Pfizer 2011 Annual Report Download - page 86

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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
Beginning on January 1, 2011, for employees hired in the U.S. and Puerto Rico after December 31, 2010, we no longer offer a
defined benefit plan and, instead, offer an enhanced benefit under our defined eligible contribution plan. In addition to the standard
matching contribution by the Company, the enhanced benefit provides an automatic Company contribution for such eligible
employees based on age and years of service.
A. Components of Net Periodic Benefit Costs and Other Amounts Recognized in Other Comprehensive
(Income)/Loss
The annual cost and other amounts recognized in other comprehensive (income)/loss for our benefit plans follow:
YEAR ENDED DECEMBER 31,
PENSION PLANS
U.S. QUALIFIED(c)
U.S. SUPPLEMENTAL
(NON-QUALIFIED)(d) INTERNATIONAL(e)
POSTRETIREMENT
PLANS(f)
(MILLIONS OF DOLLARS) 2011 2010 2009 2011 2010 2009 2011 2010 2009 2011 2010 2009
Service cost(a) $ 351 $ 347 $ 252 $36 $28 $24 $ 251 $ 230 $ 188 $68 $79 $39
Interest cost(a) 734 740 526 72 77 53 453 427 342 195 211 145
Expected return on
plan assets(a) (871) (782) (527) ———(448) (434) (375) (35) (31) (26)
Amortization of:
Actuarial losses 145 151 212 36 29 31 86 67 30 17 15 18
Prior service
(credits)/costs (8) 22(3) (2) (2) (5) (4) (3) (53) (38) (3)
Curtailments and
settlements—net 95 (52) 110 23 1 (2) 3(3) 3 (68) (23) (3)
Special termination
benefits 23 73 61 26 180 137 468319 24
Net periodic benefit
costs 469 479 636 190 313 241 344 289 193 127 232 194
Other changes
recognized in
other
comprehensive
(income)/loss(b) 1,879 260 (783) 36 117 (23) (365) 152 1,004 421 (183) (122)
Total recognized in
net periodic
benefit costs and
other
comprehensive
(income)/loss $2,348 $ 739 $(147) $226 $430 $218 $ (21) $ 441 $1,197 $548 $49 $72
(a) The acquisition of Wyeth during fourth quarter 2009 contributed to the increase in certain components of net periodic benefit costs, such as service
cost and interest cost, which was largely offset by higher expected returns on plan assets during 2010 from the inclusion of Wyeth plan assets.
Further declines in interest rates during 2011 resulted in service costs continuing to increase on an overall basis. The decrease in 2011
postretirement plans’ service and interest costs is largely driven by the harmonization of the Wyeth plans.
(b) For details, see Note 6. Other Comprehensive Income/(Loss).
(c) 2011 vs. 2010—The decrease in the U.S. qualified pension plans’ net periodic benefit costs was largely driven by lower special termination benefits
costs and higher expected returns due to contributions made to the plans, partially offset by lower curtailment gains and an increase in settlement
costs associated with on-going restructuring efforts. 2010 vs. 2009 – The decrease in the U.S. qualified pension plans’ net periodic benefit costs
was largely driven by curtailment gains and lower settlement charges associated with Wyeth-related restructuring initiatives.
(d) 2011 vs. 2010—The decrease in the U.S. supplemental (non-qualified) plans’ net periodic benefit costs was primarily driven by lower special
termination benefits costs associated with Wyeth-related restructuring initiatives. 2010 vs. 2009 – The increase in the U.S. supplemental (non-
qualified) plans’ net periodic benefit costs was primarily driven by special termination benefits recognized for certain executives as part of ongoing
Wyeth-related restructuring initiatives.
(e) 2011 vs. 2010 and 2010 vs. 2009—The increase in the international plans’ net periodic benefit costs as compared to the prior year was primarily
driven by changes in assumptions, including the decrease in discount rates across most plans.
(f) 2011 vs. 2010—The decrease in the postretirement plans’ net periodic benefit costs was due to the harmonization of the Wyeth postretirement
medical program initiated in mid-2010.2010 vs. 2009—The increase postretirement plans’ net periodic benefit costs was due to the Wyeth
acquisition, offset partially by the postretirement harmonization program.
The amounts in Accumulated other comprehensive income/(loss) expected to be amortized into 2012 net periodic benefit costs
follow:
PENSION PLANS
(MILLIONS OF DOLLARS) U.S. QUALIFIED
U.S. SUPPLEMENTAL
(NON-QUALIFIED) INTERNATIONAL
POSTRETIREMENT
PLANS
Actuarial losses $(320) $(44) $(69) $(33)
Prior service credits and other 15 3 7 50
Total $(305) $(41) $(62) $ 17
2011 Financial Report 85