Pfizer 2010 Annual Report Download - page 88

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Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
C. Obligations and Funded Status
The following table presents an analysis of the changes in 2010 and 2009 in the benefit obligations, plan assets and accounting
funded status of our U.S. qualified, U.S. supplemental (non-qualified) and international pension plans and our postretirement plans:
YEAR ENDED DECEMBER 31,
PENSION PLANS
U.S. QUALIFIED
U.S.
SUPPLEMENTAL
(NON-QUALIFIED) INTERNATIONAL
POSTRETIREMENT
PLANS
(MILLIONS OF DOLLARS) 2010 2009 2010 2009 2010 2009 2010 2009
Change in benefit obligation:
Benefit obligation at beginning of year(a) $12,578 $ 7,783 $ 1,368 $ 876 $ 9,062 $ 5,851 $ 3,733 $ 1,966
Service cost 347 252 28 24 231 188 79 39
Interest cost 740 526 77 53 427 342 211 145
Employee contributions ————18 12 22 49
Plan amendments (47) (1) (6) —(2) (2) (495) (151)
Increases arising primarily from
changes in actuarial assumptions 980 9180 33 362 1,136 281 108
Foreign exchange impact ————(504) 844 410
Acquisitions(a) 14,785 (1) 364 10 1,062 —1,798
Curtailments (233) (196) (29) (29) (33) (25) 1(26)
Settlements (904) (325) (235) (32) (54) (53) ——
Special termination benefits 73 61 180 137 6819 24
Benefits paid (500) (316) (161) (58) (376) (301) (273) (229)
Benefit obligation at end of year(b) 13,035 12,578 1,401 1,368 9,147 9,062 3,582 3,733
Change in plan assets:
Fair value of plan assets at beginning of
year(a) 9,977 5,897 ——6,524 4,394 370 303
Actual gain on plan assets 1,123 800 ——454 646 46 67
Company contributions 901 2396 90 457 448 249 180
Employee contributions ————18 12 22 49
Foreign exchange impact ————(314) 574 ——
Acquisitions(a) —3,919 ———804 ——
Settlements (905) (325) (235) (32) (54) (53) ——
Benefits paid (500) (316) (161) (58) (376) (301) (273) (229)
Fair value of plan assets at end of year 10,596 9,977 ——6,709 6,524 414 370
Funded status—Plan assets less than
the benefit obligation at end of year $ (2,439) $ (2,601) $(1,401) $(1,368) $(2,438) $(2,538) $(3,168) $(3,363)
(a) The increase in the benefit obligation and the fair value of plan assets at the beginning of the year in 2010 is primarily due to the acquisition of
Wyeth during 2009 (see Note 2. Acquisition of Wyeth, for additional information).
(b) 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 favorable change in our U.S. qualified plans’ projected benefit obligations funded status from $2.6 billion underfunded in the
aggregate as of December 31, 2009, to $2.4 billion underfunded in the aggregate as of December 31, 2010, was largely driven by
the increase in plan assets due to the higher return on plan assets earned during 2010 and our $901 million contribution to plan
assets, which was partially offset by higher costs incurred from the acquired Wyeth defined benefit obligations and the 0.4
percentage-point reduction in the discount rate. Voluntary contributions to our U.S. qualified plans were $901 million in 2010 and $2
million in 2009. In the aggregate, the U.S. qualified pension plans are underfunded on a projected benefit measurement basis and
on an accumulated benefit obligation basis as of December 31, 2010 and 2009.
The U.S. supplemental (non-qualified) pension plans are not generally funded and these obligations, which are substantially greater
than the annual cash outlay for these liabilities, are paid from cash generated from operations.
The favorable change in our international plans’ projected benefit obligations funded status from $2.5 billion underfunded in the
aggregate as of December 31, 2009, to $2.4 billion underfunded in the aggregate as of December 31, 2010, was largely driven by a
0.1 percentage-point reduction in the average rate of compensation increases and strengthening of the U.S. dollar against the euro
and the U.K. pound, which was partially offset by a 0.3 percentage-point reduction in the discount rate and higher costs incurred
from the acquired Wyeth defined benefit obligations. Outside the U.S., in general, we fund our defined benefit plans to the extent
that tax or other incentives exist and we have accrued liabilities on our consolidated balance sheet to reflect those plans that are not
fully funded.
86 2010 Financial Report