SunTrust 2011 Annual Report Download - page 166
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Please find page 166 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)
150
Assumptions
The SunTrust Benefits Finance Committee reviews and approves the assumptions for year-end measurement calculations. A
discount rate is used to determine the present value of future benefit obligations. The discount rate for each plan is determined by
matching the expected cash flows of each plan to a yield curve based on long-term, high quality fixed income debt instruments
available as of the measurement date. A series of benefit payments projected to be paid by the plan for the next 100 years is
developed based on the most recent census data, plan provisions, and assumptions. The benefit payments at each future maturity
are discounted by the year-appropriate spot interest rates. The model then solves for the discount rate that produces the same
present value of the projected benefit payments as generated by discounting each year’s payments by the spot rate. This assumption
is reviewed by the SunTrust Benefits Finance Committee and updated every year for each plan. A rate of compensation growth is
used to determine future benefit obligations for those plans whose benefits vary by pay prior to recognition of the plan curtailment
on November 14, 2011.
Actuarial gains and losses are created when actual experience deviates from assumptions. The actuarial losses on obligations
generated within the Pension Plans in 2011 resulted primarily from lower discount rates.
The change in benefit obligations were as follows:
(Dollars in millions)
Benefit obligation, beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss/(gain)
Benefits paid
Less federal Medicare drug subsidy
Plan amendments
Curtailments
Benefit obligation, end of year
Year Ended December 31
Pension Benefits
2011
$2,261
62
128
—
415
(109)
—
—
(96)
$2,661
2010
$2,008
69
129
—
209
(95)
—
(59)
—
$2,261
Other Postretirement
Benefits
2011
$189
—
9
22
(17)
(33)
3
—
—
$173
2010
$179
—
10
20
7
(30)
3
—
—
$189
The accumulated benefit obligation for the Pension Benefits at December 31, 2011 and 2010 was $2.7 billion and $2.2 billion,
respectively.
Pension benefits with a projected benefit obligation, in excess of plan assets as of December 31, were as follows:
(Dollars in millions)
Projected benefit obligation
Accumulated benefit obligation
2011
$2,530
2,530
2010
$105
101
(Weighted average assumptions used to
determine benefit obligations, end of year)
Discount rate
Rate of compensation increase
Pension Benefits
2011
4.63%
N/A
2010
5.67%
4.00
1
Other Post-
retirement Benefits
2011
4.10%
N/A
2010
5.10%
N/A
1At year-end 2010, all salaries were expected to increase by 3% for 2011, 3.5% for 2012, and 4% for 2013 and beyond.