Entergy 2009 Annual Report Download - page 132

Entergy Corporation and Subsidiaries
Notes to Financial Statements
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The significant actuarial assumptions used in determining the net periodic pension and other postretirement
benefit costs for 2009, 2008, and 2007 were as follows:
2009 2008 2007
Weighted-average discount rate:
Qualified pension 6.75% 6.50% 6.00%
Other postretirement 6.70% 6.50% 6.00%
Non-qualified pension 6.75% 6.50% 6.00%
Weighted-average rate of increase
in future compensation levels 4.23% 4.23% 3.25%
Expected long-term rate of
return on plan assets:
Taxable assets 6.00% 5.50% 5.50%
Non-taxable assets 8.50% 8.50% 8.50%
Entergy's other postretirement benefit transition obligations are being amortized over 20 years ending in
2012.
Accounting Mechanisms
With regard to pension and other postretirement costs, Entergy calculates the expected return on pension and
other postretirement benefit plan assets by multiplying the long-term expected rate of return on assets by the market-
related value (MRV) of plan assets. Entergy determines the MRV of pension plan assets by calculating a value that
uses a 20-quarter phase-in of the difference between actual and expected returns. For other postretirement benefit
plan assets Entergy uses fair value when determining MRV.
Medicare Prescription Drug, Improvement and Modernization Act of 2003
In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 became
law. The Act introduces a prescription drug benefit cost under Medicare (Part D), which started in 2006, as well as
a federal subsidy to employers who provide a retiree prescription drug benefit that is at least actuarially equivalent to
Medicare Part D. The actuarially estimated effect of future Medicare subsidies reduced the December 31, 2009 and
2008 Accumulated Postretirement Benefit Obligation by $215 million and $187 million, respectively, and reduced the
2009, 2008, and 2007 other postretirement benefit cost by $24.0 million, $24.7 million, and $26.5 million,
respectively. In 2009, Entergy received $5.1 million in Medicare subsidies for prescription drug claims.
Non-Qualified Pension Plans
Entergy also sponsors non-qualified, non-contributory defined benefit pension plans that provide benefits to
certain key employees. Entergy recognized net periodic pension cost related to these plans of $23.6 million in 2009,
$17.2 million in 2008, and $20.6 million in 2007. In 2009, Entergy recognized a $6.7 million settlement charge
related to the payment of lump sum benefits out of the plan that is included in the non-qualified pension plan cost
above. The projected benefit obligation was $147.9 million and $138.4 million as of December 31, 2009 and 2008,
respectively. There were $0.2 million in plan assets for a pre-merger Entergy Gulf States Louisiana plan at
December 31, 2008 and none at December 31, 2009. The accumulated benefit obligation was $134.1 million and
$125.5 million as of December 31, 2009 and 2008, respectively.
Entergy's non-qualified, non-current pension liability at December 31, 2009 and 2008 was $124.1 million
and $121.5 million, respectively; and its current liability was $23.8 million and $16.7 million, respectively. The
unamortized transition asset, prior service cost and net loss are recognized in regulatory assets ($51.6 million at
December 31, 2009 and $44.1 million at December 31, 2008) and accumulated other comprehensive income before
taxes ($23 million at December 31, 2009 and $18.2 million at December 31, 2008).
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