TCF Bank 2003 Annual Report Download - page 70

68 TCF Financial Corporation and Subsidiaries
Postretirement Plan TCF provides health care benefits for eligible retired employees (the “Postretirement Plan”). Effective January 1, 2000,
TCF modified the Postretirement Plan for employees not yet eligible for benefits under the Postretirement Plan by eliminating the Company subsidy.
The plan provisions for full-time and retired employees then eligible for these benefits were not changed. The Postretirement Plan is not funded.
The following table sets forth the status of the Pension Plan and the Postretirement Plan at the dates indicated:
Pension Plan Postretirement Plan
Year Ended December 31, Year Ended December 31,
(In thousands) 2003 2002 2003 2002
Benefit obligation:
Accrued participant balance – vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,958 $ 37,993 N.A. N.A.
Accrued participant balance – unvested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,621 3,101 N.A. N.A.
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,579 41,094 N.A. N.A.
Present value of future service and benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,251 1,230 N.A. N.A.
Total projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,830 $ 42,324 N.A. N.A.
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,230 $ 35,516 N.A. N.A.
Change in benefit obligation:
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,324 $ 36,053 $ 11,837 $ 9,578
Service cost – benefits earned during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,950 3,547 60 48
Interest cost on projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,950 2,857 740 685
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,907 1,736 891 2,838
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,301) (1,869) (1,142) (1,312)
Projected benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,830 42,324 12,386 11,837
Change in fair value of plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,486 59,604 ––
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,670 (8,249) ––
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,301) (1,869) (1,142) (1,312)
TCF contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –– 1,142 1,312
Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,855 49,486 ––
Funded status of plans:
Funded status at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,025 7,162 (12,386) (11,837)
Unamortized transition obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . –– 1,883 2,093
Unamortized prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (452) (813) ––
Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,344 19,733 4,742 4,077
Prepaid (accrued) benefit cost at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,917 $ 26,082 $ (5,761) $ (5,667)
N.A. Not applicable.
On December 8, 2003, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the “Act”) was signed into law. This Act
includes a prescription drug benefit and a federal subsidy for sponsors of a retiree healthcare plan, like TCF’s Postretirement Plan, beginning
in 2006. TCF offers a prescription drug benefit to certain retirees. In January 2004, the FASB issued limited guidance regarding the effects of the
Act on the estimated costs of providing this retirement benefit under SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other
Than Pensions” with various implementation options. The effects of the Act have not yet been included in TCF’s determination of post retirement
benefit obligations or expenses summarized in the table above. TCF is currently reviewing the Act and considering its options.
The measurement date used for determining the Pension Plan and the Postretirement Plan projected and accumulated benefit obligations
above and the date used to value plan assets disclosed above was September 30, 2003 and 2002. The discount rate and rate of increase in future
compensation used to measure the benefit obligation were as follows:
Pension Plan Postretirement Plan
Assumptions used to Year Ended December 31, Year Ended December 31,
determine benefit obligations 2003 2002 2001 2003 2002 2001
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . 6.0% 6.5% 7.5% 6.0% 6.5% 7.5%
Rate of compensation increase . . . . . . . . . . . . . 4.5 4.5 4.5 N.A. N.A. N.A.
N.A. Not applicable.