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56 UPS Annual Report 2004
Notes to consolidated financial statements
Expected Cash Flows
Information about expected cash flows for the pension and postretirement benefit plans is as follows (in millions):
Pension Benefits Other Benefits
Employer Contributions:
2005 (expected) to plan trusts $ 723 $ 62
2005 (expected) to plan participants 756
Expected Benefit Payments:
2005 $ 214 $ 126
2006 257 133
2007 266 141
2008 303 150
2009 332 158
2010 - 2014 2,363 975
Expected benefit payments for pensions will be primarily paid from plan trusts. Expected benefit payments for postretirement bene-
fits will be paid from plan trusts and corporate assets.
Net Periodic Benefit Cost
Information about net periodic benefit cost for the pension and postretirement benefit plans is as follows (in millions):
Postretirement
Pension Benefits Medical Benefits
2004 2003 2002 2004 2003 2002
Net Periodic Cost:
Service cost$332 $282 $217 $91 $79 $63
Interest cost 521 465 413 164 148 134
Expected return on assets (800) (669) (654) (34) (29) (33)
Amortization of:
Transition obligation 68 8 — — —
Prior service cost 37 37 30 — 1(1)
Actuarial (gain) loss 119 28 4 30 15 4
Net periodic benefit cost (benefit) $ 215 $ 151 $ 18 $ 251 $ 214 $ 167
Weighted average assumptions used to determine net cost:
Discount rate 6.25% 6.75% 7.50% 6.25% 6.75% 7.50%
Rate of compensation increase 4.00% 4.00% 4.00% N/A N/A N/A
Expected return on plan assets 8.96% 9.21% 9.42% 9.00% 9.25% 9.50%