TD Bank 2002 Annual Report Download - page 64

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FINANCIAL RESULTS
(millions of dollars) 2002 2001
Change in projected benefit obligation
Projected benefit obligation at beginning of year $ 213 $ 183
Service cost – benefits earned 87
Interest cost on projected benefit obligation 15 13
Benefits paid (4) (7)
Change in actuarial assumptions (9) 20
Actuarial (gains) losses (3) –
Other –(3)
Projected benefit obligation at end of year 220 213
Unrecognized net (gain) loss from past experience, different from
that assumed, and effects of changes in assumptions 517
Accrued benefit liability $ 215 $ 196
Annual expense
Net non-pension post-retirement benefit expense includes the following components:
Service cost – benefits earned $8 $7
Interest cost on projected benefit obligation 15 13
Non-pension post-retirement benefit expense $ 23 $20
Actuarial assumptions at end of period
Weighted average discount rate for projected benefit obligation 7.00% 6.75%
Weighted average rate of compensation increase 3.50 3.50
The assumed health care cost increased rate for the next year
used to measure the expected cost of benefits covered for the
non-pension post-retirement benefit plans is 5.5%. The rate
is assumed to decrease gradually to 4.5% over two years and
remain at that level thereafter. For 2002, the effect of one
percentage point increase or decrease in the assumed health care
cost increased rate on service and interest costs is a $5 million
increase and a $4 million decrease, respectively, and on the
accumulated post-retirement benefit obligation, a $35 million
increase and a $29 million decrease, respectively.
For 2002, the Bank’s principal pension plan’s net assets included
investments in the Bank and its affiliates which had a market value
of $118 million (2001 – $134 million; 2000 – $158 million).
The effect of a one percentage point increase or decrease in
the weighted average expected long-term rate of return on plan
assets on the Bank’s principal pension plan’s 2002 pension
expense would be a $12 million decrease or increase, respectively.
Other pension plans
In connection with the acquisition of CT, the Bank sponsors a
second pension plan consisting of a defined benefit portion and a
defined contribution portion. Funding for both portions is provid-
ed by contributions from the Bank and members of the plan. The
defined benefit portion of the plan was closed to new members
after May 31, 1987. CT employees joining the plan on or after
June 1, 1987 were only eligible to join the defined contribution
portion. Effective August 2002, the defined contribution portion
of the plan was closed to new contributions from active employ-
ees and employees eligible for that plan became eligible to join
the Bank’s principal defined benefit plan.
For 2002, the defined benefit portion of CT’s plan reported a
projected benefit obligation of $289 million (2001 – $272 million)
and plan assets with a fair value of $271 million (2001 – $271
million). The 2002 pension expense for the defined contribution
portion was $10 million (2001 – $14 million; 2000 – $15 million).
With respect to the Bank’s largest other benefit plan, a partially
funded benefit plan for eligible employees, the projected benefit
obligation was $182 million (2001 – $137 million), the plan
assets had a fair value of $20 million (2001 – $23 million) and
the accrued benefit liability was $119 million (2001 – $107 mil-
lion). The 2002 pension expense was $13 million (2001 –
$10 million). Other plans operated by the Bank and certain of its
subsidiaries are not considered material for disclosure purposes.
Non-pension post-retirement benefit plans
In addition to the Bank’s pension plans, the Bank also provides
certain health care, life insurance and dental benefits to retired
employees. The following table presents the financial position of
the Bank’s non-pension post-retirement benefit plans.