United Technologies 2008 Annual Report Download - page 82

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Postretirement Benefit Plans. We sponsor a number of postretirement benefit plans that
provide health and life benefits to eligible retirees. Such benefits are provided primarily from
domestic plans, which comprise approximately 90% of the benefit obligation. The
postretirement plans are primarily unfunded. The allocation of assets in funded plans is
approximately 37% equity and 63% fixed income.
(in millions of dollars) 2008 2007
Change in Benefit Obligation:
Beginning balance $ 971 $1,074
Service cost 35
Interest cost 53 56
Actuarial gain (54) (31)
Total benefits paid (90) (84)
Other (12) (49)
Ending balance $ 871 $ 971
Change in Plan Assets:
Beginning balance $27 $65
Employer contributions 83 76
Benefits paid from plan assets (90) (84)
Other (4) (30)
Ending balance $16 $27
Funded Status:
Fair value of plan assets $16 $27
Benefit obligations (871) (971)
Funded status of plan $(855) $ (944)
Amounts Recognized in the Consolidated Balance Sheet Consist of:
Current liability $ (88) $ (70)
Noncurrent liability (767) (874)
$(855) $ (944)
Amounts Recognized in Accumulated Other Comprehensive
Income Consist of:
Net actuarial gain $(123) $ (76)
Prior service cost (4) (10)
$(127) $ (86)
The components of net periodic benefit cost are as follows:
(in millions of dollars) 2008 2007 2006
Other Postretirement Benefits:
Service cost $3 $5 $8
Interest cost 53 56 57
Expected return on plan assets (2) (3) (4)
Amortization of prior service cost (6) (8) (26)
Net settlement and curtailment gain —— (1)
Net periodic other postretirement benefit cost $48 $50 $34
Other changes in plan assets and benefit obligations recognized in other comprehensive
income in 2008 are as follows:
(in millions of dollars)
Current year actuarial gain $(47)
Amortization of prior service credit 6
Total recognized in other comprehensive income (41)
Net recognized in net periodic benefit cost and other comprehensive income $7
The estimated amounts that will be amortized from accumulated other comprehensive income
into net periodic benefit cost in 2009 include net actuarial gains of $3 million and prior service
credits of $2 million.
Major assumptions used in determining the benefit obligation and net cost for postretirement
plans are presented in the following table as weighted-averages:
Benefit Obligation Net Cost
2008 2007 2008 2007 2006
Discount rate 6.0% 5.9% 5.9% 5.5% 5.5%
Expected return on plan assets ——7.8% 7.3% 6.0%
The 2007 net cost assumptions reflect the early adoption of the measurement change
provisions of SFAS 158, as discussed in Note 1.
80 United Technologies Corporation