Pfizer 2008 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2008 Pfizer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
The healthcare cost trend rate assumptions for our U.S. postretirement benefit plans are as follows:
(PERCENTAGES) 2008 2007
Healthcare cost trend rate assumed for next year 9.0% 9.9%
Rate to which the cost trend rate is assumed to decline 5.0 5.0
Year that the rate reaches the ultimate trend rate 2018 2015
A one-percentage-point increase or decrease in the healthcare cost trend rate assumed for postretirement benefits would have the
following effects as of December 31, 2008:
(MILLIONS OF DOLLARS) INCREASE DECREASE
Effect on total service and interest cost components $ 17 $ (14)
Effect on postretirement benefit obligation 135 (115)
D. Obligations and Funded Status
The following table presents an analysis of the changes in 2008 and 2007 in the benefit obligations, the plan assets and the
accounting funded status of our U.S. qualified, U.S. supplemental (non-qualified) and international pension plans, and our
postretirement plans:
PENSION PLANS
U.S. QUALIFIED
U.S. SUPPLEMENTAL
(NON-QUALIFIED) INTERNATIONAL
POSTRETIREMENT
PLANS
(MILLION OF DOLLARS) 2008 2007 2008 2007 2008 2007 2008 2007
Change in benefit obligation:
Benefit obligation at beginning of year(a) $ 7,456 $7,792 $ 973 $1,045 $ 7,839 $ 8,144 $ 2,178 $ 2,416
Service cost 236 282 23 27 249 292 39 42
Interest cost 459 447 38 55 388 349 141 137
Employee contributions ————21 21 39 34
Plan amendments (6) (47) (1) (5) 18 40 (33) 1
Increases/(decreases) arising primarily
from changes in actuarial assumptions 172 (412) 102 (64) (1,005) (829) (221) (289)
Foreign exchange impact ————(1,234) 564 (11) 6
Acquisitions —5—(5) 717 ——
Curtailments (48) (107) (6) (15) (74) (80) 11 5
Settlements (212) (253) (202) (11) (58) (409) ——
Special termination benefits 30 16 ——25 29 17 17
Benefits paid (304) (267) (51) (54) (325) (299) (194) (191)
Benefit obligation at end of year(a) 7,783 7,456 876 973 5,851 7,839 1,966 2,178
Change in plan assets:
Fair value of plan assets at beginning of year 7,989 7,816 ——6,579 5,880 413 396
Actual (loss)/gain on plan assets (1,576) 613 ——(1,249) 261 (107) 16
Company contributions —106 253 65 471 499 152 158
Employee contributions ————21 21 39 34
Foreign exchange impact ————(1,048) 435 ——
Acquisitions ————314 ——
Settlements (212) (279) (202) (11) (58) (232) ——
Benefits paid (304) (267) (51) (54) (325) (299) (194) (191)
Fair value of plan assets at end of year 5,897 7,989 ——4,394 6,579 303 413
Funded status (plan assets greater than (less
than) benefit obligation) at end of year $(1,886) $ 533 $(876) $ (973) $(1,457) $(1,260) $(1,663) $(1,765)
(a) For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the benefit
obligation is the accumulated postretirement benefit obligation.
The unfavorable change in our U.S. qualified plans projected benefit obligations funded status from $533 million overfunded in the
aggregate as of December 31, 2007, to $1.9 billion underfunded in the aggregate as of December 31, 2008, was largely driven by
the reduction in plan assets due to investment losses and the 0.1 percentage-point reduction in discount rate. In 2008, contributions
to our U.S. qualified plans were not significant. In 2007, we made required U.S. qualified plan contributions of $6 million and
voluntary tax-deductible contributions in excess of minimum requirements of $100 million to certain of our U.S. qualified pension
plans. In the aggregate, the U.S. qualified pension plans are underfunded on a projected benefit measurement basis and on an
accumulated benefit obligation measurement basis as of December 31, 2008, and overfunded on a projected benefit measurement
basis and on an accumulated benefit obligation measurement basis as of December 31, 2007.
2008 Financial Report 73