Bank of America 2008 Annual Report Download - page 170

The following table summarizes the changes in the fair value of plan
assets, changes in the projected benefit obligation (PBO), the funded
status of both the accumulated benefit obligation (ABO) and the PBO, and
the weighted average assumptions used to determine benefit obligations
for the pension plans and postretirement plans at December 31, 2008
and 2007. Amounts recognized at December 31, 2008 and 2007 are
reflected in other assets, and accrued expenses and other liabilities on
the Consolidated Balance Sheet. The discount rate assumption is based
on a cash flow matching technique and is subject to change each year.
This technique utilizes a yield curve based upon Aa-rated corporate bonds
with cash flows that match estimated benefit payments to produce the
discount rate assumption. For the Qualified Pension Plans, the Non-
qualified Pension Plans and the Postretirement Health and Life Plans, the
discount rate at December 31, 2008, was 6.00 percent. For both the
Qualified Pension Plans and the Postretirement Health and Life Plans, the
expected long-term return on plan assets is 8.00 percent for 2009. The
expected return on plan assets is determined using the calculated
market-related value for the Qualified Pension Plans and the fair value for
the Postretirement Health and Life Plans. The asset valuation method for
the Qualified Pension Plans recognizes 60 percent of the prior year’s
market gains or losses at the next measurement date, with the remaining
40 percent spread equally over the subsequent four years.
Qualified Pension Plans
(1)
Nonqualified Pension
Plans
(1)
Postretirement Health
and Life Plans
(1)
(Dollars in millions) 2008 2007 2008 2007 2008 2007
Change in fair value of plan assets
Fair value, January 1 $18,720 $16,793 $2 $– $ 165 $90
U.S. Trust Corporation balance, July 1, 2007 – 437 – – – –
LaSalle balance, October 1, 2007 – 1,400 – – – 85
Countrywide balance, July 1, 2008 305 – – – – –
Actual return on plan assets (5,310) 1,043 – – (43) 7
Company contributions
(2)
1,400 – 154 159 83 84
Plan participant contributions – – – – 117 109
Benefits paid (861) (953) (154) (157) (227) (225)
Federal subsidy on benefits paid n/a n/a n/a n/a 15 15
Fair value, December 31 $14,254 $18,720 $2 $2 $ 110 $ 165
Change in projected benefit obligation
Projected benefit obligation, January 1 $14,200 $12,680 $ 1,307 $ 1,345 $ 1,576 $ 1,549
U.S. Trust Corporation balance, July 1, 2007 – 363 – 6 – 9
LaSalle balance, October 1, 2007 – 1,133 – 108 – 120
Countrywide balance, July 1, 2008 439 – 53 – – –
Service cost 343 316 7 9 16 16
Interest cost 837 761 77 71 87 84
Plan participant contributions – – – – 117 109
Plan amendments 5 3 – (1) – –
Actuarial gains (1,239) (103) (32) (74) (180) (101)
Benefits paid (861) (953) (154) (157) (227) (225)
Federal subsidy on benefits paid n/a n/a n/a n/a 15 15
Projected benefit obligation, December 31 $13,724 $14,200 $ 1,258 $ 1,307 $ 1,404 $ 1,576
Amount recognized, December 31 $ 530 $ 4,520 $(1,256) $(1,305) $(1,294) $(1,411)
Funded status, December 31
Accumulated benefit obligation $12,864 $13,540 $ 1,246 $ 1,284 n/a n/a
Overfunded (unfunded) status of ABO 1,390 5,180 (1,244) (1,282) n/a n/a
Provision for future salaries 860 660 12 23 n/a n/a
Projected benefit obligation 13,724 14,200 1,258 1,307 $ 1,404 $ 1,576
Weighted average assumptions,
December 31
Discount rate 6.00% 6.00% 6.00% 6.00% 6.00% 6.00%
Expected return on plan assets 8.00 8.00 n/a n/a 8.00 8.00
Rate of compensation increase 4.00 4.00 4.00 4.00 n/a n/a
(1) The measurement date for the Qualified Pension Plans, Nonqualified Pension Plans, and Postretirement Health and Life Plans was December 31 of each year reported.
(2) The Corporation’s best estimate of its contributions to be made to the Qualified Pension Plans, Nonqualified Pension Plans, and Postretirement Health and Life Plans in 2009 is $0, $110 million and $119 million,
respectively.
n/a = not applicable
Amounts recognized in the Consolidated Financial Statements at December 31, 2008 and 2007 were as follows:
Qualified
Pension Plans
Nonqualified Pension
Plans
Postretirement Health
and Life Plans
(Dollars in millions) 2008 2007 2008 2007 2008 2007
Other assets $607 $4,520 $– $– $– $–
Accrued expenses and other liabilities (77) – (1,256) (1,305) (1,294) (1,411)
Net amount recognized at December 31 $530 $4,520 $(1,256) $(1,305) $(1,294) $(1,411)
168 Bank of America 2008