Ameriprise 2008 Annual Report Download - page 146

19. Retirement Plans and Profit Sharing Arrangements
Defined Benefit Plans
Pension Plans
The Company’s employees in the United States are eligible to participate in the Ameriprise Financial Retirement Plan (the
‘‘Retirement Plan’’), a noncontributory defined benefit plan which is a qualified plan under the Employee Retirement Income
Security Act of 1974, as amended (‘‘ERISA’’), under which the cost of retirement benefits for eligible employees in the United
States is measured by length of service, compensation and other factors and is currently being funded through a trust.
Funding of retirement costs for the Retirement Plan complies with the applicable minimum funding requirements specified by
ERISA. The Retirement Plan is a cash balance plan by which the employees’ accrued benefits are based on notional account
balances, which are maintained for each individual. Each pay period these balances are credited with an amount equal to a
percentage (determined by an employee’s age plus service) of compensation as defined by the Retirement Plan (which
includes, but is not limited to, base pay, certain incentive pay and commissions, shift differential, overtime and transition pay).
Employees’ balances are also credited daily with a fixed rate of interest that is updated each January 1 and is based on the
average of the daily five-year U.S. Treasury Note yields for the previous October 1 through November 30, with a minimum
crediting rate of 5%. Employees have the option to receive annuity payments or a lump sum payout at vested termination or
retirement.
In addition, the Company sponsors an unfunded non-qualified Supplemental Retirement Plan (the ‘‘SRP’’) for certain highly
compensated employees to replace the benefit that cannot be provided by the Retirement Plan due to Internal Revenue
Service limits. The SRP generally parallels the Retirement Plan but offers different payment options.
Most employees outside the United States are covered by local retirement plans, some of which are funded, while other
employees receive payments at the time of retirement or termination under applicable labor laws or agreements.
The components of the net periodic pension cost for all pension plans were as follows:
Years Ended December 31,
2008 2007 2006
(in millions)
Service cost $ 34 $ 37 $ 38
Interest cost 25 22 20
Expected return on plan assets (22) (21) (18)
Amortization of prior service cost (2) (2) (2)
Recognized net actuarial loss — 1 1
Other 3 (2) —
Net periodic pension benefit cost $ 38 $ 35 $ 39
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 following tables provide a reconciliation of the changes in the benefit obligation and fair value of assets for the pension
plans. The Retirement Plan’s year-end is September 30.
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