TD Bank 2011 Annual Report Download - page 135

TD BANK GROUP ANNUAL REPORT 2011 FINANCIAL RESULTS 133
TD Auto Finance (which includes Chrysler Financial)
Retirement Plans
TD Auto Finance has both contributory and non-contributory defined
benefit retirement plans covering most permanent employees. The
non-contributory pension plan provides benefits based on a fixed rate
for each year of service. The contributory plan provides benefits to
salaried employees based on the employee’s cumulative contributions,
years of service during which employee contributions were made, and
the employee’s average salary during the consecutive five years in
which the employee’s salary was highest in the 15 years preceding
retirement. In addition, TD Auto Finance provides limited post-retire-
ment benefit programs, including medical coverage and life insurance
benefits to certain employees who meet minimum age and service
requirements. As a result of the acquisition of Chrysler Financial on
April 1, 2011, obligations assumed and assets acquired related to the
Chrysler Financial Services Americas LLC retirement plans are now
included in the table below.
Supplemental Employee Retirement Plans
Supplemental employee retirement plans are partially funded by the
Bank for eligible employees.
The following table presents the financial position of the Bank’s
principal pension plans, the principal non-pension post-retirement
benefit plan, and the Bank’s significant other pension and retirement
plans. The plan assets and obligations are measured as at July 31,
except as noted.
Employee Future Benefit Plans’ Obligations, Assets and Funded Status
(millions of Canadian dollars) Principal Non-Pension
Post-Retirement Other Pension and
Principal Pension Plans Benefit Plan Retirement Plans1
2011 2010 2009 2011 2010 2009 2011 2010 2009
Change in projected benefit obligation
Projected benefit obligation at beginning of period $ 2,757 $ 2,170 $ 2,201 $ 418 $ 351 $ 329 $ 1,164 $ 1,108 $ 978
Obligations assumed upon acquisition of
Chrysler Financial – – – – – – 673 – –
Service cost – benefits earned 145 97 66 10 8 9 13 8 10
Interest cost on projected benefit obligation 168 155 143 24 24 21 84 62 66
Members’ contributions 48 47 43 – – – – – –
Benefits paid (129) (123) (122) (10) (9) (9) (76) (53) (53)
Actuarial (gains) losses – – 21 2 44 (9) (1) 58 2
Change in foreign currency exchange rate – – – – – – 29 (26) 2
Change in actuarial assumptions 210 411 (182) – – – 153 7 97
Plan amendments – – – – – 10 – – 6
Projected benefit obligation at end of period 3,199 2,757 2,170 444 418 351 2,039 1,164 1,108
Change in plan assets
Plan assets at fair value at beginning of period 2,829 2,473 2,138 – – – 755 743 770
Assets acquired upon acquisition of Chrysler Financial – – – – – – 579 – –
Actual income on plan assets 114 92 73 – – – 16 11 13
Gain (loss) on disposal of investments 139 72 (138) – – – 34 12 (11)
Members’ contributions 48 46 43 – – – – – –
Employer’s contributions 185 193 583 10 9 9 25 15 14
Increase (decrease) in unrealized gains on investments 153 127 (130) – – – 21 56 9
Change in foreign currency exchange rate (39) (43) 34 – – – 18 (25) 6
Benefits paid (129) (123) (122) (10) (9) (9) (76) (54) (53)
General and administrative expenses (9) (8) (8) – – – (4) (3) (5)
Plan assets at fair value at end of period 3,291 2,829 2,473 – – – 1,368 755 743
Excess (deficit) of plan assets
over projected benefit obligation 92 72 303 (444) (418) (351) (671) (409) (365)
Unrecognized net loss from past experience, different from
that assumed, and effects of changes in assumptions 811 838 527 60 59 14 399 256 238
Unrecognized prior service costs 34 44 54 (23) (27) (32) 7 10 14
Employer’s contributions in fourth quarter 49 47 72 2 2 3 4 9 7
Prepaid pension asset (accrued benefit liability) $ 986 $ 1,001 $ 956 $ (405) $ (384) $ (366) $ (261) $ (134) $ (106)
Annual expense
Net pension expense includes the following components:
Service cost – benefits earned $ 147 $ 99 $ 68 $ 10 $ 8 $ 9 $ 14 $ 9 $ 11
Interest cost on projected benefit obligation 168 155 143 24 24 21 84 63 68
Expected return on plan assets2 (183) (170) (131) – – – (71) (46) (59)
Actuarial losses (gains) recognized in expense 61 28 24 1 – – 13 5 3
Amortization of plan amendment costs 10 10 10 (4) (5) (6) 3 7 3
Total expense $ 203 $ 122 $ 114 $ 31 $ 27 $ 24 $ 43 $ 38 $ 26
Actuarial assumptions used to
determine the annual expense
Weighted-average discount rate for projected benefit
obligation3 5.81% 6.90% 7.13% 5.80% 6.70% 6.30% 5.58% 5.97% 6.42%
Weighted-average rate of compensation increase 3.50 3.50 3.50 3.50 3.50 3.50 2.11 2.19 2.09
Weighted-average expected long-term rate of return
on plan assets4 6.41 6.75 6.75 n/a n/a n/a 6.82 6.70 6.95
Actuarial assumptions used to determine
the benefit obligation at end of period
Weighted-average discount rate for projected
benefit obligation 5.42% 5.81% 6.90% 5.40% 5.80% 6.70% 4.95% 5.40% 5.94%
Weighted-average rate of compensation increase 3.50 3.50 3.50 3.50 3.50 3.50 2.03 2.19 2.09
1 Includes CT defined benefit pension plan, TD Banknorth defined benefit pension
plan, certain TD Auto Finance retirement plans, and Supplemental employee retire-
ment plans. Other plans operated by the Bank and certain of its subsidiaries are
not considered material for disclosure purposes. The plan assets and obligation of
the TD Banknorth defined benefit pension plan and the TD Auto Finance retirement
plans are measured as at October 31.
2 The actual return on plan assets for the principal pension plans was $360 million
(2010 – $243 million; 2009 – $(169) million).
3 The Society was re-measured on October 31, 2008 using a 7.4% discount rate,
reflecting the actuarial valuations as at October 31, 2008. The TDPP was
measured on March 1, 2009, the commencement date of the TDPP, using an
8.3% discount rate.
4 Net of fees and expenses for the Society.