General Motors 2011 Annual Report Download - page 59

GENERAL MOTORS COMPANY AND SUBSIDIARIES
salaried pension plan and to 6.5% for the hourly pension plan. The resulting weighted-average return is 6.2%. The overall decrease is
primarily due to a different asset mix consisting of a higher proportion of fixed income investments compared to last year. The
salaried pension plan has a higher target proportion of fixed income investments than the hourly pension plan and therefore, a lower
expected return on assets than the hourly pension plan.
Another key assumption in determining net pension expense is the assumed discount rate to be used to discount plan obligations.
We estimate this rate for U.S. plans using a cash flow matching approach, which uses projected cash flows matched to spot rates along
a high quality corporate yield curve to determine the present value of cash flows to calculate a single equivalent discount rate.
Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations.
The effect of actual results differing from assumptions and the changing of assumptions are included in unamortized net actuarial
gains and losses that are subject to amortization to expense over future periods.
The following table summarizes the unamortized actuarial gain (loss) (before tax) on pension plans (dollars in billions):
Successor
December 31, 2011 December 31, 2010
Unamortized actuarial gain (loss) ................................................... $(3.8) $2.9
The following table illustrates the sensitivity to a change in certain assumptions for the pension plans, holding all other assumptions
constant (dollars in millions):
Successor
U.S. Plans Non-U.S. Plans
Effect on 2012
Pension
Expense
Effect on
December 31,
2011
PBO
Effect on 2012
Pension
Expense
Effect on
December 31,
2011
PBO
25 basis point decrease in discount rate .............................. !$130 +$2,730 +$45 +$ 774
25 basis point increase in discount rate .............................. +$110 !$2,660 !$6 !$ 735
25 basis point decrease in expected return on assets .................... +$210 N/A +$34 N/A
25 basis point increase in expected return on assets .................... !$210 N/A !$34 N/A
The following data illustrates the sensitivity of changes in pension expense and pension obligation based on the last remeasurement
of the U.S hourly pension plan at December 31, 2011 (dollars in millions):
Successor
Change in future benefit units
Effect on
2012
Pension Expense
Effect on
December 31, 2011
PBO
One percentage point increase in benefit units .......................................... +$101 +$308
One percentage point decrease in benefit units .......................................... !$ 98 !$299
Refer to Note 18 to our consolidated financial statements for the weighted-average expected long-term rate of return on plan assets,
weighted-average discount rate on plan obligations, actual and expected return on plan assets, and for a discussion of the inputs used
to determine fair value for each significant asset class or category.
Other Postretirement Benefits
OPEB plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including a discount rate
and healthcare cost trend rates. In the U.S. Old GM established a discount rate assumption to reflect the yield of a hypothetical
portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to satisfy
projected future benefits.
General Motors Company 2011 Annual Report 57