CenterPoint Energy 2009 Annual Report Download - page 103

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81
CenterPoint Energy used the following assumptions to determine net periodic cost relating to pension and
postretirement benefits:
December 31,
2007 2008 2009
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
Discount rate ............................................. 5.85% 5.85% 6.40% 6.40% 6.90% 6.90%
Expected return on plan assets .................. 8.50 7.60 8.50 7.60 8.00 7.05
Rate of increase in compensation levels ... 4.60
—
4.60
—
4.60
—
In determining net periodic benefits cost, CenterPoint Energy uses fair value, as of the beginning of the year, as
its basis for determining expected return on plan assets.
The following table summarizes changes in the benefit obligation, plan assets, the amounts recognized in
consolidated balance sheets and the key assumptions of CenterPoint Energy’s pension, including benefit restoration,
and postretirement plans. The measurement dates for plan assets and obligations were December 31, 2008 and 2009.
December 31,
2008 2009
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
(In millions, exce
p
t for actuarial assum
p
tions)
Chan
g
e in Benefit Obli
g
ation
Benefit obligation, beginning of yea
r
.........................................
.
$ 1,645 $ 437 $ 1,710 $ 426
Service cos
t
................................................................................
.
31 1 25 1
Interest cos
t
................................................................................
.
101 27 113 28
Participant contributions ............................................................
.
—
5
—
6
Benefits pai
d
...............................................................................
.
(123) (38) (111) (42)
Actuarial gain (loss) ...................................................................
.
(59) (10) 129 29
Plan amendmen
t
.........................................................................
.
114
—
—
—
Medicare reimbursemen
t
............................................................
.
—
4
—
2
Benefit enhancemen
t
..................................................................
.
1
—
—
—
Benefit obligation, end of yea
r
...................................................
.
1,710 426 1,866 450
Chan
g
e in Plan Assets
Fair Value of plan assets, beginning of yea
r
..............................
.
1,792 161 1,276 135
Emplo
y
er contributions ..............................................................
.
8 27 20 28
Participant contributions ............................................................
.
—
5
—
6
Benefits pai
d
...............................................................................
.
(123) (38) (111) (42)
Actual investment return ............................................................
.
(401) (20) 247 19
Fair value of plan assets, end of
y
ea
r
.........................................
.
1,276 135 1,432 146
Funded status, end of
y
ea
r
..........................................................
.
$ (434) $ (291) $ (434) $ (304)
Amounts Reco
g
nized in Balance Sheets
Current liabilities-othe
r
..............................................................
.
$ (9) $ (10) $ (9) $ (9)
Other liabilities-
b
enefit obli
g
ations ............................................
.
(425) (281) (425) (295)
N
et liabilit
y
, end of
y
ea
r
.............................................................
.
$ (434) $ (291) $ (434) $ (304)
Actuarial Assum
p
tions
Discount rate ..............................................................................
.
6.90% 6.90% 5.70% 5.70%
Expected return on plan assets ...................................................
.
8.00 7.05 8.00 7.05
Rate of increase in compensation levels .....................................
.
4.60
—
4.60
—
Healthcare cost trend rate assumed for the next yea
r
.................
.
—
6.50
—
7.50
Prescription drug cost trend rate assumed for the next yea
r
.......
.
—
12.00
—
8.00
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate) ...................................................................
.
—
5.50
—
5.50
Year that the healthcare rate reaches the ultimate trend rate ......
.
—
2011
—
2014
Year that the prescription drug rate reaches the ultimate trend
rate ............................................................................................
.
—
2014
—
2015