TD Bank 2002 Annual Report Download - page 63

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FINANCIAL RESULTS
(millions of dollars) 2002 2001 2000
Change in projected benefit obligation
Projected benefit obligation at beginning of period $ 1,257 $1,144 $1,141
Service cost – benefits earned 26 19 22
Interest cost on projected benefit obligation 86 82 77
Members’ contributions 19 17 18
Benefits paid (88) (82) (80)
Actuarial (gains) losses 9222
Change in actuarial assumptions (42) 76 (60)
Plan amendments 544
Other (1) (5) –
Projected benefit obligation at end of period 1,271 1,257 1,144
Change in plan assets
Plan assets at fair value at beginning of period 1,191 1,263 1,131
Actual income on plan assets 55 49 57
Gain (loss) on disposal of investments (23) 67 142
Members’ contributions 19 17 18
Employer’s contributions 76 ––
Increase (decrease) in unrealized gains on investments (57) (114) 3
Benefits paid (88) (82) (80)
General and administrative expenses (8) (7) (8)
Other (1) (2) –
Plan assets at fair value at end of period 1,164 1,191 1,263
Excess (deficit) of plan assets over projected benefit obligation (107) (66) 119
Unrecognized net (gain) loss from past experience, different from
that assumed, and effects of changes in assumptions 253 178 (42)
Unrecognized prior service costs 8423
Unrecognized transition amount –– (17)
Employer’s contributions in fourth quarter 152 40 –
Prepaid pension expense $ 306 $ 156 $ 83
Annual expense
Net pension expense includes the following components:
Service cost – benefits earned $26 $19 $22
Interest cost on projected benefit obligation 86 82 77
Expected return on plan assets (81) (98) (85)
Amortization of net actuarial (gains) losses 6–14
Amortization of prior service costs 1–4
Amortization of transition amount –– (16)
Pension expense $ 38 $3$16
Actuarial assumptions at end of period
Weighted average discount rate for projected benefit obligation 7.00% 6.75% 7.25%
Weighted average rate of compensation increase 3.50 3.50 3.50
Weighted average expected long-term rate of return on plan assets16.75 6.75 8.00
1Net of fees and expenses.
Pension benefit plan
The Bank’s principal pension plan, The Pension Fund Society of
The Toronto-Dominion Bank, is a defined benefit plan funded by
contributions from the Bank and from members. In accordance
with legislation, the Bank contributes amounts determined on an
actuarial basis to the plan and has the ultimate responsibility for
ensuring that the liabilities of the plan are adequately funded
over time.
Pension benefits are based upon the length of service and
the final five years’ average salary of the employees.
The following table presents the financial position of the
Bank’s principal pension plan. The pension plan assets and
obligations are measured as at July 31.
NOTE 11 Employee future benefits
and liquidity regulations
of the Bank Act or directions of the
Superintendent of Financial Institutions Canada. The Bank Act
also imposes restrictions on the Bank’s ability to pay dividends
on common and preferred shares relating to the maintenance of
satisfactory regulatory capital through earnings over specified
periods. The Bank does not anticipate these conditions will
restrict it from paying dividends in the normal course of business.
The Bank is also restricted in the event that either TD Capital
Trust or TD Capital Trust II fails to pay semi-annual distributions
in full to holders of TD Capital Trust Securities. In addition,
the ability to pay dividends on its common shares without the
approval of the holders of the outstanding preferred shares is
restricted unless all dividends on the preferred shares have been
declared and paid or set apart for payment. Currently, these limi-
tations do not restrict the payment of dividends on preferred or
common shares.