Fannie Mae 2006 Annual Report Download - page 290

14. Employee Retirement Benefits
We sponsor both defined benefit plans and defined contribution plans for our employees, as well as a
healthcare plan that provides certain health benefits for retired employees and their dependents.
The adoption of SFAS 158 had no effect to our consolidated statement of income for the year ended
December 31, 2006 or any year presented. The following table displays the incremental effects of adopting the
provisions of SFAS 158 on our consolidated balance sheet as of December 31, 2006.
Before Application
of SFAS 158 Adjustments
After Application
of SFAS 158
(Dollars in millions)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79 $(79) $ —
Deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . — 55 55
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 79 $(24) $ 55
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(280) $(56) $(336)
Total stockholders’ equity (AOCI) . . . . . . . . . . . . . . . . . 1 80 81
Total liabilities and stockholders’ equity . . . . . . . . . . . $(279) $ 24 $(255)
Defined Benefit Pension Plans and Postretirement Health Care Plan
Our defined benefit pension plans include qualified and nonqualified noncontributory plans. Pension plan
benefits are based on years of credited service and a percentage of eligible compensation. All regular full-time
employees and regular part-time employees regularly scheduled to work at least 1,000 hours per year are
eligible to participate in the qualified defined benefit pension plan. We fund our qualified pension plan
through employer contributions to a qualified irrevocable trust that is maintained for the sole benefit of plan
participants and their beneficiaries. Contributions to our qualified pension plan are subject to a minimum
funding requirement and a maximum funding limit under the Employee Retirement Income Security Act of
1974 (“ERISA”) and IRS regulations. Although we were not required to make any contributions to the
qualified plan in 2006, 2005 or 2004, we did elect to make discretionary contributions in each of these years.
Our nonqualified pension plans include an Executive Pension Plan, Supplemental Pension Plan and the 2003
Supplemental Pension Plan, which is a bonus-based plan. These plans cover certain employees and supplement
the benefits payable under the qualified pension plan. The Compensation Committee of the Board of Directors
selects those who can participate in the Executive Pension Plan. The Board of Directors approves the pension
goals under the Executive Pension Plan for participants who are at the level of Executive Vice President and
above and payments are reduced by any amounts payable under the qualified plan. Participants typically vest
in their benefits under the Executive Pension Plan after ten years of service as a participant, with partial
vesting usually beginning after five years. Benefits under the Executive Pension Plan are paid through a rabbi
trust.
The Supplemental Pension Plan provides retirement benefits to employees who do not receive a benefit from
the Executive Pension Plan and whose salary exceeds the statutory compensation cap applicable to the
qualified plan or whose benefit is limited by the statutory benefit cap. Similarly, the 2003 Supplemental
Pension Plan provides additional benefits to our officers based on the annual cash bonus received by an
officer, but the amount of bonus considered is limited to 50% of the officer’s salary. We pay benefits for our
unfunded Supplemental Pension Plans from our cash and cash equivalents.
We also sponsor a contributory postretirement Health Care Plan that covers substantially all regular full-time
employees who meet the applicable age and service requirements. We accrue and pay the benefits for our
unfunded postretirement Health Care Plan from our cash and cash equivalents.
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FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)