Fannie Mae 2011 Annual Report Download - page 324

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Contributions
Contributions to the qualified pension plan increase the plan assets while contributions to the unfunded plans are
made to fund current period benefit payments or to fulfill annual funding requirements. We were not required to
make minimum contributions to our qualified pension plan for each of the years in the three-year period ended
December 31, 2011 since we met the minimum funding requirements as prescribed by ERISA. However, we did
make a discretionary contribution to our qualified pension plan of $124 million, $42 million and $76 million
during 2011, 2010 and 2009, respectively.
During 2011, we contributed $124 million to our qualified pension plan, $7 million to our nonqualified pension
plans and $6 million to our other postretirement benefit plan. During 2012, we anticipate contributing $60
million to our benefit plans, consisting of $45 million to our qualified pension plan, $7 million to our
nonqualified pension plans and $8 million to our other postretirement plan.
The fair value of plan assets of our funded qualified pension plan was less than our accumulated benefit
obligation by $100 million and $5 million as of December 31, 2011 and 2010, respectively. There were no plan
assets returned to us as of February 29, 2012 and we do not expect any plan assets to be returned to us during the
remainder of 2012.
Assumptions
Pension and other postretirement benefit amounts recognized in our consolidated financial statements are
determined on an actuarial basis using several different assumptions that are measured as of December 31, 2011,
2010 and 2009. The following table displays the actuarial assumptions for our plans used in determining the net
periodic benefit costs and the projected accumulated benefit obligations as of December 31, 2011, 2010 and
2009.
As of December 31,
Pension Benefits Postretirement Benefits
2011 2010 2009 2011 2010 2009
Weighted-average assumptions used to determine net periodic benefit
costs:
Discount rate ................................................... 5.65% 6.10% 6.15% 5.40% 5.75% 6.15%
Average rate of increase in future compensation ........................ 4.00 4.00 4.00
Expected long-term weighted-average rate of return on plan assets ......... 7.25 7.50 7.50
Weighted-average assumptions used to determine benefit obligation at
year-end:
Discount rate ................................................... 4.95% 5.65% 6.10% 4.75% 5.40% 5.75%
Average rate of increase in future compensation ........................ 4.00 4.00 4.00
Health care cost trend rate assumed for next year:
Pre-65 ......................................................... 8.00% 8.00% 8.00%
Post-65 ........................................................ 8.00 8.00 8.00
Rate that cost trend rate gradually declines to and remains at: 5.00 5.00 5.00
Year that rate reaches the ultimate trend rate ........................... 2018 2018 2018
As of December 31, 2011, the effect of a 1% increase or decrease in the assumed health care cost trend rate
would change the accumulated postretirement benefit obligation by less than $1 million.
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