Sallie Mae 2008 Annual Report Download - page 204

18. Benefit Plans (Continued)
nonqualified plans due to the nature of the plans; the corporate assets used to pay these benefits are included
above in employer contributions.
Components of Net Periodic Pension Cost
Net periodic pension cost included the following components:
2008 2007 2006
Years Ended December 31,
Service cost — benefits earned during the period ............ $ 6,566 $ 7,100 $ 8,291
Interest cost on project benefit obligations . ................ 12,908 12,337 11,445
Expected return on plan assets .......................... (11,709) (17,975) (16,277)
Curtailment loss .................................... 114 — —
Settlement (gain)/loss ................................ (5,074) 1,265 —
Special termination benefits ............................ — 912 —
Net amortization and deferral ........................... (1,447) (719) 494
Net periodic pension cost (benefit) ....................... $ 1,358 $ 2,920 $ 3,953
Special accounting is required when lump sum payments exceed the sum of the service and interest cost
components, and when the average future working lifetime of employees is significantly curtailed. This special
accounting requires an accelerated recognition of unrecognized gains or losses and unrecognized prior service
costs, creating adjustments to the pension expense. During the year ended December 31, 2008, the Company
recorded a net settlement gain associated with lump-sum distributions from the qualified plan and a
curtailment loss for previously unrecognized losses associated with executive non-qualified benefits. During
the year ended December 31, 2007, the Company recorded net settlement losses, including a portion related to
employees who were involuntarily terminated in the fourth quarter, associated with lump-sum distributions
from the supplemental pension plan. These amounts were recorded in accordance with SFAS No. 88,
“Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termina-
tion Benefits,” which requires that settlement losses be recorded once prescribed payment thresholds have
been reached.
Amortization of unrecognized net gains or losses are included as a component of net periodic pension
cost to the extent that the unrecognized gain or loss exceeds 10 percent of the greater of the projected benefit
obligation or the market value of plan assets. Gains or losses not yet includible in pension cost are amortized
over the average remaining service life of active participants which is approximately 8 years.
Assumptions
The weighted average assumptions used to determine the projected accumulated benefit obligations are as
follows:
2008 2007
December 31,
Discount rate....................................................... 6.25% 6.00%
Expected return on plan assets .......................................... 5.25% 8.50%
Rate of compensation increase .......................................... 4.00% 4.00%
F-84
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)