Discover 2011 Annual Report Download - page 139
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127
13. Employee Benefit Plans
The Company sponsors the Discover Financial Services Pension Plan, which is a non-contributory defined benefit plan
that is qualified under Section 401(a) of the Internal Revenue Code (the “Qualified Plan”), for eligible employees in the U.S.
The Company also sponsors the Discover Financial Services 401(k) Plan (the “Discover 401(k) Plan”) for its eligible U.S.
employees. However, effective December 31, 2008, the Qualified Plan was amended to discontinue the accrual of future
benefits.
Defined Benefit Pension and Other Postretirement Plans. The Qualified Plan generally provides pension benefits that are
based on each employee's years of credited service prior to 2009 and on compensation levels specified in the qualified plan.
The Company's policy is to fund at least the amounts sufficient to meet minimum funding requirements under the Employee
Retirement Income Security Act of 1974 (“ERISA”). The Company also participates in an unfunded postretirement benefit
plan that provides medical and life insurance for eligible U.S. retirees and their dependents.
Net Periodic Benefit Cost. Net periodic benefit cost expensed by the Company included the following components
(dollars in thousands):
Service cost, benefits earned during the period
Interest cost on projected benefit obligation
Expected return on plan assets
Net amortization
Net settlements and curtailments
Net periodic benefit (income) cost
Pension
For the Years Ended November 30,
2011
$—
20,886
(23,080)
1,369
—
$ (825)
2010
$—
20,858
(23,295)
1,625
223
$ (589)
2009
$ 1,022
20,189
(24,107)
30
64
$ (2,802)
Postretirement
For the Years Ended November 30,
2011
$ 1,083
1,243
—
(134)
—
$ 2,192
2010
$ 1,055
1,386
—
(2)
—
$ 2,439
2009
$ 777
1,575
—
(150)
—
$ 2,202
Accumulated Other Comprehensive Income. As of November 30, 2011, pretax amounts recognized in accumulated other
comprehensive income that have not yet been recognized as components of net periodic benefit cost consist of (dollars in
thousands):
Prior service credit (cost)
Net (loss) gain
Total
Pension
$ 9,559
(196,134)
$(186,575)
Postretirement
$(756)
3,275
$ 2,519
The estimated portion of the prior service (cost) credit and net (loss) gain above that is expected to be recognized as a
component of net periodic benefit cost in 2012 is shown below (dollars in thousands):
Prior service credit (cost)
Net (loss) gain
Total
Pension
$ 1,053
(3,636)
$(2,583)
Postretirement
$(66)
40
$(26)
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