Bank of America 2008 Annual Report Download - page 171

Net periodic benefit cost (income) for 2008, 2007 and 2006 included the following components:
Qualified Pension Plans Nonqualified Pension Plans
Postretirement Health
and Life Plans
(Dollars in millions) 2008
(1)
2007 2006 2008
(1)
2007 2006 2008
(1)
2007 2006
Components of net periodic benefit cost (income)
Service cost $ 343 $ 316 $ 306 $7 $9 $13 $16 $16 $13
Interest cost 837 761 676 77 71 78 87 84 86
Expected return on plan assets (1,444) (1,312) (1,034) – –– (13) (8) (10)
Amortization of transition obligation – –– – –– 31 32 31
Amortization of prior service cost (credits) 33 47 41 (8) (7) (8) – ––
Recognized net actuarial loss (gain) 83 156 229 14 17 20 (81) (60) 12
Recognized loss (gain) due to settlements and
curtailments – –– – 14 – – (2) –
Net periodic benefit cost (income) $ (148) $ (32) $ 218 $90 $ 104 $ 103 $40 $ 62 $ 132
Weighted average assumptions used to determine
net cost for years ended December 31
Discount rate
(2)
6.00% 5.75% 5.50% 6.00% 5.75% 5.50% 6.00% 5.75% 5.50%
Expected return on plan assets 8.00 8.00 8.00 n/a n/a n/a 8.00 8.00 8.00
Rate of compensation increase 4.00 4.00 4.00 4.00 4.00 4.00 n/a n/a n/a
(1) Includes the results of Countrywide. The net periodic benefit cost of the Countrywide Qualified Pension Plan was $29 million in 2008 using a discount rate of 6.75 percent at July 1, 2008. The net periodic benefit cost
of the Countrywide Nonqualified Pension Plan was $1 million and Countrywide did not have a Postretirement Health and Life Plan.
(2) In connection with the U.S. Trust Corporation and LaSalle mergers, those plans were remeasured on July 1, 2007 and October 1, 2007, using a discount rate of 6.15 percent and 6.50 percent.
n/a = not applicable
Net periodic postretirement health and life expense was determined
using the “projected unit credit” actuarial method. Gains and losses for
all benefits except postretirement health care are recognized in accord-
ance with the standard amortization provisions of the applicable account-
ing standards. For the Postretirement Health Care Plans, 50 percent of
the unrecognized gain or loss at the beginning of the fiscal year (or at
subsequent remeasurement) is recognized on a level basis during the
year.
Assumed health care cost trend rates affect the postretirement bene-
fit obligation and benefit cost reported for the Postretirement Health Care
Plans. The assumed health care cost trend rate used to measure the
expected cost of benefits covered by the Postretirement Health Care
Plans was 8.00 percent for 2009, reducing in steps to 5.00 percent in
2015 and later years. A one-percentage-point increase in assumed health
care cost trend rates would have increased the service and interest costs
and the benefit obligation by $4 million and $35 million in 2008, $5 mil-
lion and $64 million in 2007, and $3 million and $51 million in 2006. A
one-percentage-point decrease in assumed health care cost trend rates
would have lowered the service and interest costs and the benefit obliga-
tion by $4 million and $31 million in 2008, $4 million and $54 million in
2007, and $3 million and $44 million in 2006.
Pre-tax amounts included in accumulated OCI at December 31, 2008 and 2007 were as follows:
Qualified
Pension Plans
Nonqualified
Pension Plans
Postretirement
Health and
Life Plans Total
(Dollars in millions) 2008 2007 2008 2007 2008 2007 2008 2007
Net actuarial (gain) loss $7,232 $1,776 $70 $119 $(158) $(106) $7,144 $1,789
Transition obligation – – – – 126 157 126 157
Prior service cost (credits) 129 157 (30) (38) – – 99 119
Amounts recognized in accumulated OCI $7,361 $1,933 $40 $81 $ (32) $51 $7,369 $2,065
Pre-tax amounts recognized in OCI for 2008 included the following components:
Qualified
Pension
Plans
Nonqualified
Pension
Plans
Postretirement
Health and
Life Plans Total(Dollars in millions)
Other changes in plan assets and benefit obligations recognized in OCI
Current year actuarial (gain) loss $5,539 $(35) $(133) $5,371
Amortization of actuarial gain (loss) (83) (14) 81 (16)
Current year prior service (credit) cost 5– –5
Amortization of prior service credit (cost) (33) 8 – (25)
Amortization of transition obligation – – (31) (31)
Total recognized in OCI $5,428 $(41) $ (83) $5,304
Bank of America 2008 169