Accrued Severance Benefits

12 Months Ended

Dec. 31, 2014

11. Accrued Severance Benefits

The majority of accrued severance benefits is for employees in the Company’s Korean subsidiary, MagnaChip Semiconductor Ltd. (Korea). Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees and executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of December 31, 2014, 98% of all employees of the Company were eligible for severance benefits.

Changes in accrued severance benefits are as follows:


	Year Ended December 31,
	2014			2013
Beginning balance	$	135,356		$	116,036
Provisions		17,703			23,169
Severance payments		(6,650	)		(6,130	)
Translation adjustments		(6,003	)		2,281

		140,405			135,356
Less: cumulative contributions to the National Pension Fund		(346	)		(383	)
Group severance insurance plan		(770	)		(801	)

	$	139,289		$	134,172

The severance benefits are funded approximately 0.8% and 0.9% as of December 31, 2014 and 2013, respectively, through the Company’s National Pension Fund and group severance insurance plan which will be used exclusively for payment of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance.

The Company is liable to pay the following future benefits to its employees upon their normal retirement age:


	Severance Benefit
2015	$	294
2016		1,154
2017		1,714
2018		2,937
2019		2,263
2020 – 2024		23,798

The above amounts were determined based on the employees’ current salary rates and the number of service years that will be accumulated upon their retirement dates. These amounts do not include amounts that might be paid to employees that will cease working with the Company before their normal retirement ages.