AIG 2008 Annual Report Download - page 313

Assumptions
The weighted average assumptions used to determine the benefit obligations are as follows:
December 31, 2008 Non-U.S. Plans U.S. Plans Non-U.S. Plans U.S. Plans
Pension Postretirement
Discount rate ........................ 2.00 - 15.00% 6.00% 1.50 - 7.25% 6.00%
Rate of compensation increase ........... 2.50 - 10.00% 4.25% 3.00 - 4.00% 4.25%
December 31, 2007
Discount rate ........................ 2.00 - 11.00% 6.50% 2.75 - 6.50% 6.50%
Rate of compensation increase ........... 1.50 - 9.00% 4.25% 3.00 - 3.50% 4.25%
The benefit obligations for non-U.S. plans reflect those assumptions that were most appropriate for the local
economic environments of each of the subsidiaries providing such benefits.
Assumed health care cost trend rates for the U.S. plans were as follows:
2008 2007
At
December 31,
Following year:
Medical (before age 65) ............................................ 9.00% 9.00%
Medical (age 65 and older) .......................................... 7.00% 7.00%
Ultimate rate to which cost increase is assumed to decline .................... 5.00% 5.00%
Year in which the ultimate trend rate is reached:
Medical (before age 65) ............................................ 2018 2015
Medical (age 65 and older) .......................................... 2018 2015
A one percent point change in the assumed healthcare cost trend rate would have the following effect on
AIG’s postretirement benefit obligations:
2008 2007 2008 2007
One Percent
Increase
One Percent
Decrease
At December 31,
(In millions)
Non-U.S. plans .......................................... $14 $12 $(11) $(8)
U.S. plans .............................................. $6 $6 $ (5) $(5)
AIG’s postretirement plans provide benefits primarily in the form of defined employer contributions rather
than defined employer benefits. Changes in the assumed healthcare cost trend rate are subject to caps for U.S. plans.
AIG’s non-U.S. postretirement plans are not subject to caps.
The weighted average assumptions used to determine the net periodic benefit costs were as follows:
At December 31, Non-U.S. Plans* U.S. Plans Non-U.S. Plans* U.S. Plans
Pension Postretirement
2008
Discount rate ............................ 2.00 - 11.00% 6.50% 2.75 - 6.50% 6.50%
Rate of compensation increase ............... 1.50 - 9.00% 4.25% 3.00 - 3.50% 4.25%
Expected return on assets ................... 2.75 - 9.75% 7.75% N/A N/A
AIG 2008 Form 10-K 307
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)