Bank of America 2015 Annual Report Download - page 217

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Pension Plans with ABO and PBO in excess of plan assets as of December 31, 2015 and 2014 are presented in the table below.
For the non-qualified plans not subject to ERISA or non-U.S. pension plans, funding strategies vary due to legal requirements and local
practices.
Plans with PBO and ABO in Excess of Plan Assets
Non-U.S.
Pension Plans
Nonqualified
and Other
Pension Plans
(Dollars in millions) 2015 2014 2015 2014
PBO $574 $ 583 $ 1,075 $ 1,190
ABO 551 563 1,074 1,190
Fair value of plan assets 183 206 12
Net periodic benefit cost of the Corporation’s plans for 2015, 2014 and 2013 included the following components.
Components of Net Periodic Benefit Cost
Qualified Pension Plan Non-U.S. Pension Plans
(Dollars in millions) 2015 2014 2013 2015 2014 2013
Components of net periodic benefit cost (income)
Service cost $— $—$—
$27 $ 29 $ 32
Interest cost 621 665 623 93 109 98
Expected return on plan assets (1,045)(1,018) (1,024) (133)(137) (121)
Amortization of prior service cost ——— 11—
Amortization of net actuarial loss 170 111 242 63 2
Recognized loss (gain) due to settlements and curtailments —— 17 —2 (7)
Net periodic benefit cost (income) $ (254) $ (242) $ (142) $(6)$7$4
Weighted-average assumptions used to determine net cost for years ended December 31
Discount rate 4.12%4.85% 4.00% 3.56%4.30% 4.23%
Expected return on plan assets 6.00 6.00 6.50 5.27 5.52 5.50
Rate of compensation increase n/a n/a n/a 4.70 4.91 4.37
Nonqualified and
Other Pension Plans
Postretirement Health
and Life Plans
(Dollars in millions) 2015 2014 2013 2015 2014 2013
Components of net periodic benefit cost (income)
Service cost $— $1$1
$8
$8$9
Interest cost 122 133 120 48 58 54
Expected return on plan assets (92) (124) (109) (1)(4) (5)
Amortization of prior service cost ——— 44 4
Amortization of net actuarial loss (gain) 34 25 25 (46) (89) (42)
Recognized loss due to settlements and curtailments —— 2 —— 6
Net periodic benefit cost (income) $ 64 $ 35 $ 39 $13 $ (23) $ 26
Weighted-average assumptions used to determine net cost for years ended December 31
Discount rate 3.80%4.55% 3.65% 3.75%4.50% 3.65%
Expected return on plan assets 3.26 4.60 3.75 6.00 6.00 6.50
Rate of compensation increase 4.00 4.00 4.00 n/a n/a n/a
n/a = not applicable
The asset valuation method used to calculate the expected
return on plan assets component of net period benefit cost for the
Qualified Pension Plan 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.
Net periodic postretirement health and life expense was
determined using the “projected unit credit” actuarial method.
Gains and losses for all benefit plans except postretirement health
care are recognized in accordance with the standard amortization
provisions of the applicable accounting guidance. 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
benefit obligation and benefit cost reported for the Postretirement
Health and Life Plans. The assumed health care cost trend rate
used to measure the expected cost of benefits covered by the
Postretirement Health and Life Plans is 7.00 percent for 2016,
reducing in steps to 5.00 percent in 2021 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 $2 million and $34 million in 2015. A one-
percentage-point decrease in assumed health care cost trend
rates would have lowered the service and interest costs, and the
benefit obligation by $2 million and $29 million in 2015.
The Corporation’s net periodic benefit cost (income) recognized
for the plans is sensitive to the discount rate and expected return