GENERAL AND ADMINISTRATIVE EXPENSES

PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated 131

43. PENSION AND SEVERANCE

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 the 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 regulations were 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 the DPBM are active employees of Bank Mandiri; therefore, in substance Bank Mandiri has control over the DPBM. As a consequence, transactions between the DPBM and Bank Mandiri are considered related party transactions. The DPBM invests a part of its financial resources in Bank Mandiri time deposits, which balances as of December 31, 2004 and 2003, and April 30, 2003 were Rp43,000, Rp2,900 and Rp101,100, respectively. The interest rates on these time deposits are at arms-length. The Bank paid pension contributions totaling Rp87,974, Rp79,329 and Rp26,586, respectively, for the year ended December 31, 2004, the eight-month period ended December 31, 2003, and the four-month period ended April 30, 2003, 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 of the Republic of Indonesia based on 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 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 employment has been terminated but for whom the beneficial rights were not transferred to other pension plans, and pensioners. PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004 and 2003, and April 30, 2003 Expressed in millions of Rupiah, unless otherwise stated 132

43. PENSION AND SEVERANCE continued

Pension Plan continued As of December 31, 2004, the calculation of the fair value of plan assets and projected benefit obligation is based on the actuarial report of PT Dayamandiri Dharmakonsilindo dated February 11, 2005. In its calculation, the actuary used the following assumptions: DPBM I DPBM II DPBM III DPBM IV 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 January 1, 2003, adjusted amount over legacy banks’ pensionable salary As of January 1, 2003, adjusted amount over legacy banks’ pensionable salary As of January 1, 2003, adjusted amount over legacy banks’ pensionable salary As of January 1, 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 Disability rate 10 of mortality rate 10 of mortality rate 10 of mortality rate 10 of mortality rate Actuarial method Projected Unit Credit Projected Unit Credit Projected Unit Credit Projected Unit Credit Normal pension age 56 years for all grades 56 years for all grades 56 years for all grades 56 years for all grades Maximum defined benefit amount 80 of latest gross pensionable salary PhDP 80 of latest gross pensionable salary PhDP 62.5 of latest 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