Navy Federal Credit Union 2007 Annual Report Download - page 36

14 Navy Federal
Note 12: Retirement
Benefit Plans
Navy Federal Credit Union
Employees’ Retirement Plan
This is a defined benefit retirement
plan which means that benefits are
based on a set formula. Navy Federal’s
plan converted to a Cash Balance Plan
design as of January 1, 2001, but still
retains the Traditional Plan design
for those employees who opted to
remain in the Traditional Plan. The
following describes how the benefits
are calculated:
• Cash Balance Plan–This plan
provides either a single sum pay-
ment upon retirement or a monthly
annuity option depending on the
amount of the accrued benefit.
• Traditional Plan–This plan is
designed to provide a lifetime of
monthly retirement benefits,
determined by a set formula, to
vested employees. The formula is
based on the final average earnings
(average from the three highest
consecutive years of income)
multiplied by 2% multiplied by
the length of service.
Retiree Medical Plan
Navy Federal provides postretirement
benefits to retired employees in the
form of a contributory group medical
plan and supplemental retirement in-
come to offset the cost of medical
insurance premiums or out-of-pocket
medical expenses (Medical Plan).
Under the provisions of the Medical
Plan, the retirees are responsible for the
full payment of the medical insurance
premiums.
The supplemental retirement
income benefit is an annual benefit of
$75 multiplied by the number of years
of continuous service the retiree had
with Navy Federal. There are no
assets set aside to pre-fund the liability
associated with the Medical Plan.
Medical cost trends do not impact
the determination of the postretirement
benefit, as the benefit amount is a fixed
monthly amount based on the number
of years of continuous service.
Note 11: Members’ Accounts
Member deposit accounts as of December 31, 2007 and 2006 were summarized as follows (dollars in thousands):
Weighted
Average Rate
for 2007 Amount at December 31, 2007
Weighted
Average Rate
for 2006 Amount at December 31, 2006
Money market 4.63% $ 4,457,111 4.29% $ 3,061,374
Share savings 1.38% 4,467,403 1.26% 5,186,140
Member escrow 0.74% 95,849 0.48% 82,497
Checking 0.54% 3,181,833 0.50% 3,248,313
Share and IRA certificates 4.51% 11,284,022 4.57% 8,629,856
IRA shares 1.66% 359,390 1.63% 412,701
IRA MMSA 4.49% 48,808 – –
Investor custodial accounts 0.00% 83,225 0.00% 85,207
Total deposits $ 23,977,641 $ 20,706,088
Years Ending December 31
2008 2009 2010 2011 2012 Thereafter
0 – 2.00% $ 4,498 $ 450 $ 258 $ 172 $ 75 $–
2.01 – 3.00 – – – – – –
3.01 – 4.00 226,513 4,018 104 – – –
4.01 – 5.00 1,752,323 1,501,867 695,861 2,912 – –
5.01 – 6.00 3,498,282 473,304 214,839 364,901 681,998 262,265
6.01 – 7.00 1,598,759 92 96 – – 436
7.01 – 8.00% ––––––
Total $ 7,080,374 $ 1,979,731 $ 911,158 $ 367,985 $ 682,073 $ 262,701
2007 2006
Money market $ 172,425 $ 112,267
Share savings 67,069 78,671
Checking 14,697 13,784
Share and IRA certificates 521,656 340,377
IRA shares 7,047 7,129
Total dividends $ 782,894 $ 552,228
The total uninsured amount of members’ accounts was $4.03 billion and $2.86 billion at December 31, 2007 and
2006, respectively.
At December 31, 2007, scheduled maturities of share certificates and IRA certificates were as follows (dollars in thousands):
Dividends on members’ deposit accounts were as follows (dollars in thousands at year end):