Citibank 2008 Annual Report Download - page 155

Contributions
Citigroup’s pension funding policy for U.S. plans and non-U.S. plans is
generally to fund to applicable minimum funding requirements rather than
to the amounts of accumulated benefit obligations. For the U.S. plans, the
Company may increase its contributions above the minimum required
contribution under ERISA, if appropriate to its tax and cash position and the
plans’ funded position. For the U.S. pension plans, at December 31, 2008,
there were no minimum required cash contributions and no discretionary or
non-cash contributions are currently planned. For the non-U.S. pension
plans, discretionary cash contributions in 2009 are anticipated to be
approximately $167 million. In addition, the Company expects to contribute
$27 million of benefits to be directly paid by the Company for its unfunded
non-U.S. pension and postretirement plans. For the U.S. postretirement
benefit plans, there are no expected or required contributions for 2009. For
the non-U.S. postretirement benefit plans, expected cash contributions for
2009 are $91 million including $3 million of benefits to be directly paid by
the Company. These estimates are subject to change, since contribution
decisions are affected by various factors, such as market performance and
regulatory requirements; in addition, management has the ability to change
funding policy.
Estimated Future Benefit Payments
The Company expects to pay the following estimated benefit payments in
future years:
U.S. plans Non-U.S. plans
In millions of dollars
Pension
benefits
Pension
benefits
Postretirement
benefits
2009 $ 740 $ 276 $37
2010 745 258 39
2011 752 275 41
2012 769 284 44
2013 789 288 47
2014–2018 4,148 1,680 291
Prescription Drugs
In December 2003, the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the “Act of 2003”) was enacted. The Act of 2003
established a prescription drug benefit under Medicare known as “Medicare
Part D,” and a federal subsidy to sponsors of U.S. retiree health care benefit
plans that provide a benefit that is at least actuarially equivalent to Medicare
Part D. The benefits provided to certain participants are at least actuarially
equivalent to Medicare Part D and, accordingly, the Company is entitled to a
subsidy.
The expected subsidy reduced the accumulated postretirement benefit
obligation (APBO) by approximately $142 million and $141 million as of
January 1, 2008 and 2007, respectively, and the 2008 and 2007
postretirement expense by approximately $17 million and $18 million,
respectively, for all of the U.S. postretirement welfare plans for 2008 and
2007.
The following table shows the estimated future benefit payments without
the effect of the subsidy and the amounts of the expected subsidy in future
years:
Expected U.S.
postretirement benefit payments
In millions of dollars
Before Medicare
Part D subsidy
Medicare
Part D subsidy
2009 $105 $11
2010 107 12
2011 107 12
2012 107 13
2013 105 13
2014–2018 490 68
Citigroup 401(k)
Under the Citigroup 401(k) plan, a defined contribution plan, eligible U.S.
employees receive matching contributions up to 6% of their compensation,
subject to statutory limits. The matching contribution is invested according
to participants’ individual elections. Additionally, for eligible employees
whose compensation is $100,000 or less, a fixed contribution of up to 2% of
compensation is provided. This fixed contribution is invested initially in the
Citigroup common stock fund. Employees are free to transfer to alternative
plan investments immediately.
The pretax expense associated with this plan amounted to approximately
$580 million in 2008, $81 million in 2007, and $77 million in 2006. The
increase in expense from 2007 to 2008 reflects the redesign of retirement
programs effective January 1, 2008. The redesign provides for a significantly
enhanced 401(k) company contribution offset by the elimination of future
accruals under the Citigroup U.S. Pension Plan.
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