SunTrust 2011 Annual Report Download - page 172
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Please find page 172 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)
156
Net Periodic Cost
Components of net periodic benefit cost were as follows:
(Dollars in millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Recognized net actuarial loss
Curtailment gain
Other
Net periodic (benefit)/cost
Weighted average assumptions used to determine net cost
Discount rate1
Expected return on plan assets
Rate of compensation increase
Year Ended December 31
Pension Benefits
2011
$62
128
(188)
(16)
39
(88)
—
($63)
5.59%
7.72
4.00
3
4
2010
$69
129
(183)
(11)
62
—
—
$66
6.32%
8.00
4.00
2009
$64
120
(149)
(11)
112
—
5
$141
6.58%
8.00
4.00/4.50
1
Other Postretirement Benefits
2011
$—
9
(7)
—
1
—
—
$3
5.10%
4.39
N/A
2
2010
$—
10
(7)
(1)
1
—
—
$3
5.70%
4.39
N/A
2
2009
$—
12
(7)
(2)
19
—
—
$22
5.95%
5.30
N/A
2
1 Interim remeasurement was required on April 30, 2009 for the SunTrust Pension Plan due to plan changes adopted at that time. The discount rate as of the
remeasurement date was selected based on the economic environment on that date.
2 The weighted average shown for the Other Postretirement Benefit plan is determined on an after-tax basis.
3 Interim remeasurement was required on November 14, 2011 due to plan changes adopted at that time. The discount rate as of the remeasurement date was
selected based on economic conditions on that date.
4 As part of the interim remeasurement on November 14, 2011, the expected return on plan assets was reduced from 7.75% to 7.25% for the SunTrust Pension
Plan and the NCF Retirement Plan.
Other changes in plan assets and benefit obligations recognized in OCI during 2011 are as follows:
(Dollars in millions)
Current year actuarial loss/(gain)
Recognition of actuarial loss
Amortization of prior service credit
Curtailment effects
Total recognized in OCI, pre-tax
Total recognized in net periodic benefit cost and OCI, pre-tax
Pension
Benefits
$473
(39)
105
(96)
$443
$380
Other Postretirement
Benefits
($16)
(1)
—
—
($17)
($14)
The estimated actuarial loss that will be amortized from AOCI into net periodic benefit cost in 2012 is $24 million.
Additionally, SunTrust sets pension asset values equal to their market value, in contrast to the use of a smoothed asset value that
incorporates gains and losses over a period of years. Utilization of market value of assets provides a more realistic economic
measure of the plan’s funded status and cost. Assumed discount rates and expected returns on plan assets affect the amounts of
net periodic benefit cost. A 25 basis point decrease in the discount rate or expected long-term return on plan assets would increase
all Pension and Other Postretirement Plans’ net periodic benefit cost approximately less than $1 million and $6 million, respectively.
Assumed healthcare cost trend rates have a significant effect on the amounts reported for the Other Postretirement Benefit plans.
As of December 31, 2011, SunTrust assumed that pre-65 retiree health care costs will increase at an initial rate of 9.00% per year.
SunTrust assumed a healthcare cost trend that recognizes expected inflation, technology advancements, rising cost of prescription
drugs, regulatory requirements and Medicare cost shifting. SunTrust expects this annual cost increase to decrease over a 7-year
period to 5.00% per year. As of December 31, 2011, SunTrust assumed that post-65 retiree health costs will increase at an initial
rate of 8.00% per year. SunTrust expects this annual cost increase to decrease over a 5-year period to 5.00% per year.