Fannie Mae 2009 Annual Report Download - page 344

We fund our qualified pension plan through employer contributions to a qualified irrevocable trust that is
maintained for the sole benefit of plan participants and their beneficiaries. Contributions to our qualified
pension plan are subject to a minimum funding requirement and a maximum funding limit under the
Employee Retirement Income Security Act of 1974 (“ERISA”) and IRS regulations.
Our nonqualified defined benefit pension plans consist of an Executive Pension Plan, Supplemental Pension
Plan and the Supplemental Pension Plan 2003, which is a bonus-based plan. These plans cover certain
employees and supplement the benefits payable under the qualified pension plan. The Compensation
Committee of the Board of Directors selects those who can participate in the Executive Pension Plan. In 2007,
the Board of Directors approved an amendment to close the Executive Pension Plan to new participants and in
2009, the plan was frozen. Participants typically vested in their benefits under the Executive Pension Plan after
ten years of service as a participant, with partial vesting usually beginning after five years. Benefits under the
Executive Pension Plan are paid through a rabbi trust.
The Supplemental Pension Plan provides retirement benefits to employees who participate in our qualified
pension plan and do not receive a benefit from the Executive Pension Plan, and whose salary exceeds the
statutory compensation cap applicable to the qualified plan or whose benefit is limited by the statutory benefit
cap. Similarly, the Supplemental Pension Plan 2003 provides additional benefits to our officers based on
eligible bonuses, if any, received by an officer, but the amount of bonus considered is limited to 50% of the
officer’s salary. We pay benefits for our unfunded defined benefit Supplemental Pension Plans from our cash
and cash equivalents.
We also sponsor a contributory postretirement Health Care Plan that covers substantially all regular full-time
employees who meet the applicable age and service requirements. We subsidize premium costs for medical
coverage for employees who meet the age and service requirements and were hired before 2008. However, for
those who retire after 2007 (other than employees who retired under early retirement programs offered in 2007
and 2008) the subsidy amount was frozen at the 2008 dollar amount with no subsequent increases in our
contribution. Employees hired after 2007 will receive access to our retiree medical plan, when eligible, but
they will not qualify for the subsidy. We accrue and pay the benefits for our unfunded postretirement Health
Care Plan from our cash and cash equivalents.
F-86
FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)