Ameriprise 2009 Annual Report Download - page 150

policy surrender behavior, and the Company’s nonperformance risk specific to these liabilities. The fair value of other liabilities including
non-life contingent fixed annuities in payout status, equity indexed annuity host contracts and the fixed portion of a small number of
variable annuity contracts classified as investment contracts is determined in a similar manner.
Customer deposits
The fair value of investment certificate reserves is determined by discounting cash flows using discount rates that reflect current pricing
for assets with similar terms and characteristics, with adjustments for early withdrawal behavior, penalty fees, expense margin and the
Company’s nonperformance risk specific to these liabilities.
Banking and brokerage customer deposits are liabilities with no defined maturities and fair value is the amount payable on demand at the
reporting date.
Separate account liabilities
Certain separate account liabilities are classified as investment contracts and are carried at an amount equal to the related separate
account assets. Carrying value is a reasonable estimate of the fair value as it represents the exit value as evidenced by withdrawal
transactions between contractholders and the Company. A nonperformance adjustment is not included as the related separate account
assets act as collateral for these liabilities and minimize nonperformance risk.
Debt and other liabilities
Debt fair value is based on quoted prices in active markets, when available. If quoted prices are not available fair values are obtained from
nationally-recognized pricing services, broker quotes, or other model-based valuation techniques such as present value of cash flows.
19. Retirement Plans and Profit Sharing Arrangements
Defined Benefit Plans
Pension Plans
The Company’s United States employees are generally eligible for 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’’). Funding of costs for the Retirement Plan complies with the applicable minimum funding requirements specified by ERISA
and is held in a trust. 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 2.5% to 10%) of eligible compensation as defined by the Retirement Plan (which
includes, but is not limited to, base pay, certain incentive pay and commissions, shift differential and overtime). Employees’ balances are
also credited 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, retirement, death or disability. The Retirement Plan’s year-end is
September 30.
Effective March 1, 2010, the Retirement Plan will be amended to exclude continued credits for employee financial advisors. It will also
amend the percentage that will be credited to eligible employees’ accounts to be determined on service only and will range from 2.5% to
5% of eligible compensation. Non-financial advisor employees who were eligible for the Retirement Plan will be grandfathered at their
2010 rates until or unless the new schedule becomes more favorable. These plan changes are reflected in the obligations disclosed as of
December 31, 2009.
In addition, the Company sponsors the Ameriprise Financial Supplemental Retirement Plan (the ‘‘SRP’’), an unfunded non-qualified
deferred compensation plan subject to Section 409A of the Internal Revenue Code. This plan is 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.
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