Cigna 2008 Annual Report Download - page 127

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The Company measures the assets and obligations of its domestic pension and other postretirement benefit plans as of December 31.
The following table summarizes the projected obligations and assets related to the Company's domestic and international pension and
other postretirement benefit plans as of, and for the years ended, December 31:
Other
Pension Postretirement
Benefits Benefits
(In millions) 2008 2007 2008 2007
Change in benefit obligation
Benefit obligation, January 1 $ 4,045 $ 4,186 $ 426 $ 465
Service cost 74 73 1 2
Interest cost 242 231 24 24
(Gain) loss from past experience 13 (99) (20) (31)
Benefits paid from plan assets (246) (251) (3) (3)
Benefits paid - other (24) (36) (36) (31)
Translation of foreign currencies (3) - - -
Amendments - (59) (16) -
Benefit obligation, December 31 4,101 4,045 376 426
Change in plan assets
Fair value of plan assets, January 1 3,417 3,343 28 30
Actual return on plan assets (921) 321 (1) 1
Benefits paid (246) (251) (3) (3)
Translation of foreign currencies (4) - - -
Contributions 2 4 - -
Fair value of plan assets, December 31 2,248 3,417 24 28
Funded Status $(1,853) $ (628) $(352) $(398)
The postretirement benefits liability adjustment included in accumulated other comprehensive loss consisted of the following as of
December 31:
Pension Other
Benefits Postretirement Benefits
(In millions) 2008 2007 2008 2007
Unrecognized net gain (loss) $(1,548) $ (437) $ 84 $ 74
Unrecognized prior service cost 50 61 88 89
Postretirement benefits liability adjustment $(1,498) $ (376) $ 172 $ 163
During 2008, the Company’s postretirement benefits liability adjustment increased by $1.1 billion pre-tax ($723 million after-tax)
resulting in a decrease to shareholders’ equity. The increase in the liability was primarily due to the difference between expected and
actual returns on pension plan assets. Those investments experienced significant losses in 2008 due to the decline in the equity
markets, compared with the expected long-term returns of 8% assumed in the expense calculation. Partially offsetting these losses
was the amortization of actuarial losses.
Pension benefits. The Company’s pension plans were underfunded by $1.9 billion in 2008 and $628 million in 2007 and had related
accumulated benefit obligations of $4.1 billion as of December 31, 2008 and $4.0 billion as of December 31, 2007.
The Company funds its qualified pension plans at least at the minimum amount required by the Employee Retirement Income Security
Act of 1974 (ERISA) and the Pension Protection Act of 2006.
The Company did not make domestic pension plan contributions in 2008 or 2007 to its primary qualified domestic pension plan. The
Company expects contributions to the qualified pension plan to be approximately $410 million during 2009. This amount could
change based on final valuation amounts and the level at which the Company decides to fund the plan. These estimates do not
include funding requirements related to the litigation matter discussed in Note 22 to the Consolidated Financial Statements, as
management does not expect this to be resolved in 2009. Future years’ contributions will ultimately be based on a wide range of