GE 2008 Annual Report Download - page 67

ge 2008 annual report 65
notes to consolidated financial statements
In 2009, we estimate that we will amortize $675 million of prior
service cost and $105 million of net actuarial gain from share-
owners’ equity into retiree benefit plans cost. Comparable
amortized amounts in 2008 were $673 million of prior service
cost and $49 million of net actuarial gains.
ESTIMATED FUTURE BENEFIT PAYMENTS
2014 –
(In millions) 2009 2010 2011 2012 2013 2018
Gross $910 $930 $965 $980 $1,000 $5,200
Expected Medicare
Part D subsidy 75 80 85 90 95 550
Net $835 $850 $880 $890 $ 905 $4,650
Pension Benefits
We sponsor a number of pension plans. Principal pension plans,
together with affiliate and certain other pension plans (other
pension plans) detailed in this note, represent about 99% of our
total pension assets. We use a December 31 measurement date
for our plans.
PRINCIPAL PENSION PLANS are the GE Pension Plan and the GE
Supplementary Pension Plan.
The GE Pension Plan provides benefits to certain U.S. employees
based on the greater of a formula recognizing career earnings or a
formula recognizing length of service and final average earnings.
Certain benefit provisions are subject to collective bargaining.
The GE Supplementary Pension Plan is an unfunded plan
providing supplementary retirement benefits primarily to higher-
level, longer-service U.S. employees.
OTHER PENSION PLANS in 2008 included 31 U.S. and non-U.S.
pension plans with pension assets or obligations greater than
$50 million. These defined benefit plans provide benefits to
employees based on formulas recognizing length of service and
earnings.
PENSION PLAN PARTICIPANTS
Principal Other
pension pension
December 31, 2008 Total plans plans
Active employees 188,000 140,000 48,000
Vested former employees 231,000 190,000 41,000
Retirees and beneficiaries 246,000 220,000 26,000
Total 665,000 550,000 115,000
FAIR VALUE OF PLAN ASSETS
(In millions) 2008 2007
Balance at January 1 $1,804 $1,710
Actual gain (loss) on plan assets (486) 221
Employer contributions 617 622
Participant contributions 51 47
Benefits paid (a) (811) (796)
Balance at December 31 $1,175 $1,804
(a) Net of Medicare Part D subsidy.
PLAN ASSET ALLOCATION
2008 2007
Target Actual Actual
December 31 allocation allocation allocation
U.S. equity securities 19 – 39% 25% 33%
Non-U.S. equity securities 18 – 38 15 20
Debt securities (including
cash equivalents) 11–41 39 31
Real estate 2–12 7 6
Private equities 3–13 8 5
Other 0–10 6 5
Plan fiduciaries set investment policies and strategies for the trust
and oversee its investment allocation, which includes selecting
investment managers and setting long-term strategic targets.
Long-term strategic investment objectives include preserving the
funded status of the plan and balancing risk and return. Target
allocation ranges are guidelines, not limitations, and occasionally
plan fiduciaries will approve allocations above or below a target
range.
Trust assets invested in short-term securities must generally
be invested in securities rated A1/P1 or better, except for 15%
of such securities that may be rated A2/P2. According to statute,
the aggregate holdings of all qualifying employer securities
(e.g., GE common stock) and qualifying employer real property
may not exceed 10% of the fair value of trust assets at the time
of purchase. GE securities represented 3.6% and 5.9% of trust
assets at year-end 2008 and 2007, respectively.
RETIREE BENEFIT ASSET (LIABILITY)
December 31 (In millions) 2008 2007
Funded status (a) $(10,774) $(11,179)
Liability recorded in the Statement
of Financial Position
Retiree health plans
Due within one year $ (644) $ (675)
Due after one year (9,105) (10,172)
Retiree life plans (1,025) (332)
Net liability recognized $(10,774) $(11,179)
Amounts recorded in shareowners’
equity (unamortized)
Prior service cost $ 5,027 $ 5,700
Net actuarial loss (gain) (475) 210
Total $ 4,552 $ 5,910
(a) Fair value of assets less APBO, as shown in the preceding tables.