Travelers 2010 Annual Report Download - page 243

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
primarily short-term securities and corporate bonds, and categorized as level 2 in the fair value
hierarchy.
Estimated Future Benefit Payments
The following table presents the estimated benefits expected to be paid by the Company’s pension
and postretirement benefit plans for the next ten years (reflecting estimated future employee service),
as well as the amounts of other postretirement benefits the Company expects to receive under the
Medicare Part D drug subsidy over that time period:
Medicare
Part D
Drug Subsidy
Benefits Expected to be Paid Expected
Postretirement to be
(in millions) Pension Plans Benefit Plans Received
2011 ........................... $ 145 $ 20 $ 2
2012 ........................... 161 21 3
2013 ........................... 168 21 3
2014 ........................... 181 22 3
2015 ........................... 192 22 3
2016 through 2020 ................. 1,089 109 17
Savings Plan
The Company has a savings plan, The Travelers 401(k) Savings Plan (the Savings Plan), in which
substantially all Company employees are eligible to participate. Under the Savings Plan, the Company
matches 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’s matching contribution is made
in cash and invested according to the employee’s current investment elections. The Company’s
matching contribution can be reinvested at any time into any other investment option. In 2009, in
addition to the annual matching contribution, the Company made a special contribution to each
employee having a base salary of $60,000 or less as of December 31, 2008, in the amount of 1% of
base salary up to a maximum of $500 regardless of the employee having contributed to the Savings
Plan. The total expense related to the Savings Plan was $93 million and $98 million for the years ended
December 31, 2010 and 2009, respectively.
Included in the Savings Plan are a legacy Savings Plus Plan (SPP) and a Stock Ownership Plan
(SOP) in which substantially all employees who were hired by legacy SPC before April 1, 2004 were
eligible to participate. 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. 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. The SOP has no preferred shares available for future allocations.
All common shares and the common stock equivalent of all preferred shares held by the Savings
Plan are considered outstanding for diluted EPS computations and dividends paid on all shares are
charged to retained earnings.
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