Bank of Montreal 2012 Annual Report Download - page 165

Notes
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Canadian $ in millions, except as noted) Pension benefit plans
Other employee future
benefit plans
2012 2011 2012 2011
Weighted-average assumptions used to determine benefit expenses
Estimated average service period of active employees (in years) 10 11 14 14
Average period until benefits are vested (in years) na na 11 11
Discount rate at beginning of year 5.1% 5.2% 5.6% 5.4%
Expected long-term rate of return on plan assets 5.9% 6.3% 7.0% 7.0%
Rate of compensation increase 3.3% 3.2% 3.2% 3.0%
Assumed overall health care cost trend rate na na 5.4% (1) 5.6% (2)
(1) Trending to 4.5% in 2030 and remaining at that level thereafter.
(2) Trending to 4.4% in 2030 and remaining at that level thereafter.
na – not applicable
Changes in the 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
2012 2011 2012 2011
Benefit liability
Benefit liability at beginning of year 5,124 4,839 952 975
Opening adjustment for acquisitions –17 ––
Benefits earned by employees 186 163 18 21
Interest cost on benefit liability 266 253 53 53
Benefits paid to pensioners and employees (264) (243) (29) (30)
Voluntary employee contributions 10 9––
(Gain) loss on the benefit liability arising from changes in assumptions 693 73 154 (66)
Plan settlement –1––
Plan amendments (b) –25 ––
Other, primarily foreign exchange (3) (13) 1(1)
Benefit liability at end of year 6,012 5,124 1,149 952
Wholly or partially funded benefit liability 5,938 5,066 102 102
Unfunded benefit liability 74 58 1,047 850
Total benefit liability 6,012 5,124 1,149 952
Weighted-average assumptions used to determine the benefit liability
Discount rate at end of year 4.2% 5.1% 4.4% 5.6%
Rate of compensation increase 2.9% 3.3% 3.2% 3.2%
Assumed overall health care cost trend rate na na 5.4% (1) 5.5% (1)
Fair value of plan assets
Fair value of plan assets at beginning of year 5,338 5,185 72 67
Expected return on plan assets 313 323 55
(Shortfall) excess of actual returns over expected returns on plan assets 177 (87) 41
Employer contributions 223 171 29 30
Voluntary employee contributions 10 9––
Benefits paid to pensioners and employees (264) (239) (29) (30)
Settlement payments –(3) ––
Other, primarily foreign exchange 5(21) –(1)
Fair value of plan assets at end of year 5,802 5,338 81 72
Plan funded status (210) 214 (1,068) (880)
Unrecognized actuarial (gain) loss (a) 675 160 83 (68)
Unrecognized (benefit) of plan amendments (b) ––(4) (7)
Net benefit asset (liability) at end of year 465 374 (989) (955)
Recorded in:
Other assets 508 411 ––
Other liabilities (43) (37) (989) (955)
Net benefit asset (liability) at end of year 465 374 (989) (955)
The plans paid $4 million for the year ended October 31, 2012 ($4 million in 2011) to us and
certain of our subsidiaries for investment management, record-keeping, custodial and
administrative services rendered on the same terms that we offer to our customers for these
services. The plans did not hold any of our shares directly as at October 31, 2012 and 2011.
(1) Trending to 4.5% in 2030 and remaining at that level thereafter.
na – not applicable
162 BMO Financial Group 195th Annual Report 2012