Rogers 2006 Annual Report Download - page 105

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101
RO GER S CO MMU NIC AT ION S IN C . 20 0 6 ANN UA L RE POR T
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net plan expense is outlined below:
2006 2005
Plan cost:
Service cost $ 24 $ 15
Interest cost 32 30
Actual return on plan assets (40) (67)
Actuarial loss (gain) on benefit obligation (12) 82
Costs 4 60
Differences between costs arising during the year and costs recognized during the year in respect of:
Return on plan assets 7 37
Actuarial loss (gain) 22 (74)
Plan amendments/prior service cost 1 1
Transitional asset (10) (10)
Net pension expense $ 24 $ 14
December 31, 2006 (2005 – $18 million) and related expense for 2006
was $4 million (2005 – $3 million).
The Company also provides supplemental unfunded pension ben-
efits to certain executives. The accrued benefit obligation relating to
these supplemental plans amounted to approximately $19 million at
(A) ACTUARIAL ASSUMP TIONS:
2006 2005
Weighted average discount rate for accrued benefit obligations 5.25% 5.25%
Weighted average discount rate for pension expense 5.25% 6.25%
Weighted average rate of compensation increase for pension expense and accrued benefit obligation 3.50% 4.00%
Weighted average expected long-term rate of return on plan assets 6.75% 7.25%
Expected return on assets represents management’s best estimate
of the long-term rate of return on plan assets applied to the fair
value of the plan assets. The Company establishes its estimate of the
expected rate of return on plan assets based on the fund’s target
asset allocation and estimated rate of return for each asset class.
Estimated rates of return are based on expected returns from fixed
income securities which take into account bond yields. An equity
risk premium is then applied to estimate equity returns. Differences
between expected and actual return are included in actuarial gains
and losses.
The estimated average remaining service periods for the plans range
from 9 to 13 years. The Company did not have any curtailment gains
or losses in 2006 or 2005.
Plan assets are comprised primarily of pooled funds that invest in
common stocks and bonds. The pooled Canadian equity fund has
investments in the Company’s equity securities comprising approxi-
mately 1% of the pooled fund. This results in approximately $1 million
(2005 – $1 million) of the plans’ assets being indirectly invested in the
Company’s equity securities.
The Company makes contributions to the plans to secure the benefits
of plan members and invests in permitted investments using the target
ranges established by the Pension Committee of the Company. The
Pension Committee reviews actuarial assumptions on an annual basis.
(B) ALLOCATION OF PL AN ASSETS:
Percentage of Percentage of
plan assets, plan assets, Target asset
December 31, December 31, allocation
Asset category 2006 2005 percentage
Equity securities 59.7% 59.5% 50% to 65%
Debt securities 40.0% 39.9% 35% to 50%
Other (cash) 0.3% 0.6% 0% to 1%
100.0% 100.0%