Morgan Stanley 2010 Annual Report Download - page 231

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
retirement contribution under the 401(k) plan. The amount of the retirement contribution is included in the
Company’s 401(k) cost and is equal to between 2% and 5% of eligible pay up to the annual Internal Revenue
Code Section 401(a)(17) limit based on years of service as of December 31.
On June 1, 2010, the U.S. Qualified Plan was amended to cease future benefit accruals after December 31, 2010.
Any benefits earned by participants under the U.S. Qualified Plan at December 31, 2010 will be preserved and
will be payable based on the U.S. Qualified Plan’s provisions. As a result, the Company recorded a curtailment
gain that reduced Compensation and benefits expense by approximately $51 million in the consolidated
statements of income for 2010. Additionally, the Company remeasured the obligation and assets of the U.S.
Qualified Plan at May 31, 2010 due to such cessation of accruals for benefits.
The Company also has an unfunded postretirement benefit plan that provides medical and life insurance for
eligible U.S. retirees and medical insurance for their dependents.
On October 29, 2010, the Morgan Stanley Medical Plan was amended to change eligibility requirements for a
Company-provided subsidy toward the cost of retiree medical coverage after December 31, 2010. As a result, the
Company recorded a curtailment gain that reduced Compensation and benefits expense by approximately $4
million in the consolidated statements of income for 2010. Additionally, the Company remeasured the obligation
and assets of the postretirement plan at October 31, 2010 for this amendment.
Net Periodic Benefit Expense.
The following table presents the components of the net periodic benefit expense for 2010, 2009, fiscal 2008 and
the one month ended December 31, 2008:
Pensions Postretirement
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008 2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
(dollars in millions)
Service cost, benefits earned during the
period ............................. $ 99 $116 $102 $ 8 $ 7 $ 12 $ 8 $1
Interest cost on projected benefit
obligation .......................... 152 152 135 12 11 12 10 1
Expected return on plan assets ............ (128) (125) (128) (10) — — — —
Net amortization of prior service credits .... (4) (9) (8) (1) (3) (1) (2) —
Net amortization of actuarial loss .......... 24 41 31 — 1 3 1 —
Curtailment gain ....................... (50) — — — (4) — — —
Settlement loss ........................ 3 — — — — — — —
Net periodic benefit expense ......... $ 96 $175 $132 $ 9 $ 12 $ 26 $17 $2
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