Sallie Mae 2009 Annual Report Download - page 217

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:
2009 2008 2007
Years Ended December 31,
Service cost — benefits earned during the period ............ $ 3,231 $ 6,566 $ 7,100
Interest cost on project benefit obligations . ................ 12,350 12,908 12,337
Expected return on plan assets .......................... (10,713) (11,709) (17,975)
Curtailment loss .................................... — 114 —
Settlement (gain)/loss ................................ (1,362) (5,074) 1,265
Special termination benefits ............................ — — 912
Net amortization and deferral ........................... (1,367) (1,447) (719)
Net periodic pension cost (benefit) ....................... $ 2,139 $ 1,358 $ 2,920
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 years ended December 31, 2009 and 2008, the
Company recorded net settlement gains associated with lump-sum distributions from the plans. In 2008, the
Company also recorded 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 ASC 715, “Compensation — Retirement 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:
2009 2008
December 31,
Discount rate....................................................... 5.85% 6.25%
Expected return on plan assets .......................................... 5.25% 5.25%
Rate of compensation increase .......................................... N/A 4.00%
F-90
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)