Vectren 2008 Annual Report Download - page 85

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83
the Consumer Price Index (CPI). Any increase in health care costs in excess of the CPI increase is the
responsibility of the plan participants.
Benefit Obligations
A reconciliation of the Company’s benefit obligations at December 31, 2008 and 2007, follows:
(In millions) 2008 2007 2008 2007
Benefit obligation, beginning of period 249.6$ 255.4$ 70.2$ 69.5$
Service cost – benefits earned during the period 7.7 5.6 0.7 0.5
Interest cost on projected benefit obligation 18.8 14.9 5.2 3.9
Plan participants' contributions - - 2.8 1.3
Plan amendments 0.4 - - -
Actuarial loss (gain) 0.3 (13.9) 2.5 1.5
Medicare subsidy receipts - - 0.7 0.2
Benefits paid (16.2) (12.4) (9.8) (6.7)
Benefit obligation, end of period 260.6$ 249.6$ 72.3$ 70.2$
Pension Benefits Other Benefits
The accumulated benefit obligation for all defined benefit pension plans was $245.2 million and $231.9 million at
December 31, 2008 and 2007, respectively. Due to moving the measurement date from September 30 to December
31, in accordance with SFAS 158, the 2008 roll forward of the projected benefit obligation includes 15 months of
activity.
The benefit obligation as of December 31, 2008 and 2007 was calculated using the following assumptions:
Pension Benefits Other Benefits
2008 2007 2008 2007
Discount rate 6.25% 6.25% 6.25% 6.25%
Rate of compensation increase 3.75% 3.75% N/A N/A
Expected increase in Consumer Price Index N/A N/A 3.50% 3.50%
To calculate the 2008 ending postretirement benefit obligation, medical claims costs in 2009 were assumed to be 6
percent higher than those incurred in 2008. That trend was assumed to reach its ultimate trending increase of 5%
by 2010 and remain level thereafter. A one-percentage point change in assumed health care cost trend rates would
have changed the benefit obligation by approximately $1.1 million.
Plan Assets
A reconciliation of the Company’s plan assets at December 31, 2008 and 2007 follows:
(In millions) 2008 2007 2008 2007
Plan assets at fair value, beginning of period 211.8$ 185.0$ 6.8$ 6.8$
Actual return on plan assets (58.0) 22.3 (1.4) 0.9
Employer contributions 13.3 16.9 5.9 4.5
Plan participants' contributions - - 2.8 1.3
Benefits paid (16.2) (12.4) (9.8) (6.7)
Fair value of plan assets, end of period 150.9$ 211.8$ 4.3$ 6.8$
Pension Benefits Other Benefits
Due to moving the measurement date from September 30 to December 31, in accordance with SFAS 158, the 2008
roll forward of plan assets includes 15 months of activity.