PNC Bank 2005 Annual Report Download - page 96

96
NOTE 17 EMPLOYEE BENEFIT PLANS
PENSION AND POSTRETIREMENT PLANS
We have a noncontributory, qualified defined benefit
pension plan covering eligible employees. Retirement
benefits are derived from a cash balance formula based on
compensation levels, age and length of service. Pension
contributions are based on an actuarially determined amount
necessary to fund total benefits payable to plan participants.
We also maintain nonqualified supplemental retirement
plans for certain employees. All retirement benefits
provided under these plans are unfunded and we make any
payments to plan participants. We also provide certain
health care and life insurance benefits for qualifying retired
employees (“postretirement benefits”) through various
plans.
During the second quarter of 2005, we acquired a frozen
defined benefit pension plan as a result of the Riggs
acquisition. Plan assets and projected benefit obligations of
the Riggs plan were approximately $107 million and $116
million, respectively, at acquisition date. The $9 million
funding deficit was recognized as part of the Riggs
acquisition purchase price allocation. For determining
contribution amounts to the plan, deficits are calculated using
ERISA-mandated rules, and on this basis we contributed
approximately $16 million to the Riggs plan during the third
quarter of 2005. We integrated the Riggs plan into the PNC
plan on December 30, 2005.
We use a measurement date of December 31 for plan assets and benefit obligations. A reconciliation of the changes in the
projected benefit obligation for qualified and nonqualified pension plans and postretirement benefit plans as well as the change in
plan assets for the qualified pension plan is as follows:
Qualified
Pension
Nonqualified
Pension
Postretirement
Benefits
December
31 (Measurement Date)
–
in millions
2005
2004
2005
2004
2005
2004
Accumulated benefit obligation at end of year $1,232 $1,111 $69 $68
Projected benefit obligation at beginning of year
$1,166
$1,025
$72
$68
$276
$258
United National acquisitio
n
37
25
Riggs acquisition
116
1
26
Service cost
33
35
1
1
2
3
Interest cost
65
65
4
4
14
17
Effect of Medicare Modernization Act
(11)
Amendments
1
1
(10)
Actuarial loss (gain) (including changes in assumptions)
71
2
4
(28)
14
Participant contributions 7 7
Benefits paid (90) (61) (7) (5) (28) (27)
Curtailment (7)
Projected benefit obligation at end of year
$1,290
$1,166
$73
$72
$270
$276
Fair value of plan assets at beginning of year $1,492 $1,352
United National acquisition 36
Riggs acquisition 107
Actual return on plan assets 102 154
Employer contribution 16 11 $7 $5 $21 $20
Participant contributions 7 7
Benefits paid (90) (61) (7) (5) (28) (27)
Fair value of plan assets at end of ye
ar
$1,627
$1,492
Funded status
$337
$326
$(73)
$(72)
$(270)
$(276)
Unrecognized net actuarial loss 340 337 26 27 64 96
Unrecognized prior service cost (credit) (1) (2) 1 1 (38) (46)
Net amount recognized on the balance sheet
$676
$661
$(46
)
$(44)
$(244)
$(226)
Prepaid (accrued) pension cost $676 $661 $(46) $(44)
Additional minimum liability (23) (24)
Intangible asset 1 1
Accumulated other comprehensive loss 22 23
Net amount recognized on the balance sheet $676 $661 $(46) $(44)
The fair value of the qualified pension plan assets exceeds both the accumulated benefit obligation and the projected benefit
obligation. The nonqualified pension plan, which contains several individual plans that are accounted for together, is unfunded.
Contributions from us and, in the case of postretirement benefit plans, participant contributions cover all benefits paid under the
nonqualified pension plan and postretirement benefit plans. The benefit obligations, asset values, funded status and balance sheet
impacts are shown in the above table.