Verizon Wireless 2010 Annual Report Download - page 64

62
Notes to Consolidated Financial Statements continued
NOTE 12
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 the 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 postretirement
health care and life insurance plans. See Note 1 regarding the change in
accounting for benefit plans.
Pension and Other Postretirement Benefits
Pension and other postretirement benefits for many of our employees
are subject to collective bargaining agreements. Modifications in benefits
have been bargained from time to time, and we may also periodically
amend the benefits in the management plans. The following tables sum-
marize benefit costs, as well as the benefit obligations, 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, 2010 2009 2010 2009
Change in Benefit
Obligations
Beginning of year $ 31,818 $ 30,394 $ 27,337 $ 27,096
Service cost 353 384 305 311
Interest cost 1,797 1,924 1,639 1,766
Plan amendments (212) – (2,580) (5)
Actuarial (gain) loss, net 748 2,056 826 (469)
Benefits paid (1,996) (2,565) (1,675) (1,740)
Termination benefits 687 75 – 18
Curtailment (gain) loss, net 61 1,245 132 352
Acquisitions and
divestitures, net (581) 192 (266) 8
Settlements paid (3,458) (1,887) – –
End of year $ 29,217 $ 31,818 $ 25,718 $ 27,337
Change in Plan Assets
Beginning of year $ 28,592 $ 27,791 $ 3,091 $ 2,555
Actual return on plan assets 3,089 4,793 319 638
Company contributions 138 337 1,210 1,638
Benefits paid (1,996) (2,565) (1,675) (1,740)
Settlements paid (3,458) (1,887) – –
Acquisitions and
divestitures, net (551) 123 – –
End of year $ 25,814 $ 28,592 $ 2,945 $ 3,091
Funded Status
End of year $ (3,403) $ (3,226) $ (22,773) $ (24,246)
(dollars in millions)
Pension Health Care and Life
At December 31, 2010 2009 2010 2009
Amounts recognized on the
balance sheet
Noncurrent assets $ 398 $ 3,141 $ – $ –
Current liabilities (146) (139) (581) (542)
Noncurrent liabilities (3,655) (6,228) (22,192) (23,704)
Total $ (3,403) $ (3,226) $ (22,773) $ (24,246)
Amounts recognized in
Accumulated Other
Comprehensive Loss
(Pretax)
Prior service cost $ 554 $ 999 $ (567) $ 2,667
Total $ 554 $ 999 $ (567) $ 2,667
Beginning in 2013, as a result of federal health care reform, Verizon will
no longer file for the Retiree Drug Subsidy (RDS) and will instead contract
with a Medicare Part D plan on a group basis to provide prescription drug
benefits to Medicare eligible retirees. This change to our Medicare Part D
strategy, resulted in the adoption of plan amendments during the fourth
quarter of 2010, which will allow the company to be eligible for greater
Medicare Part D plan subsidies over time.
The accumulated benefit obligation for all defined benefit pension plans
was $28.5 billion and $30.8 billion at December 31, 2010 and 2009,
respectively.
Information for pension plans with an accumulated benefit obligation in
excess of plan assets follows:
(dollars in millions)
At December 31, 2010 2009
Projected benefit obligation $ 28,329 $ 28,719
Accumulated benefit obligation 27,752 28,128
Fair value of plan assets 24,529 22,352