Morgan Stanley 2010 Annual Report Download - page 232

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other changes in plan assets and benefit obligations recognized in other comprehensive loss (income) on a
pre-tax basis in 2010, 2009, fiscal 2008 and the one month ended December 31, 2008 are as follows:
Pension Postretirement
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008 2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
(dollars in millions)
Net loss (gain) .......................... $ 34 $509 $(330) $282 $ 2 $ (25) $(11) $50
Prior service credit ....................... — (16) — — (54) — — —
Amortization of prior service credit .......... 54 9 8 1 7 1 2 —
Amortization of net loss ................... (27) (41) (31) — (1) (3) (1) —
Total recognized in other comprehensive loss
(income) ............................. $ 61 $461 $(353) $283 $(46) $ (27) $(10) $50
The Company, for most plans, amortizes (as a component of pension and postretirement expense) unrecognized
net gains and losses over the average future service of active participants to the extent that the gain (loss) exceeds
10% of the greater of the projected benefit obligation or the market-related value of plan assets. Effective
January 1, 2011, the U.S. Qualified Plan will amortize the unrecognized net gains and losses using the average
life expectancy of participants.
The following table presents the weighted average assumptions used to determine net periodic benefit costs 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
Discount rate ................ 5.91% 5.75% 6.17% 7.23% 6.00%/5.35% 5.78% 6.34% 7.47%
Expected long-term rate of return
on plan assets ............. 4.78 5.21 6.46 5.17 N/A N/A N/A N/A
Rate of future compensation
increases ................. 5.13 5.12 5.08 5.09 N/A N/A N/A N/A
N/A—Not Available.
The expected long-term rate of return on plan assets represents the Company’s best estimate of the long-term
return on plan assets. For the U.S. Qualified Plan, the expected long-term rate of return was estimated by
computing a weighted average return of the underlying long-term expected returns on the plan’s fixed income
assets based on the investment managers’ target allocations within this asset class. The expected long-term return
on assets is a long-term assumption that generally is expected to remain the same from one year to the next
unless there is a significant change in the target asset allocation, the fees and expenses paid by the plan or market
conditions. In late 2008, the U.S. Qualified Plan transitioned to 100% investment in fixed income securities and
related derivative securities, including interest rate swap contracts. This asset allocation is expected to help
protect the plan’s funded status and limit volatility of the Company’s contributions. Total U.S. Qualified Plan
portfolio performance is assessed by comparing actual investment performance with changes in the estimated
present value of the U.S. Qualified Plan’s liability.
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