TD Bank 2009 Annual Report Download - page 131

TD BANK FINANCIAL GROUP ANNUAL REPORT 2009 FINANCIAL RESULTS 127
1Includes loss recognized in fiscal 2009 of nil (2008 – $5 million; 2007 –
$6 million) less actuarial gains on projected benefit obligation in the year of
$(9) million (2008 – $(93) million; 2007 – $(2) million).
2Includes amortization of costs for plan amendments in fiscal 2009 of $(6) million
(2008 – $(6) million; 2007 – $(5) million) less actual cost of plan amendments in
the year of $10 million (2008 – nil; 2007 – nil).
TD Bank, N.A. (which includes TD Banknorth and Commerce)
Retirement Plans
TD Banknorth has a non-contributory defined benefit retirement plan
covering most permanent employees. Supplemental retirement plans
have been adopted for certain key officers and limited post-retirement
benefit programs provide medical coverage and life insurance benefits
to a closed group of employees and directors who meet minimum age
and service requirements. Effective December 31, 2008 benefit accruals
under the retirement and supplemental retirement plans were frozen.
In addition, TD Bank, N.A. and its subsidiaries maintain a defined
contribution 401(k) plan covering all employees. Effective January 1,
2009 the plan was amended to include a core contribution from
TD Bank, N.A. for all employees and a transition contribution for
certain employees. The additional amount contributed to the plan
by TD Bank, N.A. for fiscal 2009 was $31 million.
The following table presents the financial position of the defined
benefit portion of TD Banknorth’s pension plan. The retirement plan
assets and obligations are measured as at October 31.
TD Banknorth Defined Benefit Retirement
Plan Obligations and Assets
(millions of Canadian dollars) 2009 2008 2007
Projected benefit obligation at end of period $ 445 $ 311 $ 338
Plan assets at fair value at end of period 411 418 460
Prepaid pension expense 135 123 115
Pension expense (11) (1) 4
Supplemental Employee Retirement Plans
These plans are supplemental employee retirement plans which are
partially funded for eligible employees.
The following table presents the financial position of the Bank’s
largest other retirement plans. The retirement plan assets and obliga-
tions are measured as at July 31.
Supplemental Retirement Plans Obligations and Assets
(millions of Canadian dollars) 2009 2008 2007
Projected benefit obligation at end of period $ 337 $ 329 $ 342
Plan assets at fair value at end of period 22–
Accrued benefit liability 306 292 271
Pension expense 32 32 33
Other plans operated by the Bank and certain of its subsidiaries 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 health
care, life insurance and dental benefits to retired Canadian-based
employees who meet the age and service requirements.
The table below presents the financial position of the Bank’s
principal non-pension post-retirement benefit plan. The principal
non-pension post-retirement benefit plan obligation is measured
as at July 31.
Principal Non-Pension Post-Retirement Benefit Plan Obligations
(millions of Canadian dollars, except as noted) 2009 2008 2007
Change in projected benefit obligation
Projected benefit obligation at beginning of period $ 329 $ 396 $ 374
Service cost – benefits earned 912 11
Interest cost on projected benefit obligation 21 23 21
Plan amendments 10 ––
Benefits paid (9) (9) (8)
Actuarial gains (9) (93) (2)
Projected benefit obligation at end of period 351 329 396
Unrecognized net loss from past experience, different from that assumed,
and effects of changes in assumptions 14 23 120
Unamortized past service costs (32) (48) (54)
Employer’s contributions 323
Accrued benefit liability $ 366 $ 352 $ 327
Annual expense
Net non-pension post-retirement benefit expense includes the following components:
Service cost – benefits earned $9 $12 $11
Interest cost on projected benefit obligation 21 23 21
Actuarial gains (9) (93) (2)
Plan amendments 10 ––
Difference between costs arising in the period and costs recognized in the period in respect of:
Actuarial losses1998 8
Plan amendments2(16) (6) (5)
Non-pension post-retirement benefit expense $ 24 $34 $ 33
Actuarial assumptions used to determine the annual expense
Weighted-average discount rate for projected benefit obligation 6.30% 5.60% 5.60%
Weighted-average rate of compensation increase 3.50 3.50 3.50
Actuarial assumptions used to determine the benefit obligation at end of period
Weighted-average discount rate for projected benefit obligation 6.70% 6.30% 5.60%
Weighted-average rate of compensation increase 3.50 3.50 3.50
The rate of increase for health care costs for the next year used to
measure the expected cost of benefits covered for the principal non-
pension post-retirement benefit plan is 6.70%. The rate is assumed
to decrease gradually to 3.70% by the year 2028 and remain at that
level thereafter.
For 2009, the effect of a one percentage point increase or decrease in
the health care cost trend rate on the benefit expense is a $6 million
increase and a $4 million decrease, respectively, and on the benefit obli-
gation, a $53 million increase and a $43 million decrease, respectively.