JP Morgan Chase 2003 Annual Report Download - page 92

Notes to consolidated financial statements
J.P. M organ Chase & Co.
90 J.P. Morgan Chase & Co. / 2003 Annual Report
While the Firm ow ns the COLI policies, COLI proceeds (death
benefits, w ithdraw als and other distributions) may be used only
to reimburse the Firm for its net postretirement benefit claim
payments and related administrative expenses. The U.K. postre-
tirement benefit plan is unfunded.
The follow ing tables present the funded status and amounts
reported on the Consolidated balance sheet, the accumulated
benefit obligation and the components of net periodic benefit
costs reported in the Consolidated statement of income for the
Firm’s U.S. and non-U.S. defined benefit pension and postretire-
ment benefit plans.
Postretirement medical and life insurance
JPM organ Chase offers postretirement medical and life
insurance benefits to qualifying U.S. employees. These benefits
vary w ith length of service and date of hire and provide for lim-
its on the Firm’s share of covered medical benefits. The medical
benefits are contributory, w hile the life insurance benefits are
noncontributory. Postretirement medical benefits are also
offered to qualifying U.K. employees.
JPM organ Chase’s U.S. postretirement benefit obligation is
partially funded w ith corporate-ow ned life insurance (“ COLI” )
purchased on the lives of eligible employees and retirees.
Defined benefit pension plans Postretirement
U.S. Non-U.S. benefit plans(a)
As of December 31, (in millions) 2003 2002 2003 2002 2003 2002
Change in benefit obligat ion
Benefit obligation at beginning of year $(4,241) $(4,007) $(1,329) $(1,100) $(1,126) $(1,056)
Benefits earned during the year (180) (174) (16) (16) (15) (12)
Interest cost on benefit obligations (262) (275) (74) (62) (73) (69)
Plan amendments (89) —(1) ——10
Employee contributions ——(1) (1) (11) (14)
Actuarial gain (loss) (262) (226) (125) (92) (134) (50)
Benefits paid 386 377 55 47 113 99
Curtailment gain 15 64 —22 (2) 27
Settlement gain ———6——
Special termination benefits ——(1) (3) —(57)
Foreign exchange impact and other ——(167) (130) (4) (4)
Benefit obligation at end of year $(4,633) $(4,241) $(1,659) $(1,329) $(1,252) $(1,126)
Change in plan asset s
Fair value of plan assets at beginning of year $4,114 $4,048 $1,281 $1,058 $1,020 $1,089
Actual return on plan assets 811 (406) 133 (150) 154 (74)
Firm contributions 327 849 87 304 216
Settlement payments ——(12) (6) ——
Benefits paid (386) (377) (43) (47) (27) (11)
Foreign exchange impact and other ——157 122 ——
Fair value of plan assets at end of year $4,866(b) $4,114(b) $1,603 $1,281 $1,149 $1,020
Reconciliat ion of funded stat us
Funded status $233 $(127) $(56) $(48) $(103) $(106)
Unrecognized amounts:
Net transition asset ——(1) (1) ——
Prior service cost 137 56 54810
Net actuarial (gain) loss 920 1,224 564 477 156 86
Prepaid (accrued) benef it cost report ed in
Other asset s (Accrued expenses), respect ively $ 1,290 $1,153 $512(c) $ 432(c) $61 $(10)
Accumulat ed benefit obligat ion $ (4,312) $(3,949) $(1,626) $(1,295) NA NA
(a) Includes postretirement benefit obligation of $36 million and $38 million and postretirement benefit liability (included in Accrued expenses) of $54 million and $49 million at December 31, 2003 and 2002,
respectively, for the U.K. plan, which is unfunded.
(b) At December 31, 2003 and 2002, approximately $315 million and $295 million, respectively, of U.S. plan assets relate to surplus assets of group annuity contracts.
(c) At December 31, 2003 and 2002, Accrued expenses related to non-U.S. defined benefit pension plans that JPMorgan Chase elected not to prefund fully totaled $99 million and $81 million, respectively.