PNC Bank 2006 Annual Report Download - page 111

N OTE 17 E MPLOYEE B ENEFIT P LANS
P ENSION A ND P OSTRETIREMENT P LANS
We have a noncontributory, qualified defined benefit pension
plan covering eligible employees. 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. We also provide certain health care and
life insurance benefits for qualifying retired employees
(“postretirement benefits”) through various plans. The
nonqualified pension and postretirement benefit plans are
unfunded.
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 2006 2005 2006 2005 2006 2005
Accumulated benefit obligation at end of year $1,186 $1,232 $73 $69
Projected benefit obligation at beginning of year $1,290 $1,166 $73 $72 $270 $276
Riggs acquisition 116 1 26
Service cost 34 33 1122
Interest cost 68 65 4413 14
Amendments 21
Actuarial loss (gain) (including changes in assumptions) (47) 3 2(30) (28)
Participant contributions 77
Federal Medicare subsidy on benefits paid 2
Benefits paid (102) (90) (5) (7) (29) (28)
Projected benefit obligation at end of year $1,245 $1,290 $76 $73 $235 $270
Fair value of plan assets at beginning of year $1,627 $1,492
Riggs acquisition 107
Actual return on plan assets 221 102
Employer contribution 16 $5 $7 $20 $21
Participant contributions 77
Federal Medicare subsidy on benefits paid 2
Benefits paid (102) (90) (5) (7) (29) (28)
Fair value of plan assets at end of year $1,746 $1,627
Funded status $501 $337 $(76) $(73) $(235) $(270)
Unrecognized net actuarial loss 340 26 64
Unrecognized prior service cost (credit) (1) 1 (38)
Net amount recognized on the balance sheet $501 $676 $(76) $(46) $(235) $(244)
Amounts recognized in the Consolidated Balance Sheet consist of:
Other assets (Other liabilities) $501 $(76) $(235)
Prepaid (accrued) pension cost $676 $(46) $(244)
Additional minimum liability (23)
Intangible asset 1
Accumulated other comprehensive loss 22
Net amount recognized in the Consolidated Balance Sheet $501 $676 $(76) $(46) $(235) $(244)
Amounts recognized in accumulated other comprehensive income consist of:
Prior service cost (credit) 2 (31)
Net actuarial loss 184 28 33
Amount recognized in AOCI $186 $28 $2
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.
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