GE 2008 Annual Report Download - page 68

Download and view the complete annual report

Please find page 68 of the 2008 GE annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

66 ge 2008 annual report
notes to consolidated financial statements
COST OF PENSION PLANS
Total Principal pension plans Other pension plans
(In millions) 2008 2007 2006 2008 2007 2006 2008 2007 2006
Expected return on plan assets $(4,850) $(4,459) $(4,211) $(4,298) $(3,950) $(3,811) $(552) $(509) $(400)
Service cost for benefits earned 1,663 1,727 1,719 1,331 1,355 1,402 332 372 317
Interest cost on benefit obligation 3,152 2,885 2,685 2,653 2,416 2,304 499 469 381
Prior service cost amortization 332 247 258 321 241 253 11 65
Net actuarial loss amortization 316 856 893 237 693 729 79 163 164
Pension plans cost $ 613 $ 1,256 $ 1,344 $ 244 $ 755 $ 877 $369 $ 501 $ 467
ACTUARIAL ASSUMPTIONS are described below. The discount rates at December 31 measured the year-end benefit obligations and the
earnings effects for the subsequent year.
Principal pension plans Other pension plans (weighted average)
December 31 2008 2007 2006 2005 2008 2007 2006 2005
Discount rate 6.11% 6.34% 5.75% 5.50% 6.03% 5.65% 4.97% 4.74%
Compensation increases 4.20 5.00 5.00 5.00 4.47 4.50 4.26 4.20
Expected return on assets 8.50 8.50 8.50 8.50 7.41 7.51 7.44 7.47
To determine the expected long-term rate of return on pension
plan assets, we consider current and expected asset allocations,
as well as historical and expected returns on various categories
of plan assets. For the principal pension plans, we apply our
expected rate of return to a market-related value of assets,
which stabilizes variability in the amounts to which we apply
that expected return.
We amortize experience gains and losses as well as the
effects of changes in actuarial assumptions and plan provisions
over a period no longer than the average future service of
employees.
FUNDING POLICY for the GE Pension Plan is to contribute amounts
sufficient to meet minimum funding requirements as set forth
in employee benefit and tax laws plus such additional amounts
as we may determine to be appropriate. We have not made
contributions to the GE Pension Plan since 1987 and will not
make any such contributions in 2009. In 2009, we expect to pay
approximately $170 million for benefit payments under our GE
Supplementary Pension Plan and administrative expenses of our
principal pension plans and expect to contribute approximately
$690 million to other pension plans. In 2008, comparative amounts
were $153 million and $627 million, respectively.
BENEFIT OBLIGATIONS are described in the following tables.
Accumulated and projected benefit obligations (ABO and PBO)
represent the obligations of a pension plan for past service as of
the measurement date. ABO is the present value of benefits earned
to date with benefits computed based on current compensation
levels. PBO is ABO increased to reflect expected future
compensation.
PROJECTED BENEFIT OBLIGATION
Principal pension plans Other pension plans
(In millions) 2008 2007 2008 2007
Balance at January 1 $42,947 $43,293 $ 9,014 $9,034
Service cost for
benefits earned 1,331 1,355 332 372
Interest cost on benefit
obligations 2,653 2,416 499 469
Participant contributions 169 173 40 43
Plan amendments —1,470 16 26
Actuarial loss (gain) (a) 791 (3,205) (923) (665)
Benefits paid (2,723) (2,555) (383) (370)
Acquisitions
(dispositions) —net ——545 (311)
Exchange rate adjustments ——(1,392) 416
Balance at December 31 (b) $45,168 $42,947 $ 7,748 $9,014
(a) Principally associated with discount rate changes.
(b) The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was
$3,505 million and $3,437 million at year-end 2008 and 2007, respectively.
ACCUMULATED BENEFIT OBLIGATION
December 31 (In millions) 2008 2007
GE Pension Plan $40,313 $38,155
GE Supplementary Pension Plan 2,582 2,292
Other pension plans 7,075 8,175