US Airways 2005 Annual Report Download - page 140

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
The following table presents the weighted average assumptions used to determine benefit obligations:
Other
Defined Benefit Postretirement
Pension Plans Benefits
Year Ended Year Ended
Dec. 31, 2005 Dec. 31, 2005
Discount rate 5.75% 5.30%
Rate of compensation increase 4.00% 4.00%
As of December 31, 2005, the Company discounted its pension obligations using a rate of 5.75% based on the current rates earned on long-term bonds that
received one of the two highest ratings given by a recognized rating agency.
At the measurement date of September 30, 2005, the Company assumed a discount rate of 5.30% for measuring its other postretirement benefit
obligations, based on a hypothetical portfolio of high quality publicly traded U.S. bonds (Aa rated, non-callable or callable with make-whole provisions), for
which the timing and cash outflows approximate the estimated benefit payments of the other postretirement benefit plans.
The assumed health care cost trend rates are 10% in 2006 and 9% in 2007, decreasing to 5% in 2011 and thereafter. The assumed health care cost trend
rates have a significant effect on amounts reported for retiree health care plans. A one-percentage point change in the health care cost trend rates would have
the following effects on other postretirement benefits as of September 30, 2005 (in millions):
1% Increase 1% Decrease
Effect on total service and interest costs $ 1 $ —
Effect on postretirement benefit obligation $ 10 $ (9)
Weighted average assumptions used to determine net periodic benefit cost were as follows:
Other
Defined Benefit Postretirement
Pension Plans Benefits
Year Ended Year Ended
Dec. 31, 2005 Dec. 31, 2005
Discount rate 5.75% 5.30%
Expected return on plan assets 8.00% —
Rate of compensation increase 4.00% 4.00%
Components of the net and total periodic cost for pension benefits (in millions):
Year Ended
Dec. 31, 2005
Service cost $ —
Interest cost 1
Expected return on plan assets (1)
Total periodic cost $ —
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