Vectren 2010 Annual Report Download - page 87

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85
The weighted averages of significant assumptions used to determine net periodic benefit costs follow:
2010 2009 2008 2010 2009 2008
Discount rate 6.00% 6.25% 6.25% 6.00% 6.25% 6.25%
Rate of compensation increase 3.50% 3.75% 3.75% N/A N/A N/A
Expected return on plan assets 8.00% 8.25% 8.25% 8.00% 8.25% 8.25%
Expected increase in Consumer Price Index N/A N/A N/A 3.00% 3.50% 3.50%
Pension Benefits Other Benefits
Health care cost trend rate assumptions do not have a material effect on the service and interest cost components of benefit
costs. The Company’s plans limit its exposure to increases in health care costs to annual changes in 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, 2010 and 2009 follows:
(In millions) 2010 2009 2010 2009
Benefit obligation, beginning of period 271.5$ 260.6$ 79.6$ 72.3$
Service cost – benefits earned during the period 6.3 6.3 0.5 0.5
Interest cost on projected benefit obligation 15.9 15.8 4.6 4.4
Plan participants' contributions - - 1.7 2.8
Plan amendments 0.8 0.1 - -
Actuarial loss (gain) 21.3 2.0 1.2 7.2
Medicare subsidy receipts - - 0.5 0.8
Benefit payments (18.5) (13.3) (7.4) (8.4)
Benefit obligation, end of period 297.3$ 271.5$ 80.7$ 79.6$
Pension Benefits Other Benefits
The accumulated benefit obligation for all defined benefit pension plans was $280.5 and $257.0 million at December 31, 2010
and 2009, respectively.
The benefit obligation as of December 31, 2010 and 2009 was calculated using the following assumptions:
Pension Benefits Other Benefits
2010 2009 2010 2009
Discount rate 5.50% 6.00% 5.50% 6.00%
Rate of compensation increase 3.50% 3.50% N/A N/A
Expected increase in Consumer Price Index N/A N/A 3.00% 3.00%
To calculate the 2010 ending postretirement benefit obligation, medical claims costs in 2011 were assumed to be 8 percent
higher than those incurred in 2010. That trend was assumed to reach its ultimate trending increase of 5 percent by 2014 and
remain level thereafter. A one-percentage point change in assumed health care cost trend rates would have changed the
benefit obligation by approximately $2.4 million.