Aetna 2008 Annual Report Download - page 70

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We also sponsor a supplemental pension plan that, prior to January 1, 2007, had been used to provide benefits for
wages above the Internal Revenue Code wage limits applicable to tax qualified pension plans (such as the Aetna
Pension Plan). Effective January 1, 2007, no new benefits accrue under the supplemental pension plan, but interest
will continue to be credited on outstanding supplemental cash balance accounts and the plan may continue to be used
to credit special pension arrangements.
In addition, we currently provide certain medical and life insurance benefits for retired employees, including those of
our former parent company. We provide subsidized health benefits to certain eligible employees who terminated
employment prior to December 31, 2006. There is a cap on our portion of the cost of providing medical and dental
benefits to our retirees. All current and future retirees and employees who terminate employment at age 45 or later
with at least five years of service are eligible to participate in our group health plans at their own cost.
In accordance with FAS 158, during 2007 we changed our measurement date for determining benefit obligations and
the fair value of plan assets of our pension and OPEB plans to December 31 (the end of our fiscal year). We
previously used September 30 as our measurement date.
The following table shows the changes in the benefit obligations during 2008 and 2007 for our pension and OPEB
plans. For the pension plans, the benefit obligation is the projected benefit obligation (which does not differ
materially from the accumulated benefit obligation). For the OPEB plans, the benefit obligation is the accumulated
postretirement benefit obligation.
(Millions) 2008 2007 2008 2007
Benefit obligation, beginning of year 4,906.2$ 5,121.5$ 332.1$ 393.2$
Net effect of changing measurement date pursuant to FAS 158 - 69.6 - (2.6)
Service cost 45.3 44.4 .3 .3
Interest cost 3 12 .
2
299.1 20.0 21.7
Actuarial (gain) loss
(
232.6
)
(
291.2
)
11 .4
(
42.5
)
Plan amendments
-
(
36.7
)
- -
Benefits p aid (288 .3) (300.5) (34.2) (38.0)
Benefit obligation, end of year 4,742.8$ 4,906.2$ 329.6$ 332.1$
Pension P lans O PE B Pla ns
We used the following weighted average assumptions to determine the benefit obligations of our pension and OPEB
plans at our measurement date for 2008 and 2007:
2008 2007 2008 2007
Discount rate 6.89% 6.56% 6.92% 6.35%
Rate of increase in future compensation levels 4.51 4.51 - -
Pension Plans OPEB Plans
The discount rates used to determine the benefit obligation of our pension and OPEB plans were calculated using a
yield curve. The yield curve consisted of a series of individual discount rates, with each discount rate corresponding
to a single point-in-time, based on high quality bonds. Projected benefit payments are discounted to the
measurement date using the corresponding rate from the yield curve. The discount rates differ for our pension and
OPEB plans due to the nature of the projected benefit payments for each plan.
Annual Report - Page 65