OG&E 2009 Annual Report Download - page 92

Rate Assumptions
Pension Plan and Postretirement
Restoration of Retirement Income Plan Benefit Plans
Year ended December 31 2009 2008 2007 2009 2008 2007
Discount rate 5.30% 6.25% 6.25% 6.00% 6.25% 6.25%
Rate of return on plans’ assets 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Compensation increases 4.50% 4.50% 4.50% N/A N/A N/A
Assumed health care cost trend:
Initial trend N/A N/A N/A 9.49% 9.00% 9.00%
Ultimate trend rate N/A N/A N/A 5.00% 4.50% 4.50%
Ultimate trend year N/A N/A N/A 2018 2014 2013
N/A - not applicable
The overall expected rate of return on plan assets assumption remained at 8.50 percent in 2008 and 2009 in determining net
periodic benefit cost. The rate of return on plan assets assumption is the average long-term rate of earnings expected on the funds
currently invested and to be invested for the purpose of providing benefits specified by the Pension Plan or postretirement benefit
plans. This assumption is reexamined at least annually and updated as necessary. The rate of return on plan assets assumption reflects
a combination of historical return analysis, forward-looking return expectations and the plans’ current and expected asset allocation.
Post-Employment Benefit Plan
Disabled employees receiving benefits from OGE Energy’s Group Long-Term Disability Plan are entitled to continue
participating in the Company’s Medical Plan along with their dependents. The post-employment benefit obligation represents the
actuarial present value of estimated future medical benefits that are attributed to employee service rendered prior to the date as of
which such information is presented. The obligation also includes future medical benefits expected to be paid to current employees
participating in OGE Energy’s Group Long-Term Disability Plan and their dependents, as defined in OGE Energy’s Medical Plan.
The post-employment benefit obligation is determined by an actuary on a basis similar to the accumulated postretirement
benefit obligation. The estimated future medical benefits are projected to grow with expected future medical cost trend rates and are
discounted for interest at the discount rate and for the probability that the participant will discontinue receiving benefits from OGE
Energy’s Group Long-Term Disability Plan due to death, recovery from disability, or eligibility for retiree medical benefits. The
Company’s post-employment benefit obligation was approximately $1.7 million and $1.6 million at December 31, 2009 and 2008,
respectively.
Defined Contribution Retirement Plan
OGE Energy provides a 401(k) Plan. Each regular full-time employee of OGE Energy or a participating affiliate is eligible
to participate in the 401(k) Plan immediately. All other employees of OGE Energy or a participating affiliate are eligible to become
participants in the 401(k) Plan after completing one year of service as defined in the 401(k) Plan. Participants may contribute each
pay period any whole percentage between two percent and 19 percent of their compensation, as defined in the 401(k) Plan, for that pay
period. Participants who have attained age 50 before the close of a year are allowed to make additional contributions referred to as
“Catch-Up Contributions,” subject to the limitations of the Code. The 401(k) Plan was amended in October 2009, as discussed
previously, whereby employees were offered a one-time irrevocable election to either stay in their current 401(k) Plan where OGE
Energy matching contributions are discussed below or select an option whereby, effective January 1, 2010, OGE Energy will
contribute on behalf of each participant, depending on the option selected, 200 percent of the participant’s contributions up to five
percent of compensation or 100 percent of the participant’s contributions up to six percent of compensation. In the current 401(k)
Plan, OGE Energy contributes to the 401(k) Plan each pay period, on behalf of each participant, an amount equal to 50 percent of the
participant’s contributions up to six percent of compensation for participants whose employment or re-employment date occurred
before February 1, 2000 and who have less than 20 years of service, as defined in the 401(k) Plan, and an amount equal to 75 percent
of the participant’s contributions up to six percent of compensation for participants whose employment or re-employment date
occurred before February 1, 2000 and who have 20 or more years of service, as defined in the 401(k) Plan. For participants whose
employment or re-employment date occurred on or after February 1, 2000 and before December 1, 2009, under the current 401(k)
Plan, OGE Energy contributes 100 percent of the participant’s contributions up to six percent of compensation. For participants hired
on or after December 1, 2009, OGE Energy contributes, effective January 1, 2010, 200 percent of the participant’s contributions up to
five percent of compensation. No OGE Energy contributions are made with respect to a participant’s Catch-Up Contributions,
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