Bank of Montreal 2010 Annual Report Download - page 153
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Notes
BMO Financial Group 193rd Annual Report 2010 151
Pension and Other Employee Future Benefi t Expenses
Pension and other employee future benefit expenses are determined as follows:
(Canadian $ in millions) Pension benefit plans Other employee future benefit plans
2010 2009 2008 2010 2009 2008
Annual Benefits Expense
Benefits earned by employees 128 115 141 19 13 19
Interest cost on accrued benefit liability 254 259 236 57 50 51
Actuarial loss recognized in expense 75 76 10 4 – 12
Amortization of plan amendment costs 14 16 14 (8) (8) (8)
Settlement gain (3) – – – – –
Expected return on plan assets (292) (245) (298) (5) (5) (6)
Annual benefits expense 176 221 103 67 50 68
Canada and Quebec pension plan expense 59 58 56 – – –
Defined contribution expense 7 8 9 – – –
Total annual pension and other employee future benefit expenses
recognized in the Consolidated Statement of Income 242 287 168 67 50 68
(Canadian $ in millions, except as noted) Pension benefit plans Other employee future benefit plans
2010 2009 2008 2010 2009 2008
The impact on annual benefits expense if we had recognized
all costs and benefits as they arose
Total annual pension and other employee future benefit expenses
recognized in the Consolidated Statement of Income 242 287 168 67 50 68
(Excess) shortfall of actual returns over expected returns on plan assets (279) (254) 1,422 (3) 6 20
(Excess) shortfall of actuarial (gains) losses amortized
over actuarial (gains) losses arising 511 360 (842) 34 166 (276)
(Excess) shortfall of plan amendment costs amortized
over plan amendment costs arising – (14) (14) 8 8 8
Total pro forma annual pension and other employee future benefit
expenses if we had recognized all costs and benefits during the year 474 379 734 106 230 (180)
Weighted-average assumptions used to determine benefit expenses
Estimated average service period of active employees (in years) 11 11 11 13 14 12
Expected average remaining period to full benefit eligibility (in years) na na na 10 11 10
Discount rate at beginning of year 6.2% 7.3% 5.6% 6.4% 7.3% 5.5%
Expected long-term rate of return on plan assets 6.5% 6.6% 6.6% 8.0% 8.0% 8.0%
Rate of compensation increase 3.0% 3.7% 3.9% 3.0% 3.7% 3.9%
Assumed overall health care cost trend rate na na na 7.3%(1) 7.4%(2) 7.1%(3)
(1) Trending to 4.4% in 2029 and remaining at that level thereafter. na – not applicable
(2) Trending to 4.4% in 2018 and remaining at that level thereafter.
(3) Trending to 4.5% in 2013 and remaining at that level thereafter.