Occidental Petroleum 2008 Annual Report Download - page 75

NOTE 13 RETIREMENT PLANS AND POSTRETIREMENT BENEFITS
Occidental has various benefit plans for its salaried, domestic union and nonunion hourly, and certain foreign national employees.
DEFINED CONTRIBUTION PLANS
All domestic employees and certain foreign national employees are eligible to participate in one or more of the defined contribution
retirement or savings plans that provide for periodic contributions by Occidental based on plan-specific criteria, such as base pay, age level
and employee contributions. Certain salaried employees participate in a supplemental retirement plan that provides restoration of benefits
lost due to governmental limitations on qualified retirement benefits. The accrued liabilities for the supplemental retirement plan were $97
million and $84 million as of December 31, 2008 and 2007, respectively, and Occidental expensed $93 million in 2008, $86 million in
2007 and $74 million in 2006 under the provisions of these defined contribution and supplemental retirement plans.
DEFINED BENEFIT PLANS
Participation in the defined benefit plans is limited and approximately 1,000 domestic and 2,200 foreign national employees, mainly
union, nonunion hourly and certain employees that joined Occidental from acquired operations with grandfathered benefits, are currently
accruing benefits under these plans.
Pension costs for Occidental’s defined benefit pension plans, determined by independent actuarial valuations, are generally funded by
payments to trust funds, which are administered by independent trustees.
OTHER POSTRETIREMENT BENEFIT PLANS
Occidental provides medical and dental benefits and life insurance coverage for certain active, retired and disabled employees and their
eligible dependents. The benefits are generally funded by Occidental as the benefits are paid during the year. The total benefit costs, including
the postretirement costs, were approximately $144 million in 2008, $131 million in 2007 and $120 million in 2006.
OBLIGATIONS AND FUNDED STATUS
Occidental adopted SFAS No. 158 on December 31, 2006, which requires an employer to recognize the overfunded or underfunded
amounts of its defined benefit pension and postretirement plans in its financial statements. Occidental uses a measurement date of
December 31 for all defined benefit pension and postretirement benefit plans. The following table shows the funding status of Occidental's
plans:
Pension Benefits Postretirement Benefits
Unfunded Plans Funded Plans
For the years ended December 31, (in millions) 2008 2007 2008 2007 2008 2007
Changes in benefit obligation:
Benefit obligation — beginning of year $527 $523 $662 $619 $33 $29
Service cost — benefits earned during the period 14 9 13 12 — 1
Interest cost on projected benefit obligation 30 27 36 34 2 2
Actuarial (gain) loss 23 (6) 112 47 5 2
Foreign currency exchange rate changes (16) 12 — — — —
Benefits paid (45) (41) (55) (50) (1) (1)
Plan amendments and other 9 3 — — — —
Benefit obligation — end of year $542 $527 $768 $662 $39 $33
Changes in plan assets:
Fair value of plan assets — beginning of year $567 $556 $ — $ — $4 $ 3
Actual return on plan assets (136) 39 — — (1) 1
Foreign currency exchange rate changes (5) 2 — — — —
Employer contributions 19 11 — — 1 1
Benefits paid (45) (41) — — (1) (1)
Fair value of plan assets — end of year $400 $567 $ — $ — $ 3 $ 4
Funded (unfunded) status: $(142)$40 $(768)$(662)$(36)$(29)
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The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for defined benefit pension plans with an