Note 15. Benefit Plans

Jefferies Employees’ Pension Plan

We have a defined benefit pension plan, Jefferies Employees’ Pension Plan, which is subject to the provisions of the Employee Retirement Income Security Act of 1974 and covers certain of our employees. Benefits are based on years of service and the employee’s career average pay. Our funding policy is to contribute to the plan at least the minimum amount required for funding purposes under the Internal Revenue Code. If the difference between the actual return on plan assets and the expected return on plan assets exceeds 10% of the greater of the market-related value of plan assets or projected plan liabilities, the excess net gain or loss is amortized as a component of net periodic pension cost. Effective December 31, 2005, benefits under the pension plan have been frozen. Accordingly, there are no further benefit accruals for future service after December 31, 2005.

The components of our net periodic pension cost for the three months ended August 31, 2011 and 2010 and the nine and eight months ended August 31, 2011 and 2010, respectively (in thousands), are as follows:


							Nine Months			Eight Months
	Three Months Ended						Ended			Ended
	August 31,			August 31,			August 31,			August 31,
	2011			2010			2011			2010
Net pension cost included the following components:
Service cost (1)	$	44		$	50		$	131		$	134
Interest cost on projected benefit obligation		591			603			1,774			1,630
Expected return on plan assets		(644	)		(644	)		(1,933	)		(1,738	)
Net loss amortization		223			171			671			464

Net periodic pension cost	$	214		$	180		$	643		$	490


(1)		Service cost relates to administrative expenses incurred during the periods.

We contributed $2.0 million and $2.0 million to our pension plan during the three and nine months ended August 31, 2011, respectively. We do not anticipate making further contributions to the plan during the remainder of the fiscal year.

German Pension Plan

In connection with the acquisition of the Global Commodities Group from Prudential on July 1, 2011, we acquired a German defined benefits pension plan for the benefit of eligible employees in that territory and a liability of $21.8 million was recognized on July 1, 2011 as a pension obligation within Accrued expenses and other liabilities as part of purchase accounting. The German pension plan is reinsured by insurance contracts held in the name of Jefferies Bache Limited with multi-national insurers. The investment in these insurance contracts are recognized in Financial instruments owned — Investments at fair value in the Consolidated Statements of Financial Condition at August 31, 2011. All costs relating to the plan (including insurance premiums and other costs as computed by the insurers) will be met in full by us. In connection with the acquisition, it was agreed with Prudential that any insurance premiums and funding obligations related to pre-acquisition date service will be reimbursed to us by Prudential.

Our net periodic pension cost for the two months ended August 31, 2011 was $190,000, comprised of service cost and interest cost on the projected benefit obligation of $6,000 and $184,000, respectively. We did not contribute to the plan during the two months ended August 31, 2011 and do not anticipate making a contribution during the remainder of the fiscal year.