We maintain three defined benefit pension plans: one for United Kingdom employees, one for German employees, and one for Philippine employees. These plans cover most of the employees in the United Kingdom, Germany and the Philippines. Benefits are based on years of service and the employees' compensation. We deposit funds for these plans, consistent with the requirements of local law, with investment management companies, insurance companies, banks or trustees and/or accrue for the unfunded portion of the obligations. The measurement date for the projected benefit obligations and the plan assets is March 31. The United Kingdom and German plans have been curtailed. As such, the plans are closed to new entrants and no credit is provided for additional periods of service.

The net periodic pension expense includes the following components (in thousands):

	Net Amount Recognized (in thousands):
			Year Ended March 31,
			2014		2013
Change in projected benefit obligation
	Projected benefit obligation at the beginning of the year		$	41,459	$	37,872
		Service cost		108		96
		Interest cost		1,886		1,890
		Actuarial (gain) loss		(636)		4,984
		Benefits paid		(1,498)		(1,675)
		Foreign currency adjustment		3,239		(1,708)
	Projected benefit obligation at year end		$	44,558	$	41,459

Change in plan assets
	Fair value of plan assets at the beginning of the year		$	25,129	$	22,871
		Actual return on plan assets		1,711		3,733
		Employer contribution		1,022		902
		Benefits paid from assets		(1,030)		(1,305)
		Foreign currency adjustment		2,181		(1,072)
	Plan assets at fair value at year end		$	29,013	$	25,129
	Unfunded status of the plan at year end		$	(15,545)	$	(16,330)

Pension liability recognized on the balance sheet due after one year			$	15,545	$	16,330

Plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets:
		Projected benefit obligation at year end	$	44,558	$	41,459
		Accumulated benefit obligation at year end	$	43,910	$	40,696
		Plan assets at fair value at year end	$	29,013	$	25,129

Amounts recognized in accumulated other comprehensive income (loss):
		Unrecognized actuarial loss, before tax	$	(7,743)	$	(8,076)
Amount recognized as component of stockholders’ equity – pretax			$	(7,743)	$	(8,076)
Accumulated benefit obligation at year end			$	43,910	$	40,696

We report and measure the plan assets of our defined benefit pension plans at fair value. The table below sets forth the fair value of our plan assets as of March 31, 2014 and 2013, using the same three-level hierarchy of fair-value inputs described in Note 4, “Fair Value” (in thousands):


	March 31, 2014								March 31, 2013
Description	Level 1		Level 2		Level 3			Total	Level 1		Level 2		Level 3			Total
Cash and cash funds	$	1,523	$	-	$	-	$	1,523	$	669	$	-	$	-	$	669
Currency contracts		-		(4)		-		(4)		-		(15)		-		(15)
Equity		20,946		439		2		21,387		18,411		3		6		18,420
Fixed interest		749		5,323		1		6,073		1,479		4,525		2		6,006
Mortgage backed securities		-		15		-		15		-		11		-		11
Swaps and other		1		18		-		19		2		37		(1)		38
Total	$	23,219	$	5,791	$	3	$	29,013	$	20,561	$	4,561	$	7	$	25,129

The expected long term rate of return on assets is a weighted average of the returns expected for the underlying broad asset classes. The expected returns for each asset class are estimated in light of the market conditions on the accounting date and the past performance of the asset classes generally.

The amount of accumulated other comprehensive income expected to be recognized in net periodic pension cost in fiscal 2015 includes amortization of actuarial loss of $68,000. Approximately 80% of the accrued pension liability relates to the German plan and 20% to the United Kingdom plan. The accrued pension liability related to the Philippine plan is immaterial.

The investment policies and strategies for the United Kingdom plan assets are determined by the respective plan's trustees in consultation with independent investment consultants and the employer. Our practice is to fund these plans in amounts at least sufficient to meet the minimum requirements of local laws and regulations. The trustees are aware that the nature of the liabilities of the plans will evolve as the age profile and life expectancy of the membership changes. These changing liability profiles lead to consultations about the appropriate balance of investment assets to be used by the plans (equity, debt, other), as well as timescales, within which required adjustments should be implemented. The plan assets in the United Kingdom are held in pooled investment funds operated by Fidelity Investments. The plan assets do not include our securities. The investment managers have discretion to vary the balance of investments of the scheme according to prevailing investment conditions and the trustees regularly monitor all investment decisions affecting the scheme and the overall investment performance. At March 31, 2014, approximately 80% of the assets of the United Kingdom fund were invested in equity securities while 20% were in debt securities. The investments in debt securities are made in government instruments and investment grade corporate bonds. The target allocation of the United Kingdom plan assets that we control is 75% equity securities and 25% fixed income instruments. This objective has not been achieved due to the relative investment return of the two asset classes.

The German plan was held by a separate legal entity. As of March 31, 2014, the German defined benefit plan was completely unfunded.

For our Philippine plan, the local law requires us to appoint a trustee for the fund. We have appointed Bank of the Philippine Islands, or BPI, as the trustee of the plan. The plan assets are fully invested with BPI. The main role of the trustee is to manage the fund according to the mandate given by the retirement committee of our Philippine entity and to pay the covered/eligible employees in accordance with the plan. BPI Asset Management and Trust Group, an independent unit of BPI, provides investment management services to the trustee. At March 31, 2014, approximately 66% of the assets of the fund were invested in fixed income securities, 27% in equity securities and 7% in cash. The target allocation for the Philippine fund was 75% to fixed income securities, 20% to equities and 5% to cash and cash equivalents.

We expect to make contributions to the plans of approximately $1.1 million in the fiscal year ending March 31, 2015. This contribution is primary contractual.

We expect to pay benefits in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter of approximately the following (in thousands):