TD Bank 2010 Annual Report Download - page 125

TD BANK GROUP ANNUAL REPORT 2010 FINANCIAL RESULTS 123
certain employees. The additional amount contributed to the plan by
TD Bank, N.A. for fiscal 2010 was $34 million (2009 – $31 million). For
the defined contribution plan, annual pension expense is equal to the
Bank’s contributions to the plan.
Supplemental Employee Retirement Plans
Supplemental employee retirement plans are partially funded by the
Bank for eligible employees.
The following table presents the financial position of the Bank’s
principal pension plans, the principal non-pension post-retirement
benefit plan, and the Bank’s significant other pension and retirement
plans. The plan assets and obligations are measured as at July 31.
TD Bank, N.A. (which includes TD Banknorth and Commerce)
Retirement Plans
TD Banknorth has a closed non-contributory defined benefit retirement
plan covering most permanent employees. Supplemental retirement
plans were adopted for certain key officers and limited post-retirement
benefit programs provide medical coverage and life insurance benefits
to a closed group of employees and directors who meet minimum age
and service requirements. Effective December 31, 2008, benefits under
the retirement and supplemental retirement plans were frozen.
In addition, TD Bank, N.A. and its subsidiaries maintain a defined
contribution 401(k) plan covering all employees. Effective January 1,
2009 the plan was amended to include a core contribution from
TD Bank, N.A. for all employees and a transition contribution for
Employee Future Benefit Plans Obligations, Assets and Funded Status
(millions of Canadian dollars) Principal Non-Pension
Post-Retirement Other Pension and
Principal Pension Plans Benefit Plan Retirement Plans1
2010 2009 2008 2010 2009 2008 2010 2009 2008
Change in projected benefit obligation
Projected benefit obligation at beginning of period $ 2,170 $ 2,201 $ 2,070 $ 351 $ 329 $ 396 $ 1,108 $ 978 $ 1,018
Service cost – benefits earned 97 66 78 8 9 12 8 10 25
Interest cost on projected benefit obligation 155 143 129 24 21 23 62 66 58
Members’ contributions 47 43 36 – – – – – –
Benefits paid (123) (122) (110) (9) (9) (9) (53) (53) (50)
Actuarial (gains) losses – 21 141 44 (9) (93) 58 2 (24)
Change in foreign currency exchange rate – – – – – – (26) 2 24
Change in actuarial assumptions 411 (182) (149) – – – 7 97 (59)
Curtailment – – – – – – – – (14)
Plan amendments – – 6 – 10 – – 6 –
Projected benefit obligation at end of period 2,757 2,170 2,201 418 351 329 1,164 1,108 978
Change in plan assets
Plan assets at fair value at beginning of period 2,473 2,138 2,225 – – – 743 770 817
Actual income on plan assets 92 73 72 – – – 11 13 16
Gain (loss) on disposal of investments 72 (138) 10 – – – 12 (11) 19
Members’ contributions 46 43 36 – – – – – –
Employer’s contributions 193 583 83 9 9 9 15 14 14
Increase (decrease) in unrealized gains on investments 127 (130) (174) – – – 56 9 (71)
Change in foreign currency exchange rate (43) 34 4 – – – (25) 6 30
Benefits paid (123) (122) (110) (9) (9) (9) (54) (53) (50)
General and administrative expenses (8) (8) (8) – – – (3) (5) (5)
Plan assets at fair value at end of period 2,829 2,473 2,138 – – – 755 743 770
Excess (deficit) of plan assets
over projected benefit obligation 72 303 (63) (418) (351) (329) (409) (365) (208)
Unrecognized net loss from past experience,
different from that assumed, and effects
of changes in assumptions 838 527 414 59 14 23 256 238 95
Unrecognized prior service costs 44 54 64 (27) (32) (48) 10 14 12
Employer’s contributions in fourth quarter 47 72 29 2 3 2 9 7 2
Prepaid pension asset (accrued benefit liability) $ 1,001 $ 956 $ 444 $ (384) $ (366) $ (352) $ (134) $ (106) $ (99)
Annual expense
Net pension expense includes the following components:
Benefits earned by employees $ 99 $ 68 $ 78 $ 8 $ 9 $ 12 $ 9 $ 11 $ 28
Interest cost on projected benefit obligation 155 143 129 24 21 23 63 68 57
Expected return on plan assets2 (170) (131) (150) – – – (46) (59) (59)
Actuarial losses (gains) recognized in expense 28 24 14 – – 5 5 3 5
Amortization of plan amendment costs 10 10 10 (5) (6) (6) 7 3 3
Total expense $ 122 $ 114 $ 81 $ 27 $ 24 $ 34 $ 38 $ 26 $ 34
Actuarial assumptions used
to determine the annual expense
Weighted-average discount rate
for projected benefit obligation3 6.90% 7.13% 5.68% 6.70% 6.30% 5.60% 5.97% 6.42% 5.63%
Weighted-average rate of compensation increase 3.50 3.50 3.50 3.50 3.50 3.50 2.19 2.09 3.82
Weighted-average expected long-term rate
of return on plan assets4 6.75 6.75 6.75 n/a n/a n/a 6.70 6.95 7.05
Actuarial assumptions used to determine
the benefit obligation at end of period
Weighted-average discount rate
for projected benefit obligation 5.81% 6.90% 6.30% 5.80% 6.70% 6.30% 5.40% 5.94% 6.25%
Weighted-average rate of compensation increase 3.50 3.50 3.50 3.50 3.50 3.50 2.19 2.09 2.38
1 Includes CT defined benefit pension plan, TD Banknorth defined benefit pension
plan, and Supplemental employee retirement plans. Other plans operated by the
Bank and certain of its subsidiaries are not considered material for disclosure
purposes. The plan assets and obligation of the TD Banknorth defined benefit
pension plan are measured as at October 31 (2008 – September 30).
2 The actual return on plan assets for the principal pension plans was $243 million
(2009 – $(169) million; 2008 – $(96) million).
3
The Society was re-measured on October 31, 2008 using a 7.4% discount rate,
reflecting the actuarial valuations as at October 31, 2008. The Plan was measured on
March 1, 2009, the commencement date of the Plan, using an 8.3% discount rate.
4 Net of fees and expenses for the Society.