Target 2010 Annual Report Download - page 80

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27. Pension and Postretirement Health Care Plans
We have qualified defined benefit pension plans covering all U.S. team members who meet age and service
requirements, including in certain circumstances, date of hire. We also have unfunded nonqualified pension plans
for team members with qualified plan compensation restrictions. Eligibility for, and the level of, these benefits varies
depending on team members’ date of hire, length of service and/or team member compensation. Upon early
retirement and prior to Medicare eligibility, team members also become eligible for certain health care benefits if
they meet minimum age and service requirements and agree to contribute a portion of the cost. Effective January 1,
2009, our qualified defined benefit pension plan was closed to new participants, with limited exceptions.
We recognize that our obligations to plan participants can only be met over time through a combination of
company contributions to these plans and earnings on plan assets. In light of this concept, we elected to contribute
$153 million and $252 million to our qualified plans during 2010 and 2009, respectively. This restored the qualified
plans to a fully-funded status at year-end on an ABO (Accumulated Benefit Obligation) basis.
During 2009, we amended our postretirement health care plan, resulting in a $46 million reduction to our
recorded liability, with a corresponding increase to shareholders’ equity of $28 million, net of taxes of $18 million.
The financial benefits of this amendment will be recognized through a reduction of benefit plan expense over the six
years subsequent to the amendment.
The following tables provide a summary of the changes in the benefit obligations, fair value of plan assets, and
funded status and amounts recognized in our Consolidated Statement of Financial Position for our postretirement
benefit plans:
Change in Projected Benefit Obligation Pension Benefits Postretirement
Qualified Plans Nonqualified Plans Health Care Benefits
(millions) 2010 2009 2010 2009 2010 2009
Benefit obligation at beginning of year $2,227 $1,948 $33 $36 $ 87 $117
Service cost 114 99 1197
Interest cost 127 123 2246
Actuarial (gain)/loss 160 155 (2) (3) 333
Participant contributions 21——66
Benefits paid (105) (99) (3) (3) (15) (18)
Plan amendments —————(64)
Benefit obligation at end of year $2,525 $2,227 $31 $33 $ 94 $ 87
Change in Plan Assets Pension Benefits Postretirement
Qualified Plans Nonqualified Plans Health Care Benefits
(millions) 2010 2009 2010 2009 2010 2009
Fair value of plan assets at beginning of year $2,157 $1,771 $— $— $— $—
Actual return on plan assets 308 232 ————
Employer contributions 153 252 33912
Participant contributions 21——66
Benefits paid (105) (99) (3) (3) (15) (18)
Fair value of plan assets at end of year 2,515 2,157 ————
Benefit obligation at end of year 2,525 2,227 31 33 94 87
Funded status $ (10) $ (70) $(31) $(33) $(94) $(87)
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