DTE Energy 2007 Annual Report Download - page 26

The above table represents disclosure required of SFAS No. 158 beginning in 2007.
The following table reconciles the obligations, assets and funded status of the plans as well as the amounts recognized as prepaid
pension cost in the Consolidated Statements of Financial Position at December 31:
(in Millions) 2007 2006
Accumulated benefit obligation, end of year $ 248 $ 266
Change in projected benefit obligation
Projected benefit obligation, beginning of year $ 299 $ 275
Service cost 7 7
Interest cost 16 16
Actuarial loss (23) 12
Benefits paid (24) (17)
Special termination benefits — 6
Projected benefit obligation, end of year $ 275 $ 299
Change in plan assets
Plan assets at fair value, beginning of year $ 370 $ 344
Actual return on Plan assets 36 43
Benefits paid (24) (17)
Plan assets at fair value, end of year $ 382 $ 370
Funded status of the Plans, November 30 $ 107 $ 71
December adjustment — —
Funded status, December 31 $ 107 $ 71
Noncurrent assets $ 107 $ 71
Amounts recognized in regulatory assets
Net actuarial loss $ 20 $ 50
Prior service cost $ 3 $ 3
Assumptions used in determining the projected benefit obligation and net pension costs are listed below:
2007 2006 2005
Projected benefit obligation
Discount rate 6.50% 5.70% 5.90%
Rate of compensation increase 4.00% 4.00% 4.00%
Net pension costs
Discount rate 5.70% 5.90% 6.00%
Rate of compensation increase 4.00% 4.00% 4.00%
Expected long-term rate of return on Plan assets 8.75% 8.75% 9.00%
At December 31, 2007, the benefits expected to be paid in each of the next five years and in the aggregate for the five fiscal years
thereafter are as follows:
(in Millions)
2008 $ 15
2009 15
2010 15
2011 15
2012 16
2013 — 2017 88
Total $ 164
We employ a consistent formal process in determining the long-term rate of return for various asset classes. Management reviews
historic financial market risks and returns and long-term historic relationships between the asset classes of equities, fixed income and
other assets, consistent with the widely accepted capital market principle that asset classes with higher volatility generate a greater
return over the long-term. Current market factors such as inflation, interest rates, asset class risks and asset class returns are evaluated
and considered before long-term capital market assumptions are determined. The long-term portfolio return is also established
employing a consistent formal process, with due consideration of diversification, active investment management and rebalancing. Peer
data is reviewed to check for reasonableness.
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