Bank of America 2009 Annual Report Download - page 193

Net periodic benefit cost (income) for 2009, 2008 and 2007 included the following components:
Qualified Pension Plans
Nonqualified and Other
Pension Plans
Postretirement Health
and Life Plans
(Dollars in millions) 2009 2008 2007 2009 2008 2007 2009 2008 2007
Components of net periodic benefit cost (income)
Service cost $ 387 $ 343 $ 316 $34 $7 $9 $16 $16 $16
Interest cost 740 837 761 243 77 71 93 87 84
Expected return on plan assets (1,231) (1,444) (1,312) (222) –– (8) (13) (8)
Amortization of transition obligation – –– – –– 31 31 32
Amortization of prior service cost (credits) 39 33 47 (8) (8) (7) – ––
Amortization of net actuarial loss (gain) 377 83 156 5 14 17 (77) (81) (60)
Recognized loss (gain) due to settlements
and curtailments – –– – –14 – – (2)
Recognized termination benefit costs 36 –– – –– – ––
Net periodic benefit cost (income) $ 348 $ (148) $ (32) $52 $ 90 $104 $55 $40 $62
Weighted-average assumptions used to determine
net cost for the years ended December 31
Discount rate 6.00% 6.00% 5.75% 5.86% 6.00% 5.75% 6.00% 6.00% 5.75%
Expected return on plan assets 8.00 8.00 8.00 5.66 n/a n/a 8.00 8.00 8.00
Rate of compensation increase 4.00 4.00 4.00 4.61 4.00 4.00 n/a n/a n/a
n/a = not applicable
The net periodic benefit cost (income) for each of the Plans in 2009
includes the results of Merrill Lynch. The net periodic benefit cost
(income) of the Merrill Lynch Nonqualified and Other Pension Plans, and
Postretirement Health and Life Plans was $(20) million and $18 million in
2009 using a blended discount rate of 5.59 percent at January 1, 2009.
The net periodic benefit cost (income) for 2009 and 2008 includes the
results of Countrywide. The net periodic benefit cost of the Countrywide
Qualified Pension Plan was $29 million in 2008 using a discount rate of
6.75 percent at July 1, 2008. The net periodic benefit cost of the
Countrywide Nonqualified Pension Plan was $1 million. Countrywide did
not have a Postretirement Health and Life Plan.
Net periodic postretirement health and life expense was determined
using the “projected unit credit” actuarial method. Gains and losses for
all benefits except postretirement health care are recognized in accord-
ance with the standard amortization provisions of the applicable account-
ing guidance. For the Postretirement Health Care Plans, 50 percent of the
unrecognized gain or loss at the beginning of the fiscal year (or at sub-
sequent remeasurement) is recognized on a level basis during the year.
Assumed health care cost trend rates affect the postretirement bene-
fit obligation and benefit cost reported for the Postretirement Health Care
Plans. The assumed health care cost trend rate used to measure the
expected cost of benefits covered by the Postretirement Health Care
Plans was 8.00 percent for 2010, reducing in steps to 5.00 percent in
2017 and later years. A one-percentage-point increase in assumed health
care cost trend rates would have increased the service and interest costs
and the benefit obligation by $4 million and $57 million in 2009, $4 mil-
lion and $35 million in 2008, and $5 million and $64 million in 2007. A
one-percentage-point decrease in assumed health care cost trend rates
would have lowered the service and interest costs and the benefit obliga-
tion by $4 million and $50 million in 2009, $4 million and $31 million in
2008, and $4 million and $54 million in 2007.
Pre-tax amounts included in accumulated OCI at December 31, 2009
and 2008 were as follows:
Qualified Pension
Plans
Nonqualified and Other
Pension Plans
Postretirement Health
and Life Plans Total
(Dollars in millions) 2009 2008 2009 2008 2009 2008 2009 2008
Net actuarial (gain) loss $5,937 $7,232 $479 $70 $(106) $(158) $6,310 $7,144
Transition obligation – – – – 95 126 95 126
Prior service cost (credits) 126 129 (22) (30) – – 104 99
Amounts recognized in accumulated OCI $6,063 $7,361 $457 $40 $ (11) $ (32) $6,509 $7,369
Pre-tax amounts recognized in OCI for 2009 included the following components:
(Dollars in millions)
Qualified
Pension
Plans
Nonqualified
and Other
Pension
Plans
Postretirement
Health and
Life Plans Total
Other changes in plan assets and benefit obligations recognized in OCI
Current year actuarial (gain) loss $ (918) $416 $(24) $(526)
Amortization of actuarial gain (loss) (377) (8) 77 (308)
Current year prior service cost 36 – – 36
Amortization of prior service credit (cost) (39) 8 – (31)
Amortization of transition obligation – – (31) (31)
Total recognized in OCI $(1,298) $416 $ 22 $(860)
Bank of America 2009 191