Verizon Wireless 2008 Annual Report Download - page 63

Notes to Consolidated Financial Statements continued
61
NOTE 15
EMPLOYEE BENEFITS
We maintain non-contributory defined benefit pension plans for many
of our employees. In addition, we maintain postretirement health care
and life insurance plans for our retirees and their dependents, which
are both contributory and non-contributory and include a limit on the
Company’s share of cost for certain recent and future retirees. We also
sponsor defined contribution savings plans to provide opportunities for
eligible employees to save for retirement on a tax-deferred basis. We use
a measurement date of December 31 for our pension and postretire-
ment health care and life insurance plans.
Refer to Note 1 for a discussion of the adoption of SFAS No. 158, which
was effective December 31, 2006.
Pension and Other Postretirement Benefits
Pension and other postretirement benefits for many of our employees
are subject to collective bargaining agreements. Modifications in bene-
fits have been bargained from time to time, and we may also periodically
amend the benefits in the management plans.
As of June 30, 2006, Verizon management employees no longer earned
pension benefits or earned service towards the company retiree medical
subsidy. In addition, new management employees hired after December
31, 2005 are not eligible for pension benefits and managers with less
than 13.5 years of service as of June 30, 2006 are not eligible for com-
pany-subsidized retiree healthcare or retiree life insurance benefits.
Beginning July 1, 2006, management employees receive an increased
company match on their savings plan contributions.
The following tables summarize benefit costs, as well as the benefit obli-
gations, plan assets, funded status and rate assumptions associated with
pension and postretirement health care and life insurance benefit plans:
Obligations and Funded Status
(dollars in millions)
Pension Health Care and Life
At December 31, 2008 2007 2008 2007
Change in Benet
Obligations
Beginning of year $ 32,495 $ 34,159 $ 27,306 $ 27,330
Service cost 382 442 306 354
Interest cost 1,966 1,975 1,663 1,592
Plan amendments 300 – 24 –
Actuarial (gain) loss, net (154) 123 (483) (409)
Benets paid (2,577) (4,204) (1,529) (1,561)
Termination benets 32 – 7 –
Curtailment gain ––(29) –
Acquisitions and
divestitures, net (183) – (169) –
Settlements (1,867) – – –
End of year $ 30,394 $ 32,495 $ 27,096 $ 27,306
Change in Plan Assets
Beginning of year $ 42,659 $ 41,509 $ 4,142 $ 4,303
Actual return on plan assets (10,680) 4,591 (1,285) 352
Company contributions 487 737 1,227 1,048
Benets paid (2,577) (4,204) (1,529) (1,561)
Settlements (1,867) – – –
Acquisitions and
divestitures, net (231) 26 – –
End of year $ 27,791 $ 42,659 $ 2,555 $ 4,142
Funded Status
End of year $ (2,603) $ 10,164 $ (24,541) $ (23,164)
Amounts recognized on
the balance sheet
Noncurrent assets $ 3,132 $ 13,745 $ – $ –
Current liabilities (122) (130) (496) (360)
Noncurrent liabilities (5,613) (3,451) (24,045) (22,804)
Total $ (2,603) $ 10,164 $ (24,541) $ (23,164)
Amounts recognized in
Accumulated Other
Comprehensive Loss
(Pretax)
Actuarial loss, net $ 13,296 $ 13 $ 6,848 $ 6,040
Prior service cost 1,162 932 3,235 3,636
Total $ 14,458 $ 945 $ 10,083 $ 9,676
Changes in benefit obligations were caused by factors including changes
in actuarial assumptions and settlements.
The accumulated benefit obligation for all defined benefit pension plans
was $29,405 million and $31,343 million at December 31, 2008 and 2007,
respectively.
Information for pension plans with an accumulated benefit obligation in
excess of plan assets follows:
(dollars in millions)
At December 31, 2008 2007
Projected benet obligation $ 27,171 $ 11,001
Accumulated benet obligation 26,641 10,606
Fair value of plan assets 21,436 8,868
During 2008, the decline in the fair value of pension assets increased the
number of plans having accumulated benefit obligations in excess of
plan assets as of December 31, 2008 compared to December 31, 2007.