Goldman Sachs 2007 Annual Report Download - page 127
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Notes to Consolidated Financial Statements
The weighted average assumptions used to develop the actuarial present value of the projected benefit obligation and net periodic
pension cost are set forth below. These assumptions represent a weighted average of the assumptions used for the U.S. and non-U.S.
plans and are based on the economic environment of each applicable country.
Year Ended November
2007 2006 2005
Defined benefit pension plans
U.S. pension
—
projected benefit obligation
Discount rate 6.00% 5.50% 5.25%
Rate of increase in future compensation levels N/A N/A N/A
U.S. pension
—
net periodic benefit cost
Discount rate 5.50 5.25 5.50
Rate of increase in future compensation levels N/A N/A N/A
Expected long-term rate of return on plan assets 7.50 7.50 7.50
Non-U.S. pension
—
projected benefit obligation
Discount rate 5.91 4.85 4.81
Rate of increase in future compensation levels 5.38 4.98 4.75
Non-U.S. pension
—
net periodic benefit cost
Discount rate 4.85 4.81 4.63
Rate of increase in future compensation levels 4.98 4.75 4.49
Expected long-term rate of return on plan assets 6.84 6.93 6.35
Postretirement plans
—
benefit obligation
Discount rate 6.00 5.50 5.25
Rate of increase in future compensation levels 5.00 5.00 5.00
Postretirement plans
—
net periodic benefit cost
Discount rate 5.50 5.25 5.50
Rate of increase in future compensation levels 5.00 5.00 5.00
For measurement purposes, an annual growth rate in the per
capita cost of covered healthcare benefits of 10.02% was
assumed for the year ending November 2008. The rate was
assumed to decrease ratably to 5.00% for the year ending
November 2015 and remain at that level thereafter.
Generally, the firm determined the discount rates for its defined
benefit plans by referencing indices for long-term, high-quality
bonds and ensuring that the discount rate does not exceed the
yield reported for those indices after adjustment for the duration
of the plans’ liabilities.
The firm’s approach in determining the long-term rate of return
for plan assets is based upon historical financial market
relationships that have existed over time with the presumption
that this trend will generally remain constant in the future.
125Goldman Sachs 2007 Annual Report