DuPont 2005 Annual Report Download - page 105

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E. I. du Pont de Nemours and Company
Notes to Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
Pension Other
Benefits Benefits
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, 2005 2004 2005 2004
Discount rate 5.58% 6.06% 5.75% 6.25%
Expected return on plan assets 8.74% 8.85% – –
Rate of compensation increase 4.29% 4.29% 4.50% 4.49%
The discount rate and the rate of compensation increase used to determine the benefit obligation in the U.S. are 5.50 percent
and 4.50 percent, respectively, for 2005 and 5.75 percent and 4.50 percent, respectively for 2004. For determining U.S. plans net
periodic costs, the discount rate, expected return on plan assets and the rate of compensation increase are 5.75 percent,
9.0 percent, and 4.50 percent for 2005 and 6.25 percent, 9.0 percent and 4.50 percent for 2004.
The company utilizes published long-term high quality corporate bond indices to determine the discount rate at measurement
date. Where commonly available, the company considers indices of various durations to reflect the timing of future benefit
payments.
The long-term rate of return on assets in the U.S. was selected from within the reasonable range of rates determined by
(a) historical real returns (net of inflation) for the asset classes covered by the investment policy, and (b) projections of
inflation over the long-term period during which benefits are payable to plan participants. For non-U.S. plans, assumptions
reflect economic assumptions applicable to each country.
Assumed health care cost trend rates at December 31, 2005 2004
Health care cost trend rate assumed for next year 10% 10%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5% 5%
Year that the rate reaches the ultimate trend rate 2011 2010
Assumed health care cost trend rates have a modest effect on the amount reported for the health care plan. A
one-percentage-point change in assumed health care cost trend rates would have the following effects:
1-Percentage 1-Percentage
Point Increase Point Decrease
Effect on total of service and interest cost $7 $(8)
Effect on postretirement benefit obligation 82 (88)
In 2005, the company updated the mortality tables used for most U.S. plans. The impacts of this change in mortality tables and
lower discount rates were more than offset by the effects of favorable investment and other economic experience under these
plans.
F-46