Freddie Mac 2009 Annual Report Download - page 287

stock dividend for one quarter, which the REITs paid for the quarter ended September 30, 2008 and (ii) take all steps
necessary to effect the elimination of the REITs by merger in a timely and expeditious manner. No other common or
preferred stock dividends were declared by our REIT subsidiaries during 2009. Consequently, absent further direction from
FHFA to declare and pay dividends (within the time constraints set forth in the Internal Revenue Code) on the REIT
preferred and common stock, the REITs will no longer qualify as REITs for federal income tax purposes retroactively to
January 1, 2009. Upon losing REIT status, both REITs will be eligible to file a consolidated federal income tax return with
Freddie Mac for the year ended December 31, 2009.
NOTE 16: EMPLOYEE BENEFITS
Defined Benefit Plans
We maintain a tax-qualified, funded defined benefit pension plan, or Pension Plan, covering substantially all of our
employees. Pension Plan benefits are based on an employee’s years of service and highest average compensation, up to legal
plan limits, over any consecutive 36 months of employment. Our Pension Plan assets are invested in various combinations of
equity, fixed income, and other types of investments. In addition to our Pension Plan, we maintain a nonqualified, unfunded
defined benefit pension plan for our officers, as part of our Supplemental Executive Retirement Plan, or SERP. The related
retirement benefits for our SERP are paid from our general assets. Our qualified and nonqualified defined benefit pension
plans are collectively referred to as defined benefit pension plans.
We maintain a defined benefit postretirement health care plan, or Retiree Health Plan, that generally provides
postretirement health care benefits on a contributory basis to retired employees age 55 or older who rendered at least
10 years of service (five years of service if the employee was eligible to retire prior to March 1, 2007) and who, upon
separation or termination, immediately elected to commence benefits under the Pension Plan in the form of an annuity. Our
Retiree Health Plan is currently unfunded and the benefits are paid from our general assets. This plan and our defined
benefit pension plans are collectively referred to as the defined benefit plans.
Prior to 2008, for financial reporting purposes, we used a September 30 valuation measurement date for all of our
defined benefit plans. Effective January 1, 2008, we changed the measurement date of our defined benefit plan assets and
obligations from September 30 to our fiscal year-end date of December 31 using the 15-month transition method in
accordance with an amendment to the measurement date provisions in accounting requirements for defined benefit pension
and other post retirement plans. See “NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” for further
information regarding the change to our measurement date.
We accrue the estimated cost of retiree benefits as employees render the services necessary to earn their pension and
postretirement health benefits. Our pension and postretirement health care costs related to these defined benefit plans for
2009, 2008 and 2007 presented in the following tables were calculated using assumptions as of December 31, 2008,
September 30, 2007 and 2006, respectively. The funded status of our defined benefit plans for 2009 and 2008 presented in
the following tables was calculated using assumptions as of December 31, 2009 and 2008, respectively.
284 Freddie Mac