OG&E 2009 Annual Report Download - page 85

Option 1: Stay or participate in the current Pension Plan’s cash balance benefit, under which OGE Energy annually will
credit to the employee’s account an amount equal to five percent of the employee’s annual compensation plus accrued
interest, as well as stay in their current 401(k) Plan matching contribution formula where, for each pay period beginning on or
after January 1, 2010, OGE Energy contributes to the 401(k) Plan, on behalf of each participant, 100 percent of the
participant’s contributions up to six percent of compensation.
Option 2: Elect not to participate in or, for those currently participating, freeze the current cash balance benefit under the
Pension Plan at December 31, 2009 so that it will only accrue annual interest credits in the future, and, for each pay period
beginning on or after January 1, 2010, OGE Energy will also contribute to the 401(k) Plan, on behalf of each participant, 200
percent of the participant’s contributions up to five percent of compensation.
Employees hired or rehired on or after December 1, 2009, will only be eligible to participate in the 401(k) Plan where, for
each pay period, OGE Energy will contribute to the 401(k) Plan, on behalf of each participant, 200 percent of the participant’s
contributions up to five percent of compensation.
It is OGE Energy’s policy to fund the Pension Plan on a current basis based on the net periodic pension expense as
determined by OGE Energy’s actuarial consultants. OGE Energy could be required to make additional contributions if the value of its
pension trust and postretirement benefit plan trust assets are adversely impacted by a major market disruption in the future. During
each of 2009 and 2008, OGE Energy made contributions to its Pension Plan of approximately $50.0 million, of which approximately
$47.0 million in each of 2009 and 2008 was the Company’s portion, to help ensure that the Pension Plan maintains an adequate funded
status. Such contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be
earned in the future. In August 2006, legislation was passed that changed the funding requirement for single- and multi-employer
defined benefit pension plans as discussed below. During 2010, OGE Energy may contribute up to $50.0 million to its Pension Plan,
of which approximately $47.0 million is expected to be the Company’s portion. The expected contribution to the Pension Plan during
2010 would be a discretionary contribution, anticipated to be in the form of cash, and is not required to satisfy the minimum regulatory
funding requirement specified by the Employee Retirement Income Security Act of 1974, as amended.
At December 31, 2009, the projected benefit obligation and fair value of assets of the Company’s portion of OGE Energy’s
Pension Plan and restoration of retirement income plan was approximately $478.2 million and $398.9 million, respectively, for an
underfunded status of approximately $79.3 million. These amounts have been recorded in Accrued Benefit Obligations with the offset
recorded as a regulatory asset in the Company’s Balance Sheet as discussed in Note 1. The amount recorded as a regulatory asset
represents a net periodic benefit cost to be recognized in the Statements of Income in future periods.
At December 31, 2008, the projected benefit obligation and fair value of assets of the Company’s portion of OGE Energy’s
Pension Plan and restoration of retirement income plan was approximately $433.7 million and $309.2 million, respectively, for an
underfunded status of approximately $124.5 million. These amounts have been recorded in Accrued Benefit Obligations with the
offset recorded as a regulatory asset in the Company’s Balance Sheet as discussed in Note 1. The amount recorded as a regulatory
asset represents a net periodic benefit cost to be recognized in the Statements of Income in future periods.
OGE Energy recorded a pension settlement charge and a retirement restoration plan settlement charge in 2007. The pension
settlement charge and retirement restoration plan settlement charge did not require a cash outlay by OGE Energy and did not increase
OGE Energy’s total pension expense or retirement restoration expense over time, as the charges were an acceleration of costs that
otherwise would have been recognized as pension expense or retirement restoration expense in future periods.
(In millions) OGE Energy Company’s Portion (A)
Pension Settlement Charge:
2007 $ 16.7 $ 13.3
Retirement Restoration Plan Settlement Charge:
2007 $ 2.3 $ 0.1
(A) The Company’s Oklahoma and Arkansas jurisdictional portion of these charges were recorded as a regulatory asset (see Note 1
for a further discussion).
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