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Table of Contents
8. Employee Pension and Benefit Plans
Substantially all of the Company's employees meeting certain service and other requirements are eligible to participate in various pension, medical,
dental, life insurance, disability and survivorship plans.
(a) Defined Benefit and Other Postretirement Benefit Plans
The following table sets forth changes in the fair value of plan assets, benefit obligations and the funded status of the plans and the amounts recognized
in the Company's consolidated balance sheets as of December 31, 2011 and 2010 (in millions).
Defined Benefit Pension Plans Other Postretirement Benefits
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
Fair value of plan assets at beginning of period $ 40 $ 38 $ — $ —
Actual return on plan assets — 5 — —
Employer contributions 1 — 8 14
Plan participants' contributions — — 16 16
Gross benefits paid (2) (3) (24) (30)
Fair value of plan assets at end of period 39 40 — —
Benefit obligation at beginning of period 61 57 156 143
Service cost 1 1 3 3
Interest cost 3 3 8 8
Plan participants' contributions — — 16 16
Actuarial loss 11 3 14 16
Gross benefits paid (2) (3) (24) (30)
Benefit obligation at end of period 74 61 173 156
Funded status of the plan $ (35) $ (21) $ (173) $ (156)
Liability recognized in the consolidated balance sheet $ (35) $ (21) $ (173) $ (156)
Net actuarial loss (gain) recognized in accumulated other comprehensive income $ 21 $ 8 $ (23) $ (40)
The Company maintains two defined benefit pension plans sponsored by Piedmont. Piedmont closed one plan to new participants in 2002 and froze the
accrued benefits for the other plan for all participants in 2003. The aggregate accumulated benefit obligations, projected benefit obligations and plan assets
were $68 million, $74 million and $39 million as of December 31, 2011 and $56 million, $61 million and $40 million as of December 31, 2010, respectively.
The following table presents the weighted average assumptions used to determine benefit obligations:
Defined Benefit Pension Plans Other Postretirement Benefits
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
Discount rate 4.25% 5.25% 4.13% 4.93%
Rate of compensation increase 4% 4% — —
As of December 31, 2011 and 2010, the Company discounted its pension obligations based on the current rates earned on high quality Aa rated long-
term bonds.
The Company assumed discount rates for measuring its other postretirement benefit obligations, based on a hypothetical portfolio of high quality
corporate bonds denominated in U.S. currency (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.
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