Freddie Mac 2006 Annual Report Download - page 155

and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements and
periodic asset and liability studies.
Our Pension Plan assets did not include any direct ownership of our securities at September 30, 2006 and 2005.
Cash Flows Related to DeÑned BeneÑt Plans
Our general practice is to contribute to our Pension Plan an amount equal to at least the minimum required
contribution, if any, but no more than the maximum amount deductible for federal income tax purposes each year. During
2006, we made two contributions totaling $143 million to our Pension Plan compared to one contribution totaling
$48 million during 2005. The increase in contributions made to our Pension Plan was in response to the increase in tax-
deductible contributions allowed under the Pension Protection Act passed in August 2006. We have not yet determined
whether a contribution to our Pension Plan is required for 2007.
In addition to the Pension Plan contributions noted above, we paid $3 million during 2006 and $1 million during 2005 in
beneÑts under our SERP. Allocations under our SERP, as well as our Retiree Health Plan, are in the form of beneÑt
payments, as these plans are required to be unfunded.
Table 15.9 sets forth estimated future beneÑt payments expected to be paid for our deÑned beneÑt plans. The expected
beneÑts are based on the same assumptions used to measure our beneÑt obligation at September 30, 2006.
Table 15.9 Ì Estimated Future BeneÑt Payments
Postretirement
Pension BeneÑts Health BeneÑts
(in millions)
2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 7 $ 2
2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8 2
2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9 2
2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11 3
2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12 3
Years 2012-2016ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 108 25
DeÑned Contribution Plans
Our Thrift/401(k) Savings Plan, or Savings Plan, is a tax-qualiÑed deÑned contribution pension plan oÅered to all
eligible employees. Employees are permitted to contribute from 1 percent to 25 percent of their eligible compensation to the
Savings Plan, subject to limits set by the Internal Revenue Code. We match employees' contributions up to 6 percent of
their eligible compensation per pay period; the percentage matched depends upon the employee's length of service.
Employee contributions and our matching contributions are immediately vested. We also have discretionary authority to
make additional contributions to our Savings Plan that are allocated to each eligible employee, based on the employee's
eligible compensation. Employees become vested in our discretionary contributions after 5 years of service. In addition to
our Savings Plan, we maintain a non-qualiÑed deÑned contribution plan for our oÇcers, designed to make up for beneÑts lost
due to limitations on eligible compensation imposed by the Internal Revenue Code and to make up for deferrals of eligible
compensation under our Executive Deferred Compensation Plan. We incurred costs of $34 million, $31 million and
$29 million for the years ended December 31, 2006, 2005 and 2004, respectively, related to these plans. These expenses were
included in Salaries and employee beneÑts on our consolidated statements of income.
Executive Deferred Compensation Plan
Our Executive Deferred Compensation Plan is an unfunded, non-qualiÑed plan that allows certain key employees to
elect to defer substantially all or a portion of their annual salary and cash bonus, and certain key management employees to
defer the settlement of restricted stock units received from us, as well as substantially all or a portion of their annual salary
and cash bonus, for any number of years speciÑed by the employee, but under no circumstances may the period elected
exceed his or her life expectancy. During 2005, we amended the plan to modify certain provisions to address Internal
Revenue Code Section 409A as a result of the issuance of proposed regulations and other guidance. Distributions are paid
from our general assets. We record a liability equal to the accumulated deferred salary, cash bonus and accrued interest as
set forth in the plan, net of any related distributions made to plan participants. We recognize expense equal to the interest
accrued on deferred salary and bonus throughout the year. Expense associated with unvested deferred restricted stock units
is recognized as part of stock-based compensation.
NOTE 16: FAIR VALUE DISCLOSURES
The supplemental consolidated fair value balance sheets in Table 16.1 present our estimates of the fair value of our
recorded Ñnancial assets and liabilities and oÅ-balance sheet Ñnancial instruments at December 31, 2006 and 2005. Our
consolidated fair value balance sheets include the estimated fair values of Ñnancial instruments recorded on our
consolidated balance sheets prepared in accordance with GAAP, as well as oÅ-balance sheet Ñnancial instruments that
143 Freddie Mac