Honeywell 2010 Annual Report Download - page 107

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts
Our general funding policy for qualified pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. In 2010, 2009
and 2008, we were not required to make contributions to our U.S. pension plans, however, we made voluntary contributions of $1,000, $740 and $242
million, respectively, primarily to improve the funded status of our plans. During 2011, we are still not required to make any contributions to our U.S. pension
plans, however, in January 2011 we made a voluntary cash contribution of $1 billion to improve the funded status of our plans. In 2010, we contributed
marketable securities valued at $242 million to one of our non-U.S. plans. In 2011, we also expect to contribute approximately $55 million to our non-U.S.
defined benefit pension plans to satisfy regulatory funding standards and to fund benefits to be paid directly from Company assets.
Benefit payments, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are expected to be paid as
follows:
U.S. Plans Non-U.S. Plans
2011 $ 996 $ 172
2012 1,015 176
2013 1,019 182
2014 1,036 186
2015 1,081 191
2016-2020 5,172 1,039
Other Postretirement Benefits
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) provides subsidies for employers that sponsor postretirement
health care plans that provide prescription drug coverage that is at least actuarially equivalent to that offered by Medicare Part D. The March 2010 enactment
of the Patient Protection and Affordable Care Act, including modifications made in the Health Care and Education Reconciliation Act of 2010 resulted in a
one-time, non-cash charge of $13 million related to income taxes in the first quarter of 2010. The charge results from a change in the tax treatment of the
Medicare Part D program. The impact of the Act reduced other postretirement benefits expense by approximately $11 and $21 million in 2009 and 2008,
respectively. The impact of the Act on other postretirement benefits expense was insignificant in 2010.
December 31,
2010 2009
Assumed health care cost trend rate:
Health care cost trend rate assumed for next year 8.0% 8.0%
Rate that the cost trend rate gradually declines to 5.0% 5.0%
Year that the rate reaches the rate it is assumed to remain at 2017 2016
The assumed health care cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in the assumed health care cost
trend rate would have the following effects:
1 percentage point
Increase Decrease
Effect on total of service and interest cost components $ 6 $ (4)
Effect on postretirement benefit obligation $ 119 $ (78)
Benefit payments reflecting expected future service, as appropriate, are expected to be paid as follows:
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