PNC Bank 2012 Annual Report Download - page 214

N OTE 15 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 determined using a
cash balance formula where earnings credits are a percentage of eligible compensation. Earnings credit percentages for plan
participants on December 31, 2009 are frozen at their level earned to that point. Earnings credits for all employees who become
participants on or after January 1, 2010 are a flat 3% of eligible compensation. Participants at December 31, 2009 earn interest
based on 30-year Treasury securities with a minimum rate, while new participants on or after January 1, 2010 are not subject to the
minimum rate. 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 and 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. The Company reserves the right to terminate plans or make plan changes at any time.
PNC acquired RBC Bank (USA) during the first quarter of 2012. RBC Bank (USA) employees began to participate in PNC’s
pension and 401(k) plans upon meeting the plan’s eligibility requirements. Some grandfathered employees will also be eligible for
PNC’s postretirement medical benefits.
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.
Table 118: Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets
Qualified
Pension
Nonqualified
Pension
Postretirement
Benefits
December 31 (Measurement Date) – in millions 2012 2011 2012 2011 2012 2011
Accumulated benefit obligation at end of year $4,432 $4,095 $ 357 $ 289
Projected benefit obligation at beginning of year $4,188 $3,803 $ 297 $ 290 $ 397 $ 393
National City acquisition (1) 2
RBC Bank (USA) acquisition 52 13
Service cost 101944455
Interest cost 191 196 14 13 16 19
Actuarial (gains)/losses and changes in assumptions 358 304 28 15 (18) (1)
Participant contributions 13 13
Federal Medicare subsidy on benefits paid 22
Early Retirement Reinsurance Program payments received 1 1
Benefits paid (326) (209) (33) (25) (34) (37)
Projected benefit obligation at end of year $4,512 $4,188 $ 362 $ 297 $ 394 $ 397
Fair value of plan assets at beginning of year $3,805 $3,991
Actual return on plan assets 530 23
Employer contribution $33 $25 $19 $22
Participant contributions 13 13
Federal Medicare subsidy on benefits paid 22
Benefits paid (326) (209) (33) (25) (34) (37)
Fair value of plan assets at end of year $4,009 $3,805
Funded status $ (503) $ (383) $(362) $(297) $(394) $(397)
Amounts recognized on the consolidated balance sheet
Current liability (36) (30) (28) (34)
Noncurrent liability (503) (383) (326) (267) (366) (363)
Liabilities recognized on the consolidated balance sheet $ (503) $ (383) $(362) $(297) $(394) $(397)
Amounts recognized in accumulated other comprehensive income consist of:
Prior service cost (credit) $ (31) $ (39) $ 1 $ 2 $ (9) $ (11)
Net actuarial loss 1,110 1,087 93 71 37 54
Amount recognized in AOCI $1,079 $1,048 $ 94 $ 73 $ 28 $ 43
The PNC Financial Services Group, Inc. – Form 10-K 195