PNC Bank 2011 Annual Report Download - page 175

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:
Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets
Qualified
Pension
Nonqualified
Pension
Postretirement
Benefits
December 31 (Measurement Date) – in millions 2011 2010 2011 2010 2011 2010
Accumulated benefit obligation at end of year $4,095 $3,619 $ 289 $ 286
Projected benefit obligation at beginning of year $3,803 $3,611 $ 290 $ 282 $ 393 $ 374
Service cost 94 102 4375
Interest cost 196 203 13 14 19 20
Actuarial losses and changes in assumptions 304 92 15 11 (1) 20
Participant contributions 13 14
Federal Medicare subsidy on benefits paid 22
Early Retirement Reinsurance Program payments received 1
Benefits paid (209) (205) (25) (20) (37) (42)
Projected benefit obligation at end of year $4,188 $3,803 $ 297 $ 290 $ 397 $ 393
Fair value of plan assets at beginning of year $3,991 $3,721
Actual return on plan assets 23 475
Employer contribution $25 $20 $22 $26
Participant contributions 13 14
Federal Medicare subsidy on benefits paid 22
Benefits paid (209) (205) (25) (20) (37) (42)
Fair value of plan assets at end of year $3,805 $3,991
Funded status $ (383) $ 188 $(297) $(290) $(397) $(393)
Amounts recognized in the statement of financial positions
Noncurrent asset 188
Current liability (30) (33) (34) (35)
Noncurrent liability (383) (267) (257) (363) (358)
Net amount recognized on the balance sheet $ (383) $ 188 $(297) $(290) $(397) $(393)
Amounts recognized in accumulated other comprehensive income consist of:
Prior service cost (credit) $ (39) $ (46) $2$2$ (11) $ (14)
Net actuarial loss 1,087 526 71 61 54 55
Amount recognized in AOCI $1,048 $ 480 $73 $63 $43 $41
At December 31, 2011, the fair value of the qualified pension
plan assets were less than both the accumulated benefit
obligation and the projected benefit obligation. This is due to
unfavorable 2011 investment returns, as well as an increase in
obligations due to a drop in the discount rate. The
nonqualified pension plan 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.
The Early Retiree Reinsurance Program (ERRP) was
established by the Patient Protection and Affordable Care Act.
Congress appropriated funding of $5 billion for this temporary
ERRP to provide financial assistance to employers, unions,
and state and local governments to help them maintain
coverage for early retirees age 55 and older who are not yet
eligible for Medicare, including their spouses, surviving
spouses, and dependents. The ERRP ceased accepting
applications after May 5, 2011. PNC submitted an application
for reimbursement from the ERRP in 2011 for the 2010 and
2011 plan years. In 2011, PNC received reimbursement of $.6
million related to the 2010 plan year. The reimbursement for
the 2011 plan year is not reflected in the above financial
statements because the reimbursement of $.9 million was not
approved until 2012. These reimbursements will be used to
offset increases in the employer’s costs of maintaining
coverage.
166 The PNC Financial Services Group, Inc. – Form 10-K