TD Bank 2003 Annual Report Download - page 75

TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Financial Results 73
For 2003, the Bank’s principal pension plan’s net assets included
investments in the Bank and its affiliates which had a market
value of $65 million (2002 – $118 million; 2001 – $134 million).
The effect of a one percentage point increase or decrease in
the weighted average expected long-term rate of return on plan
assets on the 2003 pension expense would be a $13 million
decrease or increase, respectively.
Other pension plans
In connection with the acquisition of CT, the Bank sponsors a
second pension plan consisting of a defined benefit portion and a
defined contribution portion. Funding for both portions is provid-
ed by contributions from the Bank and members of the plan. The
defined benefit portion of the plan was closed to new members
after May 31, 1987. CT employees joining the plan on or after
June 1, 1987 were only eligible to join the defined contribution
portion. Effective August 2002, the defined contribution portion
of the plan was closed to new contributions from active employ-
ees and employees eligible for that plan became eligible to join
the Bank’s principal defined benefit plan.
For 2003, the defined benefit portion of CT’s plan reported
a projected benefit obligation of $307 million (2002 – $289
million; 2001 – $272 million), plan assets with a fair value of
$309 million (2002 – $271 million; 2001 – $271 million) and the
prepaid pension expense was $54 million (2002 – $17 million;
2001 – $14 million). The 2003 pension expense was $3 million
(2002 – $3 million; 2001 – $.7 million).
The 2003 pension expense for the defined contribution portion
was $.5 million (2002 – $10 million; 2001 – $14 million).
With respect to the Bank’s largest other benefit plan, a partially
funded benefit plan for eligible employees, the projected benefit
obligation was $211 million (2002 – $182 million; 2001 – $137
million), the plan assets had a fair value of $11 million (2002 –
$20 million; 2001 – $23 million) and the accrued benefit liability
was $137 million (2002 – $119 million; 2001 – $107 million).
The 2003 pension expense was $20 million (2002 – $13 million;
2001 – $10 million).
Other plans operated by the Bank and certain of its sub-
sidiaries are not considered material for disclosure purposes.
Non-pension post-retirement benefit plans
In addition to the Bank’s pension plans, the Bank also provides
certain health care, life insurance and dental benefits to retired
employees. The table on the following page presents the financial
position of the Bank’s non-pension post-retirement benefit plans.
(millions of dollars) 2003 2002 2001
Change in projected benefit obligation
Projected benefit obligation at beginning of period $1,271 $1,257 $1,144
Service cost – benefits earned 31 26 19
Interest cost on projected benefit obligation 90 86 82
Members’ contributions 25 19 17
Benefits paid (92) (88) (82)
Actuarial (gains) losses 792
Change in actuarial assumptions 86 (42) 76
Plan amendments –54
Other –(1) (5)
Projected benefit obligation at end of period 1,418 1,271 1,257
Change in plan assets
Plan assets at fair value at beginning of period 1,164 1,191 1,263
Actual income on plan assets 55 55 49
Gain (loss) on disposal of investments 80 (23) 67
Members’ contributions 25 19 17
Employer’s contributions 291 76 –
Increase (decrease) in unrealized gains on investments (11) (57) (114)
Benefits paid (92) (88) (82)
General and administrative expenses (9) (8) (7)
Other 4(1) (2)
Plan assets at fair value at end of period 1,507 1,164 1,191
Excess (deficit) of plan assets over projected benefit obligation 89 (107) (66)
Unrecognized net (gain) loss from past experience, different from
that assumed, and effects of changes in assumptions 299 253 178
Unrecognized prior service costs 784
Employer’s contributions in fourth quarter 13 152 40
Prepaid pension expense $ 408 $ 306 $ 156
Annual expense
Net pension expense includes the following components:
Service cost – benefits earned $31 $26 $19
Interest cost on projected benefit obligation 90 86 82
Expected return on plan assets (85) (81) (98)
Amortization of net actuarial (gains) losses 13 6–
Amortization of prior service costs 11–
Pension expense $50 $38 $ 3
Actuarial assumptions at end of period
Weighted average discount rate for projected benefit obligation 6.50% 7.00% 6.75%
Weighted average rate of compensation increase 3.50 3.50 3.50
Weighted average expected long-term rate of return on plan assets16.75 6.75 6.75
1Net of fees and expenses.