Travelers 2007 Annual Report Download - page 232

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
Estimated Future Benefit Payments
Benefits expected to be paid, which reflect estimated future employee service, are estimated to be:
Prescription
Postretirement Drug
Expected payments by period (in millions) Pension Plans Benefit Plans Subsidy
2008 ............................. $126 $ 21 $ 3
2009 ............................. 129 21 3
2010 ............................. 131 22 3
2011 ............................. 135 22 3
2012 ............................. 141 22 3
2013 through 2017 ................... 726 111 18
Savings Plan
The Company, in September 2005, merged the Travelers 401(k) Savings Plan, The St. Paul
Companies, Inc. Savings Plus Plan (SPP), and The St. Paul Companies, Inc. Stock Ownership Plan
(SOP) into one new plan, The St. Paul Travelers 401(k) Savings Plan. Effective February 27, 2007, the
name of The St. Paul Travelers 401(k) Savings Plan was changed to The Travelers 401(k) Savings Plan
(the Savings Plan). Substantially all Company employees are eligible to participate in the Savings Plan.
The Company matched employee contributions up to 5% of eligible pay, with a maximum annual
match of $5,000 which becomes 100% vested after three years of service. The Company match
contributed to accounts in 2006 was primarily in the form of the Company’s common stock. Beginning
with the 2006 match that was contributed in 2007, the Company matching contribution is made in cash
and invested according to the employee’s current investment elections. The Company matching
contribution can be reinvested at any time into any other investment option. The expense related to
this plan was $78 million and $69 million for the years ended December 31, 2007 and 2006,
respectively.
Legacy SPC 401(k) Savings Plus and Stock Ownership Plans
Prior to the September 2005 plan merger and in connection with the merger with SPC, the
Company assumed The St. Paul Companies, Inc. Savings Plus Plan (SPP), a 401(k) savings plan, and
The St. Paul Companies, Inc. Stock Ownership Plan (SOP). Substantially all employees who were hired
by legacy SPC before April 1, 2004 were eligible to participate in these plans. In 2004 under the SPP,
the Company matched 100% of employees’ contributions up to a maximum of 6% of their salary. The
match was in the form of preferred shares, to the extent available in the SOP, or in the Company’s
common shares. Also allocated to participants were preferred shares equal to the value of dividends on
previously allocated shares.
To finance the preferred stock purchase for future allocation to qualified employees, the SOP
borrowed $150 million at 9.4% from a primary U.S. underwriting subsidiary. As the principal and
interest of the trust’s loan was paid, a pro rata amount of preferred stock was released for allocation to
participating employees. Each share of preferred stock pays a dividend of $11.72 annually and is
currently convertible into eight shares of the Company’s common stock. Preferred stock dividends on
all shares held by the trust were used to pay a portion of the SOP obligation. In addition to dividends
paid to the trust, additional cash contributions were made to the SOP as necessary in order to meet the
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