Ameriprise 2007 Annual Report Download - page 93

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Ameriprise Financial 2007 Annual Report 91
Supplemental Retirement Plan and a retirement plan including
employees from Threadneedle were split. The split resulted in an
allocation of unrecognized net losses to the surviving plans adminis-
tered separately by the Company and American Express in
proportion to the projected benefit obligations of the surviving plans.
As a result of this allocation, the Company recorded additional
pension liability in 2006 and 2005 of $5 million and $32 million,
respectively.
The components of the net periodic pension cost for all pension
plans were as follows:
Years Ended December 31,
2007 2006 2005
(in millions)
Service cost $ 37 $ 38 $ 34
Interest cost 22 20 17
Expected return on plan assets (21) (18) (19)
Amortization of prior service cost (2) (2) (2)
Recognized net actuarial loss 11 1
Settlement loss —— 1
Other (2) — —
Net periodic pension benefit cost $ 35 $ 39 $ 32
The prior service costs are amortized on a straight-line basis over the
average remaining service period of active participants. Actuarial
gains and losses in excess of 10% of the greater of the projected
benefit obligation or the market-related value of assets are amortized
on a straight line basis over the expected 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. Effective December 31, 2008,
the Company will measure plan assets and benefit obligations as of the
date of the balance sheet as required by SFAS 158.
The following tables provide a reconciliation of the changes in the
benefit obligation and fair value of assets for the pension plans:
2007 2006
(in millions)
Benefit obligation, October 1 of prior year $356 $325
Service cost 37 38
Interest cost 22 19
Plan amendments 1—
Benefits paid (7) (7)
Actuarial gain (12) (5)
Settlements (25) (18)
Foreign currency rate changes —4
Benefit obligation at September 30 $372 $356
2007 2006
(in millions)
Fair value of plan assets,
October 1 of prior year $275 $244
Actual return on plan assets 50 27
Employer contributions 16 26
Benefits paid (7) (7)
Settlements (25) (18)
Foreign currency rate changes —3
Fair value of plan assets at September 30 $309 $275
The following table provides the amounts recognized in the Consoli-
dated Balance Sheets, which equal the funded status of the
Company’s pension plans:
December 31,
2007 2006
(in millions)
Benefit liability $(77) $(85)
Benefit asset 14 4
Net amount recognized $(63) $(81)
The Company complies with the minimum funding requirements in
all countries.
The amounts recognized in accumulated other comprehensive
income (net of tax) that arose as of December 31, 2007, but were not
recognized as components of net periodic benefit cost included an
unrecognized actuarial gain of $19 million and an unrecognized prior
service credit of $1 million. The estimated amounts that will be
amortized from accumulated other comprehensive income (net of
tax) into net periodic benefit cost in 2008 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, 2007 and 2006 was $292 million and $285 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,
2007 2006
(in millions)
Accumulated benefit obligation $31 $31
Fair value of plan assets ——
The projected benefit obligation and fair value of plan assets for
pension plans with projected benefit obligations that exceeded the
fair value of plan assets were as follows:
September 30,
2007 2006
(in millions)
Projected benefit obligation $325 $318
Fair value of plan assets 249 233
The weighted average assumptions used to determine benefit obliga-
tions for pension plans were as follows:
2007 2006
Discount rates 6.2% 5.7%
Rates of increase in compensation levels 4.2 4.1
The weighted average assumptions used to determine net periodic
benefit cost for pension plans were as follows:
2007 2006 2005
Discount rates 5.7% 5.5% 5.7%
Rates of increase in compensation levels 4.1 4.4 4.4
Expected long term rates of return
on assets 8.2 8.2 8.2