SunTrust 2011 Annual Report Download - page 165
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Please find page 165 of the 2011 SunTrust annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Notes to Consolidated Financial Statements (Continued)
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Compensation Plan were amended to provide for a special contribution equal to 5% of eligible 2011 earnings for employees who
have: (1) at least 20 years of service as of December 31, 2011, or (2) 10 years of service and the sum of age and service equals or
exceeds 60 as of December 31, 2011. Compensation expense related to this contribution was $28 million.
Noncontributory Pension Plans
SunTrust maintains a funded, noncontributory qualified retirement plan (the "Retirement Plan") covering employees meeting
certain service requirements. The plan provides benefits based on salary and years of service and, effective January 1, 2008, either
a traditional pension benefit formula, a cash balance formula (the Personal Pension Account) or a combination of both. Participants
are 100% vested after 3 years of service. The interest crediting rate applied to each Personal Pension Account was an annual
effective rate of 4.42% for 2011. SunTrust monitors the funded status of the plan closely and due to the current funded status,
SunTrust did not make a contribution for the 2011 plan year.
On October 1, 2004, SunTrust acquired NCF. Prior to the acquisition, NCF sponsored a funded qualified retirement plan, an
unfunded nonqualified retirement plan for some of its participants, and certain other postretirement health benefits for its employees.
Through plan amendments effective December 31, 2004 and January 1, 2008 participants' benefits under the NCF Retirement
Plan were frozen with the exception of adjustments for pay increases after 2004. Similar to the SunTrust Retirement Plan, due to
the current funded status of the NCF Retirement Plan, SunTrust did not make a contribution for the 2011 plan year.
SunTrust also maintains unfunded, noncontributory nonqualified supplemental defined benefit pension plans that cover key
executives of the Company (the "SERP", the "ERISA Excess Plan" and the "Restoration Plan"). The plans provide defined benefits
based on years of service and final average salary. SunTrust’s obligations for these nonqualified supplemental defined benefit
pension plans are included within the qualified Pension Plans in the tables presented in this section under “Pension Benefits”.
Effective January 1, 2008, the SERP was amended to reduce the benefit formula for future service accruals for certain existing
participants and to implement a new SERP Personal Pension Account (cash balance formula) for certain other existing participants
with no limit on pay for SERP Tier 2 participants and a minimum preserved benefit for SERP participants at December 31, 2007.
ERISA Excess Plan participants accrue benefits under benefit formulas that mirror the revised benefit formulas in the Retirement
Plan but with an earnings limit of two times the Retirement Plan's eligible earnings.
On December 31, 2010, the Company adopted the SunTrust Banks, Inc. Restoration Plan (the “Restoration Plan”) effective
January 1, 2011. The Restoration Plan is a nonqualified defined benefit cash balance plan designed to restore benefits to certain
employees that are limited under provisions of the Internal Revenue Code which are not otherwise provided for under the ERISA
Excess Plan. The benefit formula under the Restoration Plan is the same as the Personal Pension Account under the Retirement
Plan.
Effective January 1, 2011, a separate retirement plan was created exclusively for inactive and retired employees (“SunTrust Banks,
Inc. Retirement Plan for Inactive Participants”). Obligations and related plan assets were transferred from the SunTrust Banks,
Inc. Retirement Plan to the new plan.
The Retirement Plan, the SERP, the ERISA Excess Plan, and the Restoration Plan were each amended on November 14, 2011 to
cease all future benefit accruals. As a result, the traditional pension benefit formulas (final average pay formulas) will not reflect
future salary increases and benefit service after December 31, 2011, and compensation credits under the Personal Pension Accounts
(cash balance formula) will cease. However, interest credits under the Personal Pension Accounts will continue to accrue until
benefits are distributed and service will continue to be recognized for vesting and eligibility requirements for early retirement.
Additionally, the NCF Retirement Plan, which had been previously curtailed with respect to future benefit accruals, was amended
to cease any adjustments for pay increases after December 31, 2011. As a result of the curtailment, the SunTrust Retirement Plan
for Inactive Participants will be merged into the Retirement Plan effective January 1, 2012. The Company recorded a curtailment
gain of $88 million which is reflected in employee benefits expense on the Consolidated Statements of Income/(Loss), and reduction
to the pension benefit obligation of $96 million which is reflected in the Consolidated Balance Sheets. The curtailment gain was
partially offset by the $28 million special 401(k) contribution noted above.
Other Postretirement Benefits
Although not under contractual obligation, SunTrust provides certain health care and life insurance benefits to retired employees
(“Other Postretirement Benefits” in the tables below). At the option of SunTrust, retirees may continue certain health and life
insurance benefits if they meet age and service requirements for Other Postretirement Benefits while working for the Company.
The health care plans are contributory with participant contributions adjusted annually, and the life insurance plans are
noncontributory. Certain retiree health benefits are funded in a Retiree Health Trust. In addition, certain retiree life insurance
benefits are funded in a VEBA. SunTrust reserves the right to amend or terminate any of the benefits at any time.