Retirement Benefits

12 Months Ended

Mar. 31, 2026

24	RETIREMENT BENEFITS

Defined Benefit Plans

SMBC and some of the Company’s other subsidiaries have various defined benefit plans such as defined benefit pension plans and

lump-sum

severance indemnity plans, which define the amount of benefits that an employee will receive on or after retirement, usually based on one or more factors, such as age, years of service, compensation, classes and earned points based on service.

SMBC’s defined benefit plans account for the vast majority of the defined benefit obligations and plan assets in the Group. SMBC has a corporate defined benefit pension plan and a

lump-sum

severance indemnity plan.

Defined benefit pension plans

SMBC’s corporate defined benefit pension plan is a funded defined benefit pension plan, which is regulated by the Corporate Defined Benefit Pension Plan Law, one of the Japanese pension laws. Benefits are paid in exchange for services rendered by employees who worked for more than a specified period considering their years of service and the degree of their contribution to SMBC.

SMBC’s pension fund is a special entity established in accordance with the pension laws, and SMBC has an obligation to make contributions to it. It has a board of directors which consists of an equal number of members

elected from both the management and employees of SMBC. These board members have a fiduciary duty to administer and manage the pension fund.

The objective of SMBC’s pension fund is to earn a return over the long term which is sufficient to pay future benefits to participants of the corporate defined benefit pension plan, including pension benefit plans,

lump-sum

indemnity plans for bereaved families, and other lump sum indemnity plans. To achieve this, SMBC’s pension fund annually sets investment guidelines including asset allocation composed of equities, bonds and other appropriate financial assets according to the funding status. Investment decisions for its assets are made in accordance with these guidelines.

The Corporate Defined Benefit Pension Plan Law requires a pension fund to review the assumptions and remeasure the required contribution at least every fifth fiscal year, in order to ensure that it maintains sufficient assets for future benefit payments. On the other hand, the present value of the defined benefit obligation is calculated annually based on actuarial valuations that are dependent upon a number of assumptions, including discount rates, mortality rates and future salary (benefit) increases, in accordance with IAS 19 “Employee Benefits.” Other types of defined benefit pension plans operated by the Group are generally established and operated in the same manner as described above.

Lump-sum

severance indemnity plans

SMBC and some of the Company’s other subsidiaries have

lump-sum

severance indemnity plans under which their employees are provided with

lump-sum

cash payments upon leaving the company. While funding of these plans is not required under Japanese pension laws, some of these plans are funded with assets held by retirement benefit trusts.

SMBC and a number of the Company’s other subsidiaries in Japan established retirement benefit trusts and contributed some of their marketable securities to these trusts in order to isolate these assets for retirement benefits by entering into contracts with trust banks. Retirement benefit trusts are voluntary funds that are used either to contribute assets to the pension funds or to directly settle retirement benefits. Among the Group, retirement benefit trusts are set up for the defined benefit pension plans, as well as for the

lump-sum

severance indemnity plans.

The assets belonging to the retirement benefit trusts are available to be used only to pay or fund retirement benefits, and practically held by an entity that is legally separated from the Group. Therefore, they are not available to the Group’s creditors even in bankruptcy and cannot be returned to the Group, unless either the remaining assets are sufficient to meet all the related obligations or the entities (funds) reimburse to the Group the retirement benefits which are already paid by the Group. Therefore, these assets are accounted for as plan assets.

The following tables provide detailed information for the defined benefit

pla

ns.

The amounts of the retirement benefit liabilities and the retirement benefit assets recognized in the consolidated statements of financial position at March 31, 2026 and 2025 were determined as follows:


	At March 31,
	2026			2025
	(In millions)
Present value of unfunded obligations	¥	(24,054	)	¥	(25,972	)
Present value of funded obligations		(757,430	)		(857,083	)
Fair value of plan assets		2,034,686			1,804,994

Net retirement benefit assets (liabilities) before the asset ceiling	¥	1,253,202		¥	921,939

Effect of the asset ceiling		659,730			443,867

Net retirement benefit assets (liabilities)	¥	593,472		¥	478,072

Of which retirement benefit liabilities included in “Other liabilities”	¥	(35,829	)	¥	(34,996	)
Of which retirement benefit assets included in “Other assets”	¥	629,301		¥	513,068

The movements in the defined benefit obligations for the fiscal years ended March 31, 2026 and 2025 were as follows:


	For the fiscal year ended March 31,
	2026			2025
	(In millions)
At beginning of period	¥	883,055		¥	986,810
Current service cost		21,924			25,597
Interest cost		20,286			15,154
Actuarial losses (gains)—demographic assumptions		567			(4,170	)
Actuarial losses (gains)—financial assumptions		(81,664	)		(80,455	)
Actuarial losses (gains)—experience		(3,837	)		447
Benefits paid		(45,227	)		(43,583	)
Lump-sum payments		(15,623	)		(16,094	)
Past service cost		462			—
Others		1,541			(651	)

At end of period	¥	781,484		¥	883,055

The movements in the fair value of plan assets for the fiscal years ended March 31, 2026 and 2025 were as follows:


	For the fiscal year ended March 31,
	2026			2025
	(In millions)
At beginning of period	¥	1,804,994		¥	1,820,599
Interest income		41,293			27,406
Return on plan assets excluding interest income		217,483			(13,129	)
Contributions by employer		13,384			13,979
Benefits paid		(45,227	)		(43,583	)
Others		2,759			(278	)

At end of period	¥	2,034,686		¥	1,804,994

The movements in the effect of the asset ceiling for the fiscal years ended March 31, 2026 and 2025 were as follows:


	For the fiscal year ended March 31,
	2026		2025
	(In millions)
At beginning of period	¥	443,867	¥	330,739
Interest cost		9,943		4,896
Change in the asset ceiling		205,920		108,232

At end of period	¥	659,730	¥	443,867

The amounts recognized in “General and administrative expenses” in the consolidated income statements for the fiscal years ended March 31, 2026, 2025 and 2024 were as follows:


	For the fiscal year ended March 31,
	2026			2025			2024
	(In millions)
Current service cost	¥	21,924		¥	25,597		¥	26,431
Net interest cost		(11,064	)		(7,356	)		(6,213	)
Past service cost		462			—			(20	)

Total	¥	11,322		¥	18,241		¥	20,198

The plan assets at March 31, 2026 and 2025 were composed as follows:


	At March 31,
	2026						2025
	Quoted in active markets		Other		Total		Quoted in active markets		Other		Total
	(In millions)
Plan assets retained in the pension funds:
Equity instruments	¥	155,581	¥	88,434	¥	244,015	¥	160,285	¥	118,407	¥	278,692
Debt instruments		5,377		210,267		215,644		8,955		204,352		213,307
General account of life insurance companies		138		22,577		22,715		160		22,195		22,355
Other investments and short-term assets		49,947		811,018		860,965		48,128		657,649		705,777
Plan assets retained in the retirement benefit trusts:
Equity instruments		541,865		4,025		545,890		546,424		3,162		549,586
Other short-term assets		135,429		10,028		145,457		24,827		10,450		35,277

Total	¥	888,337	¥	1,146,349	¥	2,034,686	¥	788,779	¥	1,016,215	¥	1,804,994

The assets in the pension funds included common stocks issued by the Group at March 31, 2026 and 2025. The amounts of these stocks were not significant.

The assets in retirement benefit trusts were primarily composed of Japanese equity instruments. Most of the plan assets held by the Group are invested in Japanese equity and debt instruments. Accordingly, the Group may be exposed to market risk arising from the domestic markets.

The

Group

retained the voting rights of some of these equity instruments with fair values of ¥

534,202

million and ¥

539,742

million (

26.3

% and

29.9

% of the total fair values of plan assets) at March 31, 2026 and 2025, respectively.

The principal actuarial assumptions used at March 31, 2026, 2025 and 2024 were as follows:


	At March 31,
	2026			2025			2024
Discount rates		3.2	%		2.2	%		1.5	%

Discount rates are weighted on the basis of the defined benefit obligations.

The assumptions for future mortality are based on the official mortality table generally used for actuarial assumptions in Japan. The current average remaining life expectancy of an individual retiring at age 60 was 24 years for males and 29 years for females under the mortality table used at March 31, 2026, 2025 and 2024.

The sensitivity analyses of the eff

ct of changes in key assumptions on the defined benefit obligations at March 31, 2026 and 2025 were as follows:


	At March 31,
	2026			2025
	Increase/(decrease)			Increase/(decrease)
	(In millions)
Discount rates:
Increase by 50 bps	¥	(32,112	)	¥	(40,637	)
Decrease by 50 bps		35,458			45,208
Average life expectancy at age 60:
Increase of one year	¥	18,325		¥	23,391

Each increase and decrease in the table above assumes that only one assumption is changed, with all other assumptions remaining unchanged. In practice, however, changes in multiple assumptions may occur in a mutually interrelated manner.

The weighted average durations of defined benefit plans for the fiscal years ended March 31, 2026, 2025 and 2024 were as follows:


	At March 31,
	2026		2025		2024
	(Years)
Lump-sum severance indemnity plans		10.6		11.2		12.0
Defined benefit pension plans		14.2		15.4		16.4

Funding policy for plan assets

The pension funds review the funding status of plan assets every year. If any funding deficit is identified, a measure to cover such deficit will be implemented, for example, by increasing the amount of contributions by the employer.

Expected contribution

Expected contributions to the defined benefit plans for the fiscal year ending March 31, 2027 are ¥12,161 million.

Defined Contribution Plans

SMBC and some of the Company’s other subsidiaries provide defined contribution plans. The amounts recognized as expenses for the defined contribution plans were ¥17,020 million, ¥16,204 million and ¥14,579 million for the fiscal years ended March 31, 2026, 2025 and 2024, respectively, which were included in “General and administrative expenses” in the consolidated income statements.

Employees’ Pension Insurance Plan

In Japan, the Government of Japan operates the Employees’ Pension Insurance Plan which covers most of the private entities’ employees. The amounts of contributions charged to expense for the Employees’ Pension Insurance Plan were ¥45,478 million, ¥43,968 million and ¥40,974 million for the fiscal years ended March 31, 2026, 2025 and 2024, respectively, which were included in “General and administrative expenses” in the consolidated income statements.