Bank of Montreal 2003 Annual Report Download - page 96

BMO Financial Group 186th Annual Report 200392
Summaries of the changes in estimated financial positions of our pension benefit plans and other employee future benefit plans are
as follows:
(Canadian $ in millions, except as noted) Pension benefit plans Other employee future benefit plans
2003 2002 2001 2003 2002 2001
Benefit liability
Benefit liability at beginning of year $ 3,157 $ 2,903 $ 2,211 $ 595 $ 537 $ –
Adjustment to adopt change in accounting standard –– 402 –– 490
Benefits earned by employees 111 105 93 17 13 13
Interest cost on benefit liability 196 191 177 38 35 32
Benefits paid to pensioners and employees (195) (167) (151) (25) (23) (18)
Voluntary employee contributions 556
–––
Actuarial loss (1) 159 119 117 170 34 17
Plan amendments – 15 24 (66) ––
Reduction in liability due to partial settlement (15) –––––
Other, primarily foreign exchange (118) (14) 24 (18) (1) 3
Benefit liability at end of year $ 3,300 $ 3,157 $ 2,903 $ 711 $ 595 $ 537
Weighted-average assumptions used to determine the benefit liability:
Discount rate at end of year 6.2% 6.5% 6.7% 6.4% 6.7% 6.6%
Rate of compensation increase 4.2% 4.1% 4.2% 4.1% 3.7% 4.2%
Assumed overall health care cost trend rate na na na 8.4% 5.3% 5.6%
Fair value of plan assets
Fair value of plan assets at beginning of year $ 2,912 $ 2,816 $ 3,103 $ 55 $ 54 $ –
Transition adjustment to reflect prior funding by U.S. subsidiary ––––– 50
Actual return on plan assets 223 (188) (285) 10 (3) (3)
Bank contributions 333 454 122 25 27 5
Voluntary employee contributions 556
–––
Benefits paid to pensioners and employees (195) (167) (151) (25) (23) –
Assets paid to participants to settle their pension (17) –––––
Other, primarily foreign exchange (70) (8) 21 (10) – 2
Fair value of plan assets at end of year (2) $ 3,191 $ 2,912 $ 2,816 $ 55 $ 55 $ 54
Plan funded status (3) $ (109) $ (245) $ (87) $ (656) $ (540) $ (483)
Unrecognized actuarial loss (1) 1,192 1,148 633 219 63 25
Unrecognized cost (benefit) of plan amendments (4) 29 33 20 (66) ––
Net benefit asset (liability) at end of year $ 1,112 $ 936 $ 566 $ (503) $ (477) $ (458)
Recorded in:
Other assets $ 1,171 $ 1,008 $ 669 $ – $ – $ –
Other liabilities (59) (72) (103) (503) (477) (458)
Net benefit asset (liability) at end of year $ 1,112 $ 936 $ 566 $ (503) $ (477) $ (458)
Notes to Consolidated Financial Statements
(1) A continuity of our actuarial (gains) losses is as follows:
(Canadian $ in millions) Pension benefit plans Other employee future benefit plans
2003 2002 2001 2003 2002 2001
Unrecognized actuarial (gain) loss at beginning of year $ 1,148 $ 633 $ (543) $ 63 $ 25 $ –
Adoption of new accounting standard on November 1, 2000 –– 523 –––
Loss on the benefit liability arising from changes in assumptions 159 119 117 170 34 17
(Excess) shortfall of actual return on plan assets compared to expected return (6) 423 537 (6) 88
Recognition in expense of a portion of the unrecognized actuarial loss (62) (27) –– (3) (1)
Impact of foreign exchange and other (47) – (1) (8) (1) 1
Unrecognized actuarial loss at end of year $ 1,192 $ 1,148 $ 633 $ 219 $ 63 $ 25
(2) Fair value of plan assets at year end are comprised of:
Pension benefit plans Other employee future benefit plans
2003 2002 2001 2003 2002 2001
Equities 45% 53% 60% 61% 65% 64%
Fixed income investments 42% 39% 35% 30% 30% 36%
Other 13% 8% 5% 9% 5% –
The plans paid $4 million for the year ended October 31, 2003 ($5 million in 2002; $4 million in 2001)
to us and certain of our subsidiaries for investment management, record-keeping, custodial and
administrative services rendered on the same terms that we offer these services to our customers.
The plans did not hold any of our shares directly as at October 31, 2003, 2002 and 2001.
na – not applicable