Pfizer 2011 Annual Report Download - page 88

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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
C. Obligations and Funded Status
An analysis of the changes in our benefit obligations, plan assets and funded status of our benefit plans follow:
YEAR ENDED DECEMBER 31,
PENSION PLANS
U.S. QUALIFIED(a)
U.S.
SUPPLEMENTAL
(NON-QUALIFIED)(b) INTERNATIONAL(c)
POSTRETIREMENT
PLANS(d)
(MILLIONS OF DOLLARS) 2011 2010 2011 2010 2011 2010 2011 2010
Change in benefit obligation:
Benefit obligation at beginning of year $13,035 $12,578 $ 1,401 $ 1,368 $ 9,132 $ 9,049 $ 3,582 $ 3,733
Service cost 351 347 36 28 251 230 68 79
Interest cost 734 740 72 77 453 427 195 211
Employee contributions ————16 18 45 22
Plan amendments (73) (46) (9) (6) 4(3) (28) (495)
Changes in actuarial assumptions and
other 1,808 980 111 180 (536) 361 300 281
Foreign exchange impact ————311 (504) —4
Acquisitions 56 1—(1) 210 14 —
Curtailments (97) (233) (10) (29) (121) (33) 17 1
Settlements (476) (905) (128) (235) (64) (53) ——
Special termination benefits 23 73 26 180 46319
Benefits paid (526) (500) (68) (161) (398) (376) (296) (273)
Benefit obligation at end of year(e) 14,835 13,035 1,431 1,401 9,054 9,132 3,900 3,582
Change in plan assets:
Fair value of plan assets at beginning of
year 10,596 9,977 ——6,699 6,516 414 370
Actual gain on plan assets 398 1,123 ——171 454 946
Company contributions 1,969 901 196 396 491 455 250 249
Employee contributions ————16 18 45 22
Foreign exchange impact ————203 (315) ——
Acquisitions 44 ———————
Settlements (476) (905) (128) (235) (64) (53) ——
Benefits paid (526) (500) (68) (161) (398) (376) (296) (273)
Fair value of plan assets at end of year(f) 12,005 10,596 ——7,118 6,699 422 414
Funded status—Plan assets less than
the benefit obligation at end of year $ (2,830) $ (2,439) $(1,431) $(1,401) $(1,936) $(2,433) $(3,478) $(3,168)
(a) The unfavorable change in our U.S. qualified plans’ projected benefit obligations funded status was largely driven by changes in interest rates and
lower than expected asset returns, partially offset by plan contributions of $2.0 billion.
(b) The U.S. supplemental (non-qualified) pension plans are not generally funded and these obligations, which are substantially greater than the annual
cash outlay for these liabilities, are paid from cash generated from operations.
(c) The favorable change in our international plans’ projected benefit obligations funded status was largely driven by changes in actuarial assumptions,
partially offset by the weakening of the U.S. dollar against the U.K. pound and euro. Outside the U.S., in general, we fund our defined benefit plans
to the extent that tax or other incentives exist and we have accrued liabilities on our consolidated balance sheet to reflect those plans that are not
fully funded.
(d) The unfavorable change in our postretirement plans’ accumulated benefit obligations (ABO) funded status was largely driven by changes in
actuarial assumptions.
(e) For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the benefit
obligation is the accumulated postretirement benefit obligation. The ABO for all of our U.S. qualified pension plans was $13.8 billion in 2011 and
$12.0 billion in 2010. The ABO for our U.S. supplemental (non-qualified) pension plans was $1.2 billion in both 2011 and 2010. The ABO for our
international pension plans was $8.3 billion in 2011 and $8.1 billion in 2010.
(f) The U.S. qualified pension plans loan securities to other companies. Such securities may be onward loaned, sold or pledged by the other
companies, but they may be required to be returned in a short period of time. We also require cash collateral from these companies and a
maintenance margin of 103% of the fair value of the collateral relative to the fair value of the loaned securities. As of December 31, 2011, the fair
value of collateral received was $2 million and, as of December 31, 2010, the fair value of collateral received was $581 million. The securities
loaned continue to be included in the table above in Fair value of plan assets, and the securities-lending program for the pension plans will be
discontinued in 2012.
2011 Financial Report 87