Severance Indemnities and Pension Plans

12 Months Ended

Mar. 31, 2024

Retirement Benefits [Abstract]

Severance Indemnities and Pension Plans

SEVERANCE INDEMNITIES AND PENSION PLANS

Defined Benefit Pension Plans

The MUFG Group has funded non-contributory defined benefit pension plans, which cover substantially all of its employees and mainly provide for lifetime annuity payments commencing at age 65 (“pension benefits”) based on eligible compensation at the time of severance, rank, years of service and other factors.

MUFG Bank and certain domestic subsidiaries, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Securities Holdings, Mitsubishi UFJ NICOS and some subsidiaries of MUFG have non-contributory Corporate Defined Benefit Pension plans which provide benefits to all their domestic employees.

The MUFG Group also offers qualified and nonqualified defined benefit pension plans in foreign offices and subsidiaries for their employees. The qualified plans are non-contributory defined pension plans, which provide benefits upon retirement based on years of service and average compensation and cover substantially all of the employees of such foreign offices and subsidiaries. With respect to the offices and subsidiaries in the United States of America, the qualified plans are funded on a current basis in compliance with the requirement of the Employee Retirement Income Security Act of the United States of America. The nonqualified plans are non-contributory defined benefit pension plans, under which certain employees earn pay and interest credits on compensation amounts above the maximum stipulated by applicable laws under the qualified plans.

Severance Indemnities Plans

The MUFG Group has SIPs under which their employees in Japan, other than those who are directors, are entitled, under most circumstances, upon mandatory retirement at normal retirement age or earlier termination of employment, to lump-sum severance indemnities based on eligible compensation at the time of severance, rank, years of service and other factors. Under SIPs, benefit payments in the form of a lump-sum cash payment with no option to receive annuity payments, upon mandatory retirement at normal retirement age or earlier termination of employment, are provided. When a benefit is paid in a single payment to a benefit payee under the plans, the payment represents final relief of the obligation.

Other Postretirement Plans

The MUFG Group’s foreign offices and subsidiaries, primarily in the United States of America, provide their employees with certain postretirement medical and life insurance benefits (“other benefits”).

Net periodic cost of pension benefits and other benefits for the fiscal years ended March 31, 2022, 2023 and 2024 include the following components:

	Domestic subsidiaries						Foreign offices and subsidiaries
	2022		2023		2024		2022				2023					2024
	Pension  benefits  and SIP		Pension  benefits  and SIP		Pension  benefits  and SIP		Pension  benefits		Other  benefits		Pension  benefits			Other  benefits		Pension  benefits		Other  benefits
	(in millions)
Service cost—benefits earned during the fiscal year	¥	44,160	¥	41,026	¥	34,653	¥	16,853	¥	140	¥	16,808		¥	97	¥	13,055	¥	52
Interest cost on projected benefit obligation	11,995		14,356		20,547		11,233		494		20,573			1,002		8,414		1,216
Expected return on plan assets	(81,902)		(84,084)		(83,130)		(33,269)		(2,415)		(44,590)			(3,200)		(10,810)		(1,503)
Amortization of net actuarial loss (gain)	770		1,446		(591)		16,573		(64)		7,534			155		1,362		1,191
Amortization of prior service cost	(1,280)		(1,396)		(1,974)		(2,802)		(385)		(3,124)			(432)		(952)		(426)
Loss (gain) on settlements and curtailment	(5,820)		(4,860)		(13,659)		44		—		84,345		(1)	—		1,803		—
Other	—		—		(194)		—		—		—			—		3,939		6
Net periodic benefit cost (income)	¥	(32,077)	¥	(33,512)	¥	(44,348)	¥	8,632	¥	(2,230)	¥	81,546		¥	(2,378)	¥	16,811	¥	536

Note:

(1)One-time write off of unrecognized retirement benefit obligations of ¥84,345 million was recorded in connection with a pension buyout transaction to transfer portions of the defined benefit pension plans of MUFG Bank’s overseas branches.

The following table summarizes the assumptions used in computing the present value of the projected benefit obligations and the net periodic benefit cost:

	Domestic subsidiaries						Foreign offices and subsidiaries
	2022		2023		2024		2022				2023				2024
	Pension benefits and SIP		Pension benefits and SIP		Pension benefits and SIP		Pension benefits		Other  benefits		Pension  benefits		Other  benefits		Pension  benefits		Other  benefits
Weighted-average assumptions used:
Discount rates in determining expense	0.71	%	0.86	%	1.36	%	2.19	%	1.82	%	2.51	%	2.21	%	4.74	%	4.59	%
Discount rates in determining benefit obligation	0.86		1.36		1.70		2.78		2.63		4.76		4.68		5.06		5.06
Rates of increase in future compensation level for determining expense	3.46		3.46		3.47		5.09		—		5.04		—		5.09		—
Rates of increase in future compensation level for determining benefit obligation	3.46		3.47		3.49		5.04		—		5.09		—		5.50		—
Expected rates of return on plan assets	2.89		2.93		2.97		5.91		7.00		4.86		5.50		4.98		6.25
Cash balance crediting rate for determining expense	2.46		2.46		2.46		1.62		—		1.94		—		3.72		—
Cash balance crediting rate for determining benefit obligation	2.46		2.46		2.46		1.94		—		3.72		—		4.38		—

The following table presents the assumed health care cost trend rates for foreign offices and subsidiaries, which are used to measure the expected cost of benefits for the next year:

	2023(1)		2024(1)
Initial trend rate	7.00	%	7.50	%
Ultimate trend rate	4.50	%	4.00	%
Year the rate reaches the ultimate trend rate	2031		2033

Note:

(1)Fiscal years of foreign subsidiaries end on December 31. Therefore, the above table presents the rates and amounts at December 31, 2022 and 2023, respectively.

The following table sets forth the combined funded status and amounts recognized in the accompanying consolidated balance sheets at March 31, 2023 and 2024:

	Domestic subsidiaries					Foreign offices and subsidiaries
	2023		2024			2023					2024
	Non-contributory  pension benefits  and SIP		Non-contributory  pension benefits  and SIP			Pension  benefits			Other  benefits		Pension  benefits		Other  benefits
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of fiscal year	¥	1,692,105	¥	1,547,273		¥	619,739		¥	30,791	¥	194,843	¥	24,195
Service cost	41,026		34,653			16,808			97		13,055		52
Interest cost	14,356		20,547			20,573			1,002		8,414		1,216
Plan participants’ contributions	—		—			—			689		—		477
Acquisitions/ Divestitures	(584)		(216)			(77,231)			(3,818)		2,173		—
Amendments	—		—			(1,250)			—		(608)		—
Actuarial loss (gain)	(113,554)		(69,696)		(1)	(98,693)		(1)	(5,329)		(1,190)		(643)
Benefits paid	(65,897)		(65,641)			(33,456)			(3,785)		(30,940)		(2,676)
Lump-sum payment	(20,179)		(18,341)			(4,476)			—		(4,087)		—
Translation adjustments and other	—		—			(247,171)		(2)	4,548		16,341		3,098
Benefit obligation at end of fiscal year	1,547,273		1,448,579			194,843			24,195		198,001		25,719
Change in plan assets:
Fair value of plan assets at beginning of fiscal year	2,890,503		2,774,572			705,864			39,528		215,819		22,197
Actual return on plan assets	(76,526)		598,836			(126,085)			(6,722)		(6,764)		620
Employer contributions	26,734		25,521			1,277			(8,104)		2,045		148
Acquisitions/ Divestitures	(242)		42			(100,438)			(5,649)		—		—
Plan participants’ contributions	—		—			—			689		—		477
Benefits paid	(65,897)		(65,641)			(33,456)			(3,785)		(30,940)		(2,676)
Translation adjustments and other	—		—			(231,343)		(2)	6,240		16,831		2,905
Fair value of plan assets at end of fiscal year	2,774,572		3,333,330			215,819			22,197		196,991		23,671
Amounts recognized in the consolidated balance sheets:
Prepaid benefit cost	¥	1,245,150	¥	1,902,768		¥	89,109		¥	1,110	¥	82,633	¥	1,359
Accrued benefit cost	(17,851)		(18,017)			(68,133)			(3,108)		(83,643)		(3,407)
Net amount recognized	¥	1,227,299	¥	1,884,751		¥	20,976		¥	(1,998)	¥	(1,010)	¥	(2,048)

Notes:

(1)Significant gains and losses related to changes in the benefit obligation for the fiscal years ended March 31, 2023 and 2024 primarily result from changes in the discount rate.

(2)In connection with a pension buyout transaction, portions of the defined benefit pension plans of MUFG Bank’s overseas branches were transferred. The related obligations and assets were ¥327,203 million and ¥327,203 million, respectively.

The aggregated accumulated benefit obligations of these plans at March 31, 2023 and 2024 were as follows:

	Domestic  subsidiaries				Foreign offices  and subsidiaries
	2023		2024		2023		2024
	(in millions)
Aggregated accumulated benefit obligations	¥	1,521,419	¥	1,425,853	¥	170,917	¥	170,240

The projected benefit obligations, accumulated benefit obligations and fair value of plan assets for the plans with accumulated benefit obligations in excess of plan assets at March 31, 2023 and 2024 were as follows:

	Domestic  subsidiaries				Foreign offices  and subsidiaries
	2023		2024		2023		2024
	(in millions)
Projected benefit obligations	¥	24,918	¥	24,655	¥	81,128	¥	93,353
Accumulated benefit obligations	24,918		24,655		62,308		66,804
Fair value of plan assets	7,315		7,771		12,995		9,708

MUFG Bank, Mitsubishi UFJ Trust and Banking, Mitsubishi UFJ Securities Holdings, Mitsubishi UFJ NICOS and other subsidiaries paid special lump-sum termination benefits which are not a part of pension plans to certain early-terminated employees. The amounts charged to operations for such early termination benefits for the fiscal years ended March 31, 2022, 2023 and 2024 were ¥16,235 million, ¥16,888 million and ¥19,116 million, respectively.

The following table presents the amounts recognized in Accumulated OCI of the MUFG Group at March 31, 2023 and 2024:

	Domestic subsidiaries				Foreign offices and subsidiaries
	2023		2024		2023				2024
	Pension  benefits  and SIP		Pension  benefits  and SIP		Pension  benefits		Other  benefits		Pension  benefits		Other  benefits
	(in millions)
Net actuarial loss (gain)	¥	32,257	¥	(538,886)	¥	21,347	¥	2,729	¥	38,090	¥	2,105
Prior service cost	(1,449)		525		(1,747)		(1,375)		(1,652)		(1,114)
Gross amount recognized in Accumulated OCI	30,808		(538,361)		19,600		1,354		36,438		991
Taxes	(52,367)		121,569		(6,135)		(736)		(10,946)		(306)
Net amount recognized in Accumulated OCI	¥	(21,559)	¥	(416,792)	¥	13,465	¥	618	¥	25,492	¥	685

The following table presents OCI for the fiscal years ended March 31, 2023 and 2024:

	Domestic subsidiaries				Foreign offices and subsidiaries
	2023		2024		2023					2024
	Pension  benefits  and SIP		Pension  benefits  and SIP		Pension  benefits			Other  benefits		Pension  benefits		Other  benefits
	(in millions)
Net actuarial loss (gain) arising during the year	¥	47,026	¥	(585,393)	¥	59,505		¥	4,129	¥	16,352	¥	240
Prior service cost arising during the year	—		—		(597)			—		(608)		—
Losses (gains) due to amortization:
Net actuarial loss (gain)	(1,446)		591		(7,534)			(155)		(1,362)		(1,191)
Prior service cost	1,396		1,974		3,124			432		952		426
Curtailment and settlement	4,860		13,659		(84,345)		(1)	—		(1,803)		—
Foreign currency translation adjustments	—		—		6,096			(332)		3,307		162
Total changes in Accumulated OCI	¥	51,836	¥	(569,169)	¥	(23,751)		¥	4,074	¥	16,838	¥	(363)

Note:

(1)A one-time write off of unrecognized retirement benefit obligations of ¥84,345 million was recorded in connection with a pension buyout transaction to transfer portions of the defined benefit pension plans of MUFG Bank’s overseas branches.

Investment policies

MUFG’s investment policy for plan assets is based on an asset liability matching strategy which is intended to maintain adequate liquidity for benefit payments and to achieve a stable increase in the plan assets in the medium and long-term through proper risk control and return maximization. As a general rule, investment policies for plan assets are reviewed periodically for some plans and in the following situations for all plans: (1) large fluctuations in pension plan liabilities caused by modifications to pension plans, or (2) changes in the market environment. The plan assets allocation strategies are the principal determinant in achieving expected investment returns on the plan assets. Actual asset allocations may fluctuate within acceptable ranges due to market value variability. Plan assets are managed by a combination of internal and external asset management companies and are rebalanced when market fluctuations cause an asset category to fall outside of its strategic asset allocation range. Performance of each plan asset category is compared against established indices and similar plan asset groups to evaluate whether the risk associated with the portfolio is appropriate for the level of return.

The weighted-average target asset allocation of plan assets for the pension benefits and other benefits at March 31, 2024 was as follows:

	Domestic  subsidiaries		Foreign offices  and subsidiaries
Asset category	Pension  benefits  and SIP		Pension  benefits		Other  benefits
Japanese equity securities	35.6	%	—	%	—	%
Japanese debt securities	23.2		—		—
Non-Japanese equity securities	13.7		28.6		30.0
Non-Japanese debt securities	21.5		59.8		64.0
Real estate	1.2		6.6		6.0
Short-term assets and other	4.8		5.0		—
Total	100.0	%	100.0	%	100.0	%

Basis and procedure for estimating long-term return of each asset category

MUFG’s expected long-term rate of return on plan assets for domestic defined benefit pension plans and SIPs is based on a building-block methodology, which calculates the total long-term rate of return of the plan assets by aggregating the weighted rate of return derived from both long-term historical performance and forward-looking return expectations from each asset category.

MUFG has determined the expected long-term rate of return for each asset category as follows:

•Japanese equity securities: the rate for Japanese debt securities plus a premium for the risk associated with Japanese equity securities

•Japanese debt securities: economic growth rate of Japan

•Non-Japanese equity securities: the rate for non-Japanese debt securities plus a premium for the risk associated with non-Japanese equity securities

•Non-Japanese debt securities: global economic growth rate

Foreign offices and subsidiaries periodically reconsider the expected long-term rate of return for their plan assets. They evaluate the investment return volatility of different asset categories and compare the liability structure of their pension and other benefits to those of other companies, while considering their funding policy to maintain a funded status sufficient to meet participants’ benefit obligations, and reduce long-term funding requirements and pension costs. Based on this information, foreign offices and subsidiaries update the expected long-term rate of return.

Estimated future benefit payments

The following table presents benefit payments expected to be paid, which include the effect of expected future service for the fiscal years indicated:

	Domestic  subsidiaries		Foreign offices  and subsidiaries
	Pension  benefits  and SIP		Pension  benefits		Other  benefits
	(in millions)
Fiscal year ending March 31:
2025	¥	80,546	¥	11,604	¥	2,581
2026	78,019		11,835		2,462
2027	77,061		14,068		2,338
2028	77,552		14,628		2,187
2029	77,086		15,086		2,051
Thereafter (2030-2034)	364,282		112,240		8,844

Fair value measurement of the plan assets

The following is a description of the valuation methodologies used for plan assets measured at fair value as well as the classification of the plan assets pursuant to the fair value hierarchy described in Note 31.

Government bonds and other debt securities

When quoted prices are available in an active market, the MUFG Group adopts the quoted prices to measure the fair value of securities and such securities are classified in Level 1 of the fair value hierarchy. Level 1 securities include Japanese government bonds, most non-Japanese government bonds and certain corporate bonds. When quoted prices are available but not traded actively, such securities are classified in Level 2 of the fair value hierarchy. When quoted prices are not available, the MUFG Group generally estimates fair values by using non-binding prices obtained from independent pricing vendors. Such securities are generally classified in Level 2 of the fair value hierarchy. Level 2 securities include certain non-Japanese government bonds, official institution bonds and corporate bonds. When there is lack of liquidity for securities or significant inputs adopted to the fair value measurements are unobservable, such securities are classified in Level 3 of the fair value hierarchy. Such Level 3 securities mainly consist of non-Japanese corporate bonds.

Marketable equity securities

When quoted prices are available in an active market, the MUFG Group adopts the quoted prices to measure the fair value of marketable equity securities and such securities are classified in Level 1 of the fair value hierarchy. When quoted prices are available but not traded actively, such securities are classified in Level 2 of the fair value hierarchy.

Japanese pooled funds

Japanese pooled funds are investment fund vehicles designed for Japanese pension plan investments under Japanese pension trust fund regulations. Based upon the nature of the funds’ investments, Japanese pooled funds are categorized into four major fund types: Japanese marketable equity securities type, Japanese debt securities type, Non-Japanese marketable equity securities type and Non-Japanese debt securities type. The other types of funds invest in short-term financial instruments or loans receivable. Japanese pooled funds are generally readily redeemable at their net asset values. The fair values of Japanese pooled funds are measured at their net asset values per share (or its equivalent) as a practical expedient.

Other investment funds

Other investment funds include mutual funds, private investments funds, common collective funds, private equity funds and real estate funds. The listed investment funds or mutual funds are valued at quoted prices and classified in Level 1 or Level 2 of the fair value hierarchy. When there is no available market quotation, the fair values are generally determined at net asset values per share (or

its equivalent) as a practical expedient. Other investment funds classified in Level 3 of the fair value hierarchy consist of certain real estate funds whose fair values are not measured at their net asset values but by using significant unobservable inputs and there is inherent lack of the funds’ liquidity.

Japanese general accounts of life insurance companies

These instruments are contracts with life insurance companies that guarantee return of a certain level of fixed income, which are mainly invested in assets with low market risk such as Japanese debt securities. They are measured at conversion value and classified in Level 2 of the fair value hierarchy.

Other investments

Other investments mainly consist of call loans with the remainder consisting of miscellaneous accounts such as deposits with banks and short-term investments. These instruments are generally classified in Level 1 or Level 2 of the fair value hierarchy.

The following tables present the fair value of each major category of plan assets as of March 31, 2023 and 2024:

Pension benefits and SIP Investments:

At March 31, 2023	Domestic subsidiaries								Foreign offices and subsidiaries
Assets category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Japanese government bonds	¥	133,664	¥	—	¥	—	¥	133,664	¥	—	¥	—	¥	—	¥	—
Non-Japanese government bonds	—		—		—		—		2,632		2,339		—		4,971
Other debt securities	2,793		6,251		40		9,084		—		15,749		—		15,749
Japanese marketable equity securities	809,371		—		—		809,371		—		—		—		—
Non-Japanese marketable equity securities	78,840		165		—		79,005		3		—		—		3
Other investment funds	—		—		—		—		38		59,023		—		59,061
Japanese general account of life insurance companies(1)	—		205,117		—		205,117		—		—		—		—
Other investments	19,644		4,677		—		24,321		2,937		1,869		25,362		30,168
Total	¥	1,044,312	¥	216,210	¥	40	¥	1,260,562	¥	5,610	¥	78,980	¥	25,362	¥	109,952
At March 31, 2024	Domestic subsidiaries								Foreign offices and subsidiaries
Assets category	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Japanese government bonds	¥	57,220	¥	—	¥	—	¥	57,220	¥	—	¥	—	¥	—	¥	—
Non-Japanese government bonds	5,880		—		—		5,880		10,226		2,744		—		12,970
Other debt securities	4,404		112,628		2,548		119,580		—		44,397		—		44,397
Japanese marketable equity securities	1,030,420		—		—		1,030,420		—		—		—		—
Non-Japanese marketable equity securities	96,727		453		—		97,180		—		—		—		—
Other investment funds	—		—		—		—		600		45,098		—		45,698
Japanese general account of life insurance companies(1)	—		199,432		—		199,432		—		—		—		—
Other investments	16,823		11,393		—		28,216		3,363		1,414		432		5,209
Total	¥	1,211,474	¥	323,906	¥	2,548	¥	1,537,928	¥	14,189	¥	93,653	¥	432	¥	108,274

Note:

(1)“Japanese general accounts of life insurance companies” is a contract with life insurance companies that guarantees a return of approximately 1.25% from April 1, 2022 to March 31, 2023 and 0.95% from April 1, 2023 to March 31, 2024.

The following table presents fair values of certain investments valued at net asset value per share (or its equivalent) as a practical expedient that were excluded from the above table as of March 31, 2023 and 2024:

	Domestic  subsidiaries						Foreign offices and  subsidiaries
Assets category	2023			2024			2023			2024
	(in millions)
Japanese pooled funds:
Japanese marketable equity securities	¥	71,753		¥	74,802		¥	—		¥	—
Japanese debt securities	120,108			203,075			—			—
Non-Japanese marketable equity securities	186,555			195,320			—			—
Non-Japanese debt securities	332,691			290,985			—			—
Other	76,892			89,894			—			—
Total pooled funds	787,999			854,076			—			—
Other investment funds	726,011		(1)	941,326		(1)	105,867		(2)	88,717		(2)
Total	¥	1,514,010		¥	1,795,402		¥	105,867		¥	88,717

Notes:

(1)Other investment funds of the domestic subsidiaries include mutual funds and real estate funds of ¥690,781 million and ¥12,351 million, respectively, at March 31, 2023 and ¥899,855 million and ¥11,876 million, respectively, at March 31, 2024.

(2)Other investment funds of the foreign offices and subsidiaries include mutual funds, real estate funds and common collective funds of ¥12,136 million, ¥63,759 million and ¥29,756 million, respectively, at March 31, 2023 and ¥5,983 million, ¥50,248 million and ¥32,294 million, respectively, at March 31, 2024.

Other debt securities and Japanese debt securities in the above Pension benefits and SIP tables include ¥1,614 million (0.05% of plan assets) of debt securities issued by the MUFG Group at March 31, 2023 and ¥2,355 million (0.07% of plan assets) at March 31, 2024, respectively. Japanese marketable equity securities in the above Pension benefits and SIP tables include ¥5,284 million (0.18% of plan assets) of common stock issued by the MUFG Group at March 31, 2023 and ¥8,022 million (0.23% of plan assets) at March 31, 2024, respectively.