GE 2010 Annual Report Download - page 98

96 GE 2010 ANNUAL REPORT
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PROJECTED BENEFIT OBLIGATION
Principal pension plans Other pension plans
(In millions) 2010 2009 2010 2009
Balance at January 1 $48,117 $45,168 $9,597 $7,748
Service cost for
benefits earned 1,149 1,609 277 297
Interest cost on
benefit obligations 2,693 2,669 486 460
Participant contributions 166 167 33 35
Plan amendments — — 23 3
Actuarial loss (gain) 2,799 (a) 1,331
(a) (12) 1,113
Benefits paid (2,925) (2,827) (421) (398)
Acquisitions
(dispositions)—net — — 50 (219)
Exchange rate adjustments — — (126) 558
Balance at December 31
(b) $51,999 $48,117 $9,907 $9,597
(a) Principally associated with discount rate changes.
(b) The PBO for the GE Supplementary Pension Plan, which is an unfunded plan, was
$4,430 million and $3,828 million at year-end 2010 and 2009, respectively.
ACCUMULATED BENEFIT OBLIGATION
December 31 (In millions) 2010 2009
GE Pension Plan $46,046 $42,917
GE Supplementary Pension Plan 3,296 2,901
Other pension plans 9,134 8,947
PLANS WITH ASSETS LESS THAN ABO
December 31 (In millions) 2010 2009
Funded plans with assets less than ABO
Plan assets $51,286 $47,740
Accumulated benefit obligations 53,350 49,948
Projected benefit obligations 55,502 51,837
Unfunded plans
(a)
Accumulated benefit obligations $ 4,086 $ 3,725
Projected benefit obligations 5,247 4,675
(a) Primarily related to the GE Supplementary Pension Plan.
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. In developing future return expectations for our
principal benefit plans’ assets, we evaluate general market trends
as well as key elements of asset class returns such as expected
earnings growth, yields and spreads. Based on our analysis of
future expectations of asset performance, past return results, and
our current and expected asset allocations, we have assumed an
8.0% long-term expected return on those assets for cost recogni-
tion in 2011. This is a reduction from the 8.5% we had assumed in
2010, 2009 and 2008. 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 contri-
butions to the GE Pension Plan since 1987 and will not make any
such contributions in 2011. In 2011, we expect to pay approxi-
mately $200 million for benefit payments under our GE
Supplementary Pension Plan and administrative expenses of our
principal pension plans and expect to contribute approximately
$670 million to other pension plans. In 2010, comparative
amounts were $183 million and $573 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 com-
pensation levels. PBO is ABO increased to reflect expected
future compensation.
COST OF PENSION PLANS
Total Principal pension plans Other pension plans
(In millions) 2010 2009 2008 2010 2009 2008 2010 2009 2008
Service cost for benefits earned $ 1,426 $ 1,906 $ 1,663 $ 1,149 $ 1,609 $ 1,331 $ 277 $ 297 $ 332
Prior service cost amortization 252 437 332 238 426
(a) 321 14 11 11
Expected return on plan assets (4,857) (4,943) (4,850) (4,344) (4,505) (4,298) (513) (438) (552)
Interest cost on benefit obligations 3,179 3,129 3,152 2,693 2,669 2,653 486 460 499
Net actuarial loss amortization 1,546 482 316 1,336 348 237 210 134 79
Pension plans cost $ 1,546 $ 1,011 $ 613 $ 1,072 $ 547 $ 244 $ 474 $ 464 $ 369
(a) In 2009, included a $103 million loss as a result of our agreement with Comcast Corporation to transfer the NBCU business to a newly formed entity in which we will own
a 49% interest.
ACTUARIAL ASSUMPTIONS are described below. The actuarial assumptions at December 31 are used to measure the year-end benefit
obligations and the pension costs for the subsequent year.
Principal pension plans Other pension plans (weighted average)
December 31 2010 2009 2008 2007 2010 2009 2008 2007
Discount rate 5.28 % 5.78 % 6.11 % 6.34 % 5.11 % 5.31 % 6.03 % 5.65%
Compensation increases 4.25 4.20 4.20 5.00 4.44 4.56 4.47 4.50
Expected return on assets 8.00 8.50 8.50 8.50 7.25 7.29 7.41 7.51