Freddie Mac 2008 Annual Report Download - page 248

registered under the Exchange Act, and we are therefore subject to Section 162(m). We are analyzing the extent to which
any payments made to executive officers in 2008 may be subject to the deduction disallowance provisions of Section 162(m).
NOTE 15: EMPLOYEE BENEFITS
Defined Benefit Plans
We maintain a tax-qualified, funded defined benefit pension plan, or Pension Plan, covering substantially all of our
employees. Pension Plan benefits are based on an employee’s years of service and highest average compensation, up to legal
plan limits, over any consecutive 36 months of employment. Pension Plan assets are held in trust and the investments consist
primarily of funds consisting of listed stocks and corporate bonds. In addition to our Pension Plan, we maintain a
nonqualified, unfunded defined benefit pension plan for our officers, as part of our Supplemental Executive Retirement Plan,
or SERP. The related retirement benefits for our SERP are paid from our general assets. Our qualified and nonqualified
defined benefit pension plans are collectively referred to as defined benefit pension plans.
We maintain a defined benefit postretirement health care plan, or Retiree Health Plan, that generally provides
postretirement health care benefits on a contributory basis to retired employees age 55 or older who rendered at least
10 years of service (five years of service if the employee was eligible to retire prior to March 1, 2007) and who, upon
separation or termination, immediately elected to commence benefits under the Pension Plan in the form of an annuity. Our
Retiree Health Plan is currently unfunded and the benefits are paid from our general assets. This plan and our defined benefit
pension plans are collectively referred to as the defined benefit plans.
Prior to 2008, for financial reporting purposes, we used a September 30 valuation measurement date for all of our
defined benefit plans. Effective January 1, 2008, we adopted the measurement date provisions of SFAS 158. In accordance
with SFAS 158, we have changed the measurement date of our defined benefit plan assets and obligations from
September 30 to our fiscal year-end date of December 31 using the 15-month transition method. Under this approach, we
used the measurements determined in our 2007 consolidated financial statements to estimate the effects of the measurement
date change. As a result of adoption, we recognized an $8 million decrease in retained earnings (accumulated deficit), after
tax, at January 1, 2008 and the impact to AOCI after tax was immaterial. See “NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES” for further information regarding the change to our measurement date.
We accrue the estimated cost of retiree benefits as employees render the services necessary to earn their pension and
postretirement health benefits. Our pension and postretirement health care costs related to these defined benefit plans for
2008, 2007 and 2006 presented in the following tables were calculated using assumptions as of September 30, 2007, 2006
and 2005, respectively. The funded status of our defined benefit plans for 2008 and 2007 presented in the following tables
was calculated using assumptions as of December 31, 2008 and September 30, 2007, respectively.
245 Freddie Mac