Pfizer 2007 Annual Report Download - page 63

2007 Financial Report 61
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
The favorable change in our U.S. qualified plans projected benefit
obligations funded status from $24 million overfunded in the
aggregate as of December 31, 2006, to $533 million overfunded in
the aggregate as of December 31, 2007, was largely driven by the
0.6 percentage-point increase in the discount rate and our voluntary
contributions. In 2007, we made required U.S. qualified plan
contributions of $6 million and voluntary tax-deductible
contributions in excess of minimum requirements of $100 million
to certain of our U.S. qualified pension plans. In 2006, we made
required U.S. qualified plan contributions of $3 million and
voluntary tax-deductible contributions in excess of minimum
requirements of $450 million to certain of our U.S. qualified pension
plans. In the aggregate, the U.S. qualified pension plans are
overfunded on a projected benefit measurement basis and on an
accumulated benefit obligation measurement basis as of December
31, 2007 and 2006. In 2006, we made voluntary tax-deductible
contributions of $90 million to certain of our U.S. postretirement
plans through the establishment of sections 401(h) accounts.
The U.S. supplemental (non-qualified) pension plans are not
generally funded, as there are no tax or other incentives that exist,
and these obligations, which are substantially greater than the
annual cash outlay for these liabilities, are paid from cash
generated from operations.
The favorable change in our international plans projected benefit
obligations funded status from $2.3 billion underfunded in the
aggregate as of December 31, 2006, to $1.3 billion underfunded
in the aggregate as of December 31, 2007, was largely driven by
the increase in the discount rate in the U.K. and other European
plans. Outside the U.S., in general, we fund our defined benefit
plans to the extent that tax or other incentives exist and we
have accrued liabilities on our consolidated balance sheets to
reflect those plans that are not fully funded.
The favorable change in our postretirement plans projected benefit
obligations funded status from $2.0 billion underfunded in the
aggregate as of December 31, 2006, to $1.8 billion underfunded
in the aggregate as of December 31, 2007, was largely driven by
the 0.6 percentage-point increase in the discount rate and the
impact of our cost-reduction initiatives.
The accumulated benefit obligations (ABO) for our U.S. qualified
pension plans were $6.6 billion in 2007 and $6.8 billion in 2006.
The ABO for our U.S. supplemental (non-qualified) pension plans
was $849 million in 2007 and $883 million in 2006. The ABO for
our international pension plans was $6.8 billion in 2007 and $7.1
billion in 2006.
PENSION PLANS
U.S. SUPPLEMENTAL POSTRETIREMENT
U.S. QUALIFIED (NON-QUALIFIED) INTERNATIONAL PLANS
(MILLIONS OF DOLLARS) 2007 2006 2007 2006 2007 2006 2007 2006
Change in benefit obligation:
Benefit obligation at beginning of year(a) $7,792 $7,983 $1,045 $ 1,133 $ 8,144 $ 6,968 $ 2,416 $ 2,252
Service cost 282 368 27 43 292 303 42 47
Interest cost 447 444 55 60 349 307 137 127
Employee contributions ————21 22 34 34
Plan amendments (47) —(5) —40 10 11
Increases/(decreases) arising primarily from
changes in actuarial assumptions (412) (137) (64) (77) (829) 150 (289) 152
Foreign exchange impact ————564 769 6(1)
Acquisitions 5—(5) —17 11 ——
Curtailments(b) (107) (180) (15) (25) (80) (42) 59
Settlements(b) (253) (418) (11) (13) (409) (85) —(23)
Special termination benefits 16 17 ——29 14 17 12
Benefits paid (267) (285) (54) (76) (299) (283) (191) (194)
Benefit obligation at end of year(a) 7,456 7,792 973 1,045 7,839 8,144 2,178 2,416
Change in plan assets:
Fair value of plan assets at beginning of year 7,816 7,050 ——5,880 4,595 396 275
Actual gain on plan assets 613 1,034 ——261 552 16 31
Company contributions 106 453 65 80 499 533 158 250
Employee contributions ————21 22 34 34
Foreign exchange impact ————435 525 ——
Acquisitions ————14 1——
Settlements(b) (279) (436) (11) (4) (232) (65) ——
Benefits paid (267) (285) (54) (76) (299) (283) (191) (194)
Fair value of plan assets at end of year 7,989 7,816 ——6,579 5,880 413 396
Funded status (plan assets greater than
(less than) benefit obligation) at end of year $ 533 $24$ (973) $(1,045) $(1,260) $(2,264) $(1,765) $(2,020)
(a) For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the
benefit obligation is the accumulated postretirement benefit obligation.
(b) For 2006, includes curtailments and settlements associated with the transfer of benefit obligations as part of the sale of our Consumer
Healthcare business
D. Obligations and Funded Status
The following table presents an analysis of the changes in 2007 and 2006 in the benefit obligations, the plan assets and the funded
status of our U.S. qualified, U.S. supplemental (non-qualified) and international pension plans, and our postretirement plans: