Accrued Severance Benefits

9 Months Ended

Sep. 30, 2020

12. Accrued Severance Benefits

The majority of accrued severance benefits are for employees in the Company’s Korean subsidiary. 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 September 30, 2020, 98% of all employees of the Company were eligible for severance benefit

Changes in accrued severance benefits are as follows (in thousands):


	Three Months Ended			Nine Months Ended			Three Months Ended			Nine Months Ended
	September 30, 2020						September 30, 2019
Beginning balance	$	51,785		$	53,344		$	53,202		$	55,691
Provisions		2,167			5,941			1,851			4,494
Severance payments		(1,295	)		(4,749	)		(1,017	)		(4,312	)
Translation adjustments		1,204			(675	)		(2,180	)		(4,017	)

		53,861			53,861			51,856			51,856
Less: Cumulative contributions to severance insurance deposit accounts		(1,616	)		(1,616	)		(1,357	)		(1,357	)
The National Pension Fund		(73	)		(73	)		(80	)		(80	)
Group severance insurance plan		(219	)		(219	)		(227	)		(227	)

Accrued severance benefits, net	$	51,953		$	51,953		$	50,192		$	50,192

The severance benefits funded through the Company’s National Pension Fund and group severance insurance plan will be used exclusively for payment of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance.

In July 2018, the Company began contributing to certain severance insurance deposit accounts a certain percentage of severance benefits that are accrued for eligible employees for their services from January 1, 2018. These accounts consist of time deposits and other guaranteed principal and interest, and are maintained at insurance companies, banks or security companies for the benefit of employees. The Company deducts the contributions made to these severance insurance deposit accounts from its accrued severance benefits.

The Company is liable to pay the following future benefits to its

non-executive

employees upon their normal retirement age (in thousands):


	Severance benefit
Remainder of 2020	$	387
2021		386
2022		743
2023		605
2024		1,074
2025		2,157
2026 – 2030		19,644

The above amounts were determined based on the

non-executive

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

non-executive

employees that will cease working with the Company before their normal retirement ages.

Korea’s mandatory retirement age is 60 under the Employment Promotion for the Aged Act.