemberi Kerja-Program Pensiun Manfaat Pasti DPPK-PPMP are derived from the respective pension plans of the Merged Banks, namely Dana Pensiun Bank Mandiri Satu or DPBM I BBD, DPBM II BDN, DPBM III Bank Exim and DPBM IV Bapindo. The regulations of the respective pension plans were legalized by the Minister of Finance of the Republic of Indonesia in decision letters No. KEP-394KM.0171999, No. KEP-395KM.0171999, No. KEP-396KM.0171999 and No. KEP-397KM.0171999 dated November 15, 1999. Based on the approval of shareholders No. S-923M-MBU2003 dated March 6, 2003, Bank Mandiri has adjusted pension benefits for each Pension Fund. Such approval has been incorporated in each of the Pension Fund’s Regulations Peraturan Dana Pensiun PDP which have been approved by the Minister of Finance based on its decision letters No. KEP115KM.62003 of PDP DPBM I, No. KEP116KM.62003 of PDP DPBM II, No. KEP117KM.62003 of PDP DPBM III, and No. KEP118KM.62003 of PDP DPBM IV, all dated March 31, 2003. The actuarial calculations as of December 31, 2003 reflect the adjusted pension benefits. The members of the defined benefit pension plans originated from legacy banks who have rendered three or more service years at the time of merger and are comprised of active employees of the Bank, deferred members those whose employement have been terminated but did not transfer the beneficial rights to other pension plans, and pensioners. PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003, April 30, 2003 and December 31, 2002 Expressed in millions of Rupiah, unless otherwise stated 132

42. EMPLOYEE ALLOWANCES AND BENEFITS continued

Pension Plan continued As of December 31, 2003, the calculation of fair value of plan assets and projected benefit obligation is based on the actuarial report of PT Dayamandiri Dharmakonsolindo dated March 8, 2004. In its calculation, the actuary used the following assumptions: DPBM I DPBM II DPBM III DPBM IV Actuarial date December 31, 2003 December 31, 2003 December 31, 2003 December 31, 2003 Frequency of actuarial valuation Annually Annually Annually Annually Interest rate 9 per annum 9 per annum 9 per annum 9 per annum Expected rate of return on plan assets 10 per annum 10 per annum 10 per annum 10 per annum Working period used As of July 31, 1999 As of July 31, 1999 As of July 31, 1999 As of July 31, 1999 Pensionable salary used As of December 31, 2003, adjusted amount over legacy banks’ pensionable salary As of December 31, 2003, adjusted amount over legacy banks’ pensionable salary As of December 31, 2003, adjusted amount over legacy banks’ pensionable salary As of December 31, 2003, adjusted amount over legacy banks’ pensionable salary Expected rates of pensionable salary increase Nil Nil Nil Nil Mortality rate table CSO-1958 CSO-1958 CSO-1958 CSO-1958 Turnover rate 5 up to employees’ age 25 and reducing linearly by 0.25 for each year up to 0 at age 45 and thereafter 5 up to employees’ age 25 and reducing linearly by 0.25 for each year up to 0 at age 45 and thereafter 5 up to employees’ age 25 and reducing linearly by 0.25 for each year up to 0 at age 45 and thereafter 5 up to employees’ age 25 and reducing linearly by 0.25 for each year up to 0 at age 45 and thereafter Ill-health retirement rate NA NA NA NA Actuarial method Projected Unit Credit Projected Unit Credit Projected Unit Credit Projected Unit Credit Normal pension age 56 years for all grade 56 years for all grade 56 years for all grade 56 years for all grade Maximum defined benefit amount 80 of latest gross pensionable salary PhDP 80 of latest gross pensionable salary PhDP 62.50 of lates gross pensionable salary PhDP 75 of latest gross pensionable salary PhDP Expected rate of pension benefit increase Nil Nil Nil 4 every 2 years Tax rates - average 15 of pension benefit 15 of pension benefit 15 of pension benefit 15 of pension benefit