JP Morgan Chase 2006 Annual Report Download - page 103

JPMorgan Chase & Co. / 2006 Annual Report 101
Defined benefit pension plans
As of or for the year ended December 31, U.S. Non-U.S. OPEB plans(g)
(in millions) 2006 2005(e) 2006 2005 2006 2005(h)
Change in benefit obligation
Benefit obligation, beginning of year $ (8,054) $ (7,980) $ (2,378) $ (1,969) $ (1,395) $ (1,577)
Cazenove business partnership ———(291) ——
Benefits earned during the year (281) (293) (37) (25) (9) (13)
Interest cost on benefit obligations (452) (453) (120) (104) (78) (81)
Plan amendments ——2——117
Liabilities of newly material plans(a) ——(154) ———
Employee contributions NA NA (2) —(50) (44)
Actuarial gain (loss) (200) (123) (23) (310) (55) 21
Benefits paid 856 766 68 66 177 187
Expected Medicare Part D subsidy receipts NA NA NA NA (13) NA
Curtailments 33 29 2—(12) (9)
Settlements ——37 ———
Special termination benefits ——(1) —(2) (1)
Foreign exchange impact and other ——(311) 255 (6) 5
Benefit obligation, end of year $ (8,098) $ (8,054) $ (2,917) $ (2,378) $ (1,443) $ (1,395)
Change in plan assets
Fair value of plan assets, beginning of year $ 9,617 $ 9,637 $ 2,223 $ 1,889 $ 1,329 $ 1,302
Cazenove business partnership ———252 ——
Actual return on plan assets 1,151 703 94 308 120 43
Firm contributions 43 43 241 78 23
Employee contributions ——2———
Assets of newly material plans(a) ——67 ———
Benefits paid (856) (766) (68) (66) (100) (19)
Settlements ——(37) ———
Foreign exchange impact and other ——291 (238) ——
Fair value of plan assets, end of year $ 9,955(c) $ 9,617(c) $ 2,813 $ 2,223 $ 1,351 $ 1,329
Funded (unfunded) status $ 1,857 $ 1,563 $ (104) $ (155) $ (92) $ (66)
Unrecognized amounts:
Net actuarial loss NA(d) 1,087 NA(d) 599 NA(d) 335
Prior service cost (credit) NA(d) 43 NA(d) 3NA(d) (105)
Net amount recognized in the
Consolidated balance sheets(b) $ 1,857 $ 2,693 $ (104) $ 447(f) $ (92) $ 164
Accumulated benefit obligation, end of year $ (7,679) $ (7,647) $ (2,849) $ (2,303) NA NA
(a) Reflects adjustments related to pension plans in Germany and Switzerland, which have defined benefit pension obligations that were not previously measured under SFAS 87 due to immateriality.
(b) Net amount recognized is recorded in Other assets for prepaid pension costs or in Accounts payable, accrued expenses and other liabilities for accrued pension costs.
(c) At December 31, 2006 and 2005, approximately $282 million and $405 million, respectively, of U.S. plan assets related to participation rights under participating annuity contracts.
(d) Under SFAS 158, and as noted in the following table, amounts that were previously reported as part of prepaid or accrued pension costs are now reported within AOCI.
(e)
Revised primarily to incorporate amounts related to the U.S. defined benefit pension plans not subject to Title IV of the Employee Retirement Income Security Act of 1974 (e.g., Excess Retirement Plan).
(f) At December 31, 2005, Accrued pension costs related to non-U.S. defined benefit pension plans that JPMorgan Chase elected not to prefund fully totaled $164 million.
(g) Includes accumulated postretirement benefit obligation of $52 million and $44 million and postretirement benefit liability (included in Accrued expenses) of $52 million and $50 million, at December
31, 2006 and 2005, respectively, for the U.K. plan, which is unfunded.
(h) The U.S. OPEB plan was remeasured as of August 1, 2005, to reflect a midyear plan amendment and the final Medicare Part D regulations that were issued on January 21, 2005; as a result, the ben-
efit obligation was reduced by $116 million.
Amounts recognized in Accumulated other comprehensive income
Defined benefit pension plans
U.S. Non-U.S. OPEB plans
Before Tax After Before Tax After Before Tax After
December 31, 2006 (in millions) tax effect tax tax effect tax tax effect tax
Net actuarial loss(a) $ 783 $ 311 $ 472 $ 669 $ 266 $ 403 $ 335 $ 84 $ 251
Prior service cost (credit) 36 14 22 — — — (77) (31) (46)
Total recognized in Accumulated other
comprehensive income $ 819 $ 325 $ 494 $ 669 $ 266 $ 403 $ 258 $ 53 $ 205
(a) For defined benefit pension plans, the net actuarial loss is primarily the result of declines in discount rates in recent years, partially offset by asset gains. Other factors that contribute to this net actu-
arial loss include demographic experience, which differs from expectations, and changes in other actuarial assumptions. For OPEB plans, the primary drivers of the cumulative actuarial loss were the
decline in the discount rate in recent years and in the medical cost trend rate, which was higher than expected. These losses have been offset partially by the recognition of future savings attributable
to Medicare Part D subsidy receipts.