CenterPoint Energy 2008 Annual Report Download - page 99

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77
At December 31, 2008, the pension benefit obligation increased by $114 million due to a plan amendment
effective January 1, 2009. The amendment increased certain cash balance accounts in conjunction with a transition
to a uniform cash balance program effective 2009.
The accumulated benefit obligation for all defined benefit pension plans was $1,623 million and $1,708 million as
of December 31, 2007 and 2008, respectively.
The expected rate of return assumption was developed by reviewing the targeted asset allocations and historical
index performance of the applicable asset classes over a 15-year period, adjusted for investment fees and
diversification effects.
The discount rate was determined by reviewing yields on high-quality bonds that receive one of the two highest
ratings given by a recognized rating agency and the expected duration of obligations specific to the characteristics of
the Company’s plans.
For measurement purposes, healthcare costs are assumed to increase 6.50% during 2009, after which this rate
decreases until reaching the ultimate trend rate of 5.5% in 2011. Prescription drug costs are assumed to increase
12% during 2009, after which this rate decreases until reaching the ultimate trend rate of 5.5% in 2014.
Amounts recognized in accumulated other comprehensive income consist of the following:
December 31,
2007
2008
Pension
Benefits
Postretirement
Benefits
Pension
Benefits
Postretirement
Benefits
(In millions)
Unrecognized actuarial loss (gain) ................................................................
$ 99
$ (4)
$ 181
$ 5
Unrecognized prior service cost (credit) ................................
(6)
14
17
11
Unrecognized transition obligation ................................................................
—
4
—
3
Net amount recognized in other comprehensive income................................
$ 93
$ 14
$ 198
$ 19
The changes in plan assets and benefit obligations recognized in other comprehensive income during 2008 are as
follows (in millions):
Pension
Benefits
Postretirement
Benefits
Net loss ................................................................................................................................
$ 89
$ 9
Amortization of net loss ................................................................................................
(7)
—
Prior service credit ................................................................................................................................
22
—
Amortization of prior service credit (cost) ................................................................................................
1
(3)
Amortization of transition obligation ................................................................................................
—
(1)
Total recognized in comprehensive income ................................................................................................
$105
$ 5
The total expense recognized in net periodic costs and other comprehensive income was $106 million and
$31 million for pension and postretirement benefits, respectively, for the year ended December 31, 2008.
The amounts in accumulated other comprehensive income expected to be recognized as components of net
periodic benefit cost during 2009 are as follows (in millions):
Pension
Benefits
Postretirement
Benefits
Unrecognized actuarial loss ................................................................................................
$ 15
$ —
Unrecognized prior service cost ................................................................................................
1
2
Amounts in comprehensive income to be recognized in net periodic cost in 2009 ................................
$ 16
$ 2