PNC Bank 2008 Annual Report Download - page 130

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 pension, nonqualified pension and postretirement benefit plans as well as the change in
plan assets for the qualified pension plan follows:
Qualified
Pension
Nonqualified
Pension
Postretirement
Benefits
December 31 (Measurement Date) – in millions 2008 2007 2008 2007 2008 2007
Accumulated benefit obligation at end of year $3,493 $1,436 $ 253 $ 109
Projected benefit obligation at beginning of year $1,507 $1,245 $ 113 $76 $ 243 $ 235
National City acquisition 2,109 145 105
Other acquisitions (a) 247 534 318
Service cost 44 42 2233
Interest cost 86 82 6615 14
Amendments (17) (5)
Actuarial losses (gains) and changes in assumptions (18) (11) 24(17) (2)
EITF 06-4 adoption 29
Participant contributions 98
Federal Medicare subsidy on benefits paid 22
Benefits paid (94) (98) (10) (9) (33) (30)
Projected benefit obligation at end of year $3,617 $1,507 $ 263 $ 113 $ 359 $ 243
Fair value of plan assets at beginning of year $2,019 $1,746
National City acquisition 2,032
Other acquisitions (a) 242
Actual return on plan assets (665) 129
Employer contribution $10 $9$22 $20
Participant contributions 98
Federal Medicare subsidy on benefits paid 22
Benefits paid (94) (98) (10) (9) (33) (30)
Fair value of plan assets at end of year $3,292 $2,019
Funded status $ (325) $ 512 $(263) $(113) $(359) $(243)
Net amount recognized on the balance sheet $ (325) $ 512 $(263) $(113) $(359) $(243)
Amounts recognized in accumulated other comprehensive income consist of:
Prior service cost (credit) (12) 2(22) (29)
Net actuarial loss 1,004 198 30 30 14 31
Amount recognized in AOCI $ 992 $ 200 $30 $30 $ (8) $2
(a) Sterling in 2008; Mercantile and Yardville in 2007.
The fair value of the qualified pension plan assets is less than
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 postretirement plan provides
benefits to certain retirees that are at least actuarially
equivalent to those provided by Medicare Part D and
accordingly, we receive a federal subsidy as shown in the
table.
PNC P
ENSION P LAN A SSETS
Assets related to our qualified pension plan (the “Plan”) are
held in trust (the “Trust”). The trustee is PNC Bank, N.A. The
Trust is exempt from tax pursuant to section 501(a) of the
Internal Revenue Code (the “Code”). The Plan is qualified
under section 401(a) of the Code. Plan assets consist primarily
of listed domestic and international equity securities and US
government, agency, and corporate debt securities and real
estate investments. Plan assets do not include common stock,
preferred stock or debt of PNC.
The Pension Plan Administrative Committee (the
“Committee”) adopted the current Pension Plan Investment
Policy Statement, including the updated target allocations and
allowable ranges shown below, on August 13, 2008.
The long-term investment strategy for pension plan assets is
to:
• Meet present and future benefit obligations to all
participants and beneficiaries,
• Cover reasonable expenses incurred to provide such
benefits, including expense incurred in the
administration of the Trust and the Plan,
• Provide sufficient liquidity to meet benefit and
expense payment requirements on a timely basis, and
• Provide a total return that, over the long term,
maximizes the ratio of trust assets to liabilities by
maximizing investment return, at an appropriate level
of risk.
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