Aetna 2011 Annual Report Download - page 97

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Annual Report- Page 91
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 care 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.
The information set forth in the following tables is based upon current actuarial reports using the annual
measurement dates (December 31, for each year presented) for our pension and OPEB plans; however, certain
components of the net periodic cost for the Aetna Pension Plan in 2010 also include adjustments from the re-
measurement that occurred as of August 31, 2010.
The following table shows the changes in the benefit obligations during 2011 and 2010 for our pension and OPEB
plans.
(Millions)
Benefit obligation, beginning of year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Benefit obligation, end of year
Pension Plans
2011
$ 5,821.2
—
312.3
293.6
(296.8)
$ 6,130.3
2010
$ 5,346.1
65.7
299.5
394.3
(284.4)
$ 5,821.2
OPEB Plans
2011
$ 333.3
.2
16.6
(12.5)
(24.9)
$ 312.7
2010
$ 330.5
.2
17.9
10.8
(26.1)
$ 333.3
The Aetna Pension Plan comprises approximately 96% of the pension plans' total benefit obligation at December 31,
2011. The discount rates used to determine the benefit obligation of our pension and OPEB plans were calculated
using a yield curve as of our annual measurement date. 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 weighted
average discount rate for our pension plans was 4.98% and 5.50% for 2011 and 2010, respectively. The discount rate
for our OPEB plans was 4.78% and 5.20% for 2011 and 2010, respectively. The discount rates differ for our pension
and OPEB plans due to the duration of the projected benefit payments for each plan.
The following table reconciles the beginning and ending balances of the fair value of plan assets during 2011 and
2010 for the pension and OPEB plans:
(Millions)
Fair value of plan assets, beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets, end of year
Pension Plans
2011
$ 5,243.8
265.8
84.0
(296.8)
$ 5,296.8
2010
$ 4,394.9
604.7
528.6
(284.4)
$ 5,243.8
OPEB Plans
2011
$ 66.6
1.2
21.3
(24.9)
$ 64.2
2010
$ 67.9
2.0
22.8
(26.1)
$ 66.6
The difference between the fair value of plan assets and the plan's benefit obligation is referred to as the plan's
funded status. This funded status is an accounting-based calculation and is not indicative of our mandatory funding
requirements, which are described on page 93.
The funded status of our pension and OPEB plans at the measurement date for 2011 and 2010 were as follows:
(Millions)
Benefit obligation
Fair value of plan assets
Funded status
Pension Plans
2011
$ (6,130.3)
5,296.8
$ (833.5)
2010
$ (5,821.2)
5,243.8
$ (577.4)
OPEB Plans
2011
$ (312.7)
64.2
$ (248.5)
2010
$ (333.3)
66.6
$ (266.7)