Sun Life 2012 Annual Report Download - page 160
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Principal assumptions for materials plans:
2012 2011
Canada
%
U.K.
%
U.S.
%
Canada
%
U.K.
%
U.S.
%
To determine benefit obligation at end of year
Discount rate for pension plans 4.20 4.40 4.20 4.50 4.80 5.40
Discount rate for other post-employment benefits 3.50-4.20 n/a 4.20 4.00-4.50 n/a 5.40
Rate of compensation increase 3.00 n/a 3.50 3.00 n/a 3.75
Pension increases 0.00-0.25 3.40 n/a 0.00-0.25 3.50 n/a
Deferred pension increases 0.00-0.20 2.70 n/a 0.00-0.20 2.80 n/a
Initial health care trend rate 7.50 n/a 8.50 7.50 n/a 8.50
Ultimate health care trend rate 4.50 n/a 5.00 4.50 n/a 5.00
Year ultimate health care trend rate reached 2030 n/a 2020 2030 n/a 2017
To determine benefit costs or income for the period
Expected long-term rate of return on plan assets 6.50 4.60 7.00 6.50 5.40 7.00
History of experience gains (losses):
2012 2011 2010
Experience (gains) losses on plan liabilities $1 $ (9) $ (11)
Experience gains (losses) on plan assets $62 $ (19) $ 68
Discount rate, return on plan assets and rate of compensation increase:
The major economic assumptions which are used in determining the actuarial present value of the accrued benefit obligations vary by
country.
The discount rate assumption used in each country is based on the market yields, as of December 31, of corporate AA bonds that
match the expected timing of benefit payments. The expected return on assets assumption for pension cost purposes is the weighted
average of expected long-term asset return assumptions by asset class, and is selected from a range of possible future asset returns.
Health care cost calculations are based on long-term trend assumptions which may differ from actual results.
Sensitivity of Key Assumptions
The following table provides the potential sensitivity of the benefit obligation and expense for pension and post-retirement benefits to a
1% change in certain key assumptions based on pension and post-retirement obligations as at December 31, 2012. These sensitivities
are hypothetical and should be used with caution. The impact of changes in each key assumption may result in greater than
proportional changes in sensitivities.
Pension Other post-retirement
Obligation Expense Obligation Expense
Impact of a 1% change in key assumptions
Discount rate
Decrease in assumption $ 456 $ 72 $ 37 $ 4
Increase in assumption $ (377) $ (66) $ (31) $ (2)
Rate of compensation increase
Decrease in assumption $ (55) $ (10) n/a n/a
Increase in assumption $ 57 $ 10 n/a n/a
Expected return on assets
Decrease in assumption n/a $ 22 n/a n/a
Increase in assumption n/a $ (22) n/a n/a
Healthcare trend increase
Decrease in assumption n/a n/a $ (19) $ (1)
Increase in assumption n/a n/a $ 21 $ 1
158 Sun Life Financial Inc. Annual Report 2012 Notes to Consolidated Financial Statements