Navy Federal Credit Union 2008 Annual Report Download - page 14

Retiree Medical Plan
Navy Federal provides postretirement benefits to retired employees in the form of a contributory group medical
plan and supplemental retirement income 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. On September 1, 2008, the new retiree medical benefit went
into effect. The supplemental retirement income benefit is an annual benefit of $75 or $100 (depending on
the retiree's age on 1 September 2008), 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.
The following table sets forth the funded status of the pension and other postretirement plans:
The weighted-average assumptions used to determine the projected benefit obligation for the pension and
other postretirement benefits were:
The following table sets forth the net periodic benefit cost, contributions received and benefits paid for the
benefit plans:
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2008 FINANCIAL SECTION
At December 31, 2008, scheduled maturities of share certificates and IRA certificates were as follows:
Dividends on members’ deposit accounts totaled as follows:
Note 13: Retirement Benefit Plans
Navy Federal Credit Union Employees’ Retirement Plan
Navy Federal’s Employees’ retirement plan is a defined benefit retirement plan with benefits based on a set
formula. Navy Federal’s plan converted to a Cash Balance Plan design as of January 1st, 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:
4Cash Balance Plan—This plan provides either a single sum payment upon retirement or a monthly annuity
option depending on the amount of the accrued benefit.
4Traditional 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% times the length of service.
NAVY FEDERAL CREDIT UNION
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(dollars in thousands) 2009 2010 2011 2012 2013 Thereafter
0–2.00% $ 55,417 $ 351 $ 253 $ 109 $ 47 $—
2.01–3.00% 805,732 7,724 7,635 — ——
3.01–4.00% 3,371,034 711,591 168,089 47,975 ——
4.01–5.00% 2,096,836 1,044,493 40,963 4,298 788,210 305,210
5.01–6.00% 335,665 157,768 350,355 659,100 222,278 289,254
6.01–7.00% 90 94 ——— 419
7.01–8.00% ——
————
Total $ 6,664,774 $ 1,922,021 $ 567,295 $ 711,482 $ 1,010,535 $ 594,883
(dollars in thousands) 2008 2007
Money Market $ 110,656 $ 172,425
Share Savings 41,941 67,069
Checking 12,356 14,697
Share and IRA Certificates 489,740 521,656
IRA shares 5,925 7,047
Total dividends $ 660,618 $ 782,894
Pension Retiree Medical
(dollars in thousands at year-end) 2008 2007 2008 2007
Funded status, end of year:
Fair value of plan assets $ 490,958 $ 522,887 $—$ —
Benefit obligations 491,929 441,129 29,855 27,802
Funded status $ (971) $ 81,758 $ (29,855) $ (27,802)
Pension Retiree Medical
(dollars in thousands at year-end) 2008 2007 2008 2007
Benefit cost $ 9,774 $ 13,326 $ 4,361 $ 3,443
Employer contribution 127,000 25,000 642 1,055
Plan participants’ contribution — —826 796
Benefits paid 14,443 12,914 1,468 1,851
Pension Retiree Medical
2008 2007 2008 2007
Discount rate 6.15% 6.30% 6.15% 6.30%
Rate of compensation increase 4.00% 5.0% N/A N/A