Citibank 2011 Annual Report Download - page 190

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Plan Assumptions
Citigroup utilizes a number of assumptions to determine plan obligations
and expense. Changes in one or a combination of these assumptions
will have an impact on the Company’s pension and postretirement PBO,
funded status and benefit expense. Changes in the plans’ funded status
resulting from changes in the PBO and fair value of plan assets will have a
corresponding impact on Accumulated other comprehensive income (loss).
A discussion of certain assumptions follows.
Discount Rate
The discount rates for the U.S. pension and postretirement plans were selected
by reference to a Citigroup-specific analysis using each plan’s specific
cash flows and compared with high quality corporate bond indices for
reasonableness. Citigroup’s policy is to round to the nearest five hundredths
of a percent. Accordingly, at December 31, 2011, the discount rate was set
at 4.70% for the pension plans and 4.30% for the postretirement plans. At
December 31, 2010, the discount rate was set at 5.45% for the pension plans
and 5.10% for the postretirement plans, referencing a Citigroup-specific cash
flow analysis.
The discount rates for the non-U.S. pension and postretirement plans are
selected by reference to high quality corporate bond rates in countries that
have developed corporate bond markets. However, where developed corporate
bond markets do not exist, the discount rates are selected by reference to local
government bond rates with a premium added to reflect the additional risk
for corporate bonds.
The discount rate and future rate of compensation assumptions used in
determining pension and postretirement benefit obligations and net benefit
expense for the Company’s plans are shown in the following table:
At year end 2011 
Discount rate
53æPLANSæ
0ENSION 4.70% 
0OSTRETIREMENT 4.30 æ
.ON53æPENSIONæPLANS
2ANGE 1.75 to 13.25 æTOæ
7EIGHTEDæAVERAGEæ 5.94 
Future compensation increase rate
53æPLANSæ 3.00 
.ON53æPENSIONæPLANS
2ANGE 1.60 to 13.30 æTOæ
7EIGHTEDæAVERAGE 4.04 
During the year 2011 
Discount rate
53æPLANSæ
0ENSION 5.45% 
0OSTRETIREMENT 5.10 
.ON53æPENSIONæPLANS
2ANGE 1.75 to 14.00 æTOæ
7EIGHTEDæAVERAGE 6.23 æ
Future compensation increase rate
53æPLANSæ 3.00 
.ON53æPENSIONæPLANS
2ANGE 1.00 to 11.00 æTOæ
7EIGHTEDæAVERAGE 4.66 
æ 7EIGHTEDAVERAGEæRATESæFORæTHEæ53æPLANSæEQUALæTHEæSTATEDæRATES
æ %FFECTIVEæ*ANUARYæææTHEæ53æQUALIFIEDæPENSIONæPLANæWASæFROZENæEXCEPTæFORæCERTAINæGRANDFATHEREDæ
EMPLOYEESæACCRUINGæBENEFITSæUNDERæAæFINALæPAYæPLANæFORMULAæ/NLYæTHEæFUTUREæCOMPENSATIONæINCREASESæ
FORæTHESEæGRANDFATHEREDæEMPLOYEESæWILLæAFFECTæFUTUREæPENSIONæEXPENSEæANDæOBLIGATIONSæ&UTUREæ
COMPENSATIONæINCREASEæRATESæFORæSMALLæGROUPSæOFæEMPLOYEESæWEREæ