SunTrust 2009 Annual Report Download - page 139

SUNTRUST BANKS, INC.
Notes to Consolidated Financial Statements (Continued)
to current economic conditions and Company projections for wage growth, merit increases, and real inflation, compensation
growth assumptions of 2.0% to 3.5% will be used for the next three years (2010 – 2012) with the ultimate assumption
returning to 4% in 2013.
Actuarial gains and losses are created when actual experience deviates from assumptions. The actuarial losses on obligations
generated within the Pension Plans in 2009 resulted from lower lump sum rates and changes to actuarial demographic
assumptions offset by higher discount rates and lower salary increases.
The change in benefit obligations for the years ended December 31 was as follows:
Pension Benefits
Other Postretirement
Benefits
(Dollars in thousands) 2009 2008 2009 2008
Benefit obligation, beginning of year $1,922,252 $1,841,153 $204,742 $200,723
Service cost 63,858 77,872 292 618
Interest cost 119,548 117,090 11,211 11,811
Plan participants’ contributions - - 22,015 21,632
Actuarial (gain)/loss 18,681 (7,646) (27,859) 1,360
Benefits paid (116,399) (106,217) (33,792) (34,902)
Less federal Medicare drug subsidy - - 2,518 3,500
Benefit obligation, end of year $2,007,940 $1,922,252 $179,127 $204,742
The accumulated benefit obligation for the Pension Benefits at December 31, 2009 and 2008 was $1.9 billion and $1.8
billion, respectively.
Pension Benefits
Other Post-
retirement Benefits
(Weighted average assumptions used to determine
benefit obligations, end of year) 2009 2008 2009 2008
Discount rate 6.32 % 6.14 % 5.70 % 5.95 %
Rate of compensation increase 4.00 24.00/4.50 1N/A N/A
1At year-end 2008, all salaries were expected to increase by 2.00% for 2009 (0% for nonqualified plans), 3.00% for 2010, and total salaries were assumed to
increase at 4.50% while base salaries were assumed to increase at 4.00% for 2011 and beyond.
2At year-end 2009, all salaries were expected to increase by 2.00% for 2010, 3.00% for 2011, 3.50% for 2012, and 4.00% for 2013 and beyond.
The change in plan assets for the years ended December 31 was as follows:
Pension Benefits
Other
Postretirement Benefits
(Dollars in thousands) 2009 2008 2009 2008
Fair value of plan assets, beginning of year $1,919,349 $2,287,322 $147,167 $162,881
Actual return on plan assets 506,297 (617,770) 24,923 (32,965)
Employer contributions 24,943 356,014 723 30,521
Plan participants’ contributions --22,015 21,632
Benefits paid (116,399) (106,217) (33,792) (34,902)
Fair value of plan assets, end of year $2,334,190 $1,919,349 $161,036 $147,167
Employer contributions and benefits paid in the above table include only those amounts contributed to pay participants’ plan
benefits or added to plan assets in 2009 and 2008, respectively. SERPs are not funded through plan assets.
The basis for determining the overall expected long-term rate of return on plan assets considers past experience, current
market conditions and expectations on future trends. A building block approach is used that considers long-term inflation,
real returns, equity risk premiums, target asset allocations, market corrections (for example, narrowing of fixed income
spreads between corporate bonds and U.S. Treasuries) and expenses. Capital market simulations from internal and external
sources, survey data, economic forecasts and actuarial judgment are all used in this process.
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