Ameriprise 2006 Annual Report Download - page 94

Download and view the complete annual report

Please find page 94 of the 2006 Ameriprise annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

The components of the net periodic pension cost for all
pension plans were as follows:
Years Ended December 31,
2006 2005 2004
(in millions)
Service cost $38 $34 $31
Interest cost 20 17 15
Expected return on plan assets (18) (19) (19)
Amortization of prior service cost (2) (2) (2)
Recognized net actuarial loss 11—
Settlement loss —11
Net periodic pension benefit cost $39 $32 $26
The prior service costs are amortized on a straight-line basis
over the average remaining service period of active participants.
Gains and losses in excess of 10% of the greater of the
benefit obligation and the market-related value of assets are
amortized over the average remaining service period of active
participants.
The Company measures the obligations and related asset
values for its pension plans annually as of September 30. The
following tables provide a reconciliation of the changes in the
benefit obligation and fair value of assets for the pension plans:
2006 2005
(in millions)
Benefit obligation, October 1 of prior year $ 325 $ 276
Service cost 38 34
Interest cost 19 17
Benefits paid (7) (6)
Actuarial (gain) loss (5) 21
Settlements (18) (15)
Foreign currency rate changes 4(2)
Benefit obligation at September 30 $ 356 $ 325
2006 2005
(in millions)
Fair value of plan assets, October 1 prior year $ 244 $ 224
Actual return on plan assets 27 33
Employer contributions 26 9
Benefits paid (7) (6)
Settlements (18) (15)
Foreign currency rate changes 3(1)
Fair value of plan assets at September 30 $ 275 $ 244
The following table provides the amounts recognized in the
Consolidated Balance Sheets:
December 31,
2006 2005
(in millions)
Benefit liability $ (85) $ (67)
Benefit asset 4—
Prepaid benefit cost —9
Minimum pension liability adjustment —3
Net amount recognized $ (81) $ (55)
The portion of the benefit liability at December 31, 2006
payable within the next year is $5 million.
The Company complies with the minimum funding require-
ments in all countries. At December 31, 2006, the funded
status of the Company’s pension plans was equal to the net
amount recognized in the Consolidated Balance Sheet. The
following table reconciles the funded status of the Company’s
pension plans (benefit obligation less fair value of plan
assets) to the amounts recognized in the Consolidated
Balance Sheet as of December 31, 2005:
(in millions)
Funded status at September 30, 2005 $ (81)
Unrecognized net actuarial loss 25
Unrecognized prior service cost (7)
Fourth quarter contributions 8
Net amount recognized $ (55)
The amounts recognized in other comprehensive income (net of
tax) that arose during the year ended December 31, 2006 but not
recognized as components of net periodic benefit cost included
an unrecognized actuarial loss of $7 million and an unrecognized
prior service credit of $3 million. The estimated amounts that
will be amortized from accumulated other comprehensive
income (net of tax) into net periodic benefit cost in 2007 include
an actuarial loss of nil and a prior service credit of $1 million.
The accumulated benefit obligation for all pension plans as
of September 30, 2006 and 2005 was $285 million and
$272 million, respectively. The accumulated benefit obligation
and fair value of plan assets for pension plans with
accumulated benefit obligations that exceeded the fair value
of plan assets were as follows:
September 30,
2006 2005
(in millions)
Accumulated benefit obligation $31 $47
Fair value of plan assets —15
92 Ameriprise Financial, Inc. 2006 Annual Report