Citibank 2009 Annual Report Download - page 173

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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, 2009,
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 2010 are anticipated to be
approximately $160 million. In addition, the Company expects to contribute
$35 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 2010. For
the non-U.S. postretirement benefit plans, expected cash contributions for
2010 are $72 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
2010 $ 727 $ 327 $ 45
2011 739 290 47
2012 760 295 50
2013 774 302 54
2014 788 316 57
2015–2019 4,113 1,815 357
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 $148 million and $142 million as of
January 1, 2009 and 2008, respectively, and the postretirement expense by
approximately $13 million and $17 million for 2009 and 2008, respectively.
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
2010 $ 113 $ 13
2011 113 13
2012 111 13
2013 109 14
2014 106 14
2015–2019 479 67
Citigroup 401(k)
Under the Citigroup 401(k) plan, a defined-contribution plan, eligible U.S.
employees received matching contributions up to 6% of their compensation
in 2009, subject to statutory limits. Effective January 7, 2010, the maximum
amount of matching contributions paid on employee deferral contributions
made into this plan will be reduced from 6% to 4% of eligible pay for all
employees. 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.
The pretax expense associated with this plan amounted to approximately
$442 million and $580 million in 2009 and 2008, respectively. The decrease
in expense from 2008 to 2009 reflects the reduction in participants due to the
Morgan Stanley Smith Barney joint venture and other reductions in workforce.