Sallie Mae 2005 Annual Report Download - page 184
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SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)
F-62
17. Benefit Plans
Pension Plans
Effective July 1, 2004, the Company’s qualified and supplemental pension plans (the “Pension Plans”)
were frozen with respect to new entrants and participants with less than five years of service. Accordingly,
at July 1, 2004, the Company recorded a net curtailment gain of $4.5 million. No further benefits will
accrue with respect to such participants under the Pension Plans, other than interest accruals on cash
balance accounts. These participants were fully vested as of June 30, 2004.
For those participants continuing to accrue benefits under the Pension Plans, benefits are credited
using a cash balance formula. Under the formula, each participant has an account, for record keeping
purposes only, to which credits are allocated each payroll period based on a percentage of the participant’s
compensation for the current pay period. The applicable percentage is determined by the participant’s
number of years of service with the Company. If an individual participated in the Company’s prior pension
plan as of September 30, 1999 and met certain age and service criteria, the participant (“grandfathered
participant”) will receive the greater of the benefits calculated under the prior plan, which uses a final
average pay plan method, or the current plan under the cash balance formula.