Pep Boys 2010 Annual Report Download - page 121

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 29, 2011, January 30, 2010 and January 31, 2009
NOTE 13—BENEFIT PLANS (Continued)
The following actuarial assumptions were used to determine benefit obligation and pension
expense:
Year Ended
January 29, January 30, January 31,
2011 2010 2009
Benefit obligation assumptions:
Discount rate .......................... 5.70% 6.10% 7.00%
Rate of compensation increase .............. N/A N/A N/A
Pension expense assumptions:
Discount rate .......................... 6.10% 7.00% 6.50%
Expected return on plan assets .............. 6.95% 6.70% 6.70%
Rate of compensation expense .............. N/A N/A 4.00%(1)
(1) Bonuses are assumed to be 25% of base pay for the SERP.
The Company selected the discount rate for the benefit obligation at January 29, 2011 to reflect a
rate commensurate with a model bond portfolio with durations that match the expected payment
patterns of the plans. To develop the expected long-term rate of return on assets assumption, the
Company considered the historical returns and the future expectations for returns for each asset class,
as well as the target asset allocation of the pension portfolio. This resulted in the selection of a
long-term rate of return on assets of 6.95% for fiscal 2010 and 6.70% for fiscal 2009 and 2008.
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