SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ad. Income tax continued
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
70
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued ag. Premium income and claims expenses continued
Claims and benefits consist of settled claims, claims that are still in process of completion and estimates of claims incurred but not yet reported IBNR. Claims and benefits are recognised as
expenses when the liabilities to cover claims are incurred. Claim recoveries from reinsurance companies are recognised and recorded as deduction from claims expenses consistent in the same
period with the claim expenses recognition. Total claims in process, including claims incurred but not yet reported, are stated at estimated
amounts determined based on the actuarial technical insurance calculations. Changes in estimated claims liabilities as a result of further evaluation and the difference between estimated claims and
paid claims are recognised as addition to or deduction from expenses in the period the changes occurred.
ah. Fees and commissions income
Fees and commissions income and transaction cost that are directly attributable to lending and consumer financing activities, are recognised as a partdeduction of outstanding loan and
consumer financing receivables and will be recognised as interest income by amortising the carrying value of loan and consumer financing receivables using effective interest rate method.
The directly attributable unamortised fees and commissions balances relating to loans and consumer financing receivables and investment in lease financing which settled prior to maturity are
recognised upon settlement date, of such loans, consumer financing and investment in lease financing.
Other fees and commissions income which are not directly related to lending activities or a specific periods are recognised as revenue on the transaction date.
ai. Employee benefits Pension liability
Bank Mandiri established a defined contribution pension plan covering substantially all of its eligible employees from August 1, 1999 and also defined benefit pension plans, which were derived from
each of the Merged Banks’ pension plan. This program is funded through payment to pension fund’s management as defined in the regular actuarial calculation.
Bank Mandiri and Subsidiaries’ pension liability has been calculated by comparing the benefit that will be received by an employee at normal pension age from the Pension Plans with the benefit as
stipulated under the Labor Law No. 132003 after deducting accumulated employee contributions and the results of its investments. If the pension benefit from the Pension Plans is less than the
benefit as required by the Labor Law No. 132003, the Bank and Subsidiaries will have to pay such shortage.
The pension plan based on the labor law is a defined benefit plan because the labor law requires a certain formula to calculate the minimum pension benefit. A defined contribution plan is a pension
plan that defines an amount of pension contribution based on pension Fund Regulation and all contribution including investment return are recorded in its account’s member as pension benefit as
stated in Pension Fund Law No. 11 year 1992 dated April 20, 1992 regarding Pension Fund.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated
71