TD Bank 2012 Annual Report Download - page 154

TD BANK GROUP ANNUAL REPORT 2012 FINANCIAL RESULTS152
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.
Employee Benefit Plans’ Obligations, Assets and Funded Status
(millions of Canadian dollars, except as noted) Principal Non-Pension
Principal Post-Retirement Other Pension and
Pension Plans
Benefit Plan1
Retirement Plans2
2012 2011 2012 2011 2012 2011
Change in projected benefit obligation
Projected benefit obligation at beginning of year $ 3,141 $ 2,856 $ 426 $ 419 $ 2,055 $ 1,182
Obligations assumed upon acquisition of Chrysler Financial – – – – – 673
Service cost – benefits earned 166 153 13 12 17 18
Interest cost on projected benefit obligation 190 171 24 23 101 85
Members’ contributions 61 49 – – – 1
Benefits paid (180) (137) (10) (10) (100) (77)
Change in foreign currency exchange rate – – – – 2 25
Change in actuarial assumptions3 758 49 78 (14) 283 148
Actuarial (gains) losses 1 – (5) (4) 7 –
Plan amendments 6 – – – (9) –
Curtailment4 – – – – (31) –
Projected benefit obligation as at October 31 $ 4,143 $ 3,141 $ 526 $ 426 $ 2,325 $ 2,055
Change in plan assets
Plan assets at fair value at beginning of year $ 3,300 $ 3,038 $ – $ – $ 1,374 $ 769
Assets acquired upon acquisition of Chrysler Financial – – – – – 579
Expected return on plan assets5 194 196 – – 90 72
Actuarial gains (losses) 79 (33) – – 61 (11)
Members’ contributions 61 49 – – – 1
Employer’s contributions 293 189 10 10 38 21
Change in foreign currency exchange rate – – – – 1 21
Benefits paid (180) (137) (10) (10) (100) (77)
General and administrative expenses (4) (2) – – (2) (1)
Plan assets at fair value as at October 31 $ 3,743 $ 3,300 $ – $ – $ 1,462 $ 1,374
Excess (deficit) of plan assets
over projected benefit obligation6 $ (400) $ 159 $ (526) $ (426) $ (863) $ (681)
Unrecognized net loss from past experience, different
from that assumed, and effects of changes in assumptions7 763 82 55 (18) 379 159
Unrecognized unvested plan amendment costs (credits)8 – – (22) (28) (9) –
Prepaid pension asset (accrued benefit liability)9 $ 363 $ 241 $ (493) $ (472) $ (493) $ (522)
Annual expense
Net employee benefits expense includes the following:
Service cost – benefits earned $ 170 $ 155 $ 13 $ 12 $ 19 $ 19
Interest cost on projected benefit obligation 190 171 24 23 101 85
Expected return on plan assets5 (194) (196) – – (90) (72)
Actuarial (gains) losses recognized in expense – – – – 10 –
Plan amendment costs (credits) recognized in expense 6 – (5) (5) – –
Curtailment (gains) losses4 – – – – (31) –
Total expense $ 172 $ 130 $ 32 $ 30 $ 9 $ 32
Actuarial assumptions used to determine the
annual expense
Weighted-average discount rate for projected benefit obligation 5.72% 5.71% 5.50% 5.60% 4.99% 5.50%
Weighted-average rate of compensation increase 3.50% 3.50% 3.50% 3.50% 1.98% 2.14%
Weighted-average expected long-term rate of return
on plan assets 5.71% 6.39% n/a n/a 6.67% 6.73%
Actuarial assumptions used to determine the
projected benefit obligation as at October 31
Weighted-average discount rate for projected benefit obligation10 4.53% 5.72% 4.50% 5.50% 4.08% 4.99%
Weighted-average rate of compensation increase11 2.82% 3.50% 3.50% 3.50% 1.86% 2.02%
1
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 6.10%. The rate is assumed to decrease gradually to 3.70% by the
year 2028 and remain at that level thereafter.
2
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 TD Banknorth defined benefit
pension plan was frozen as of December 31, 2008 and no service credits can
be earned after that date. Certain TD Auto Finance defined benefit pension
plans were frozen as of April 1, 2012 and no service credits can be earned after
March 31, 2012.
3
Primarily relates to the change in discount rate from 2011 to 2012.
4
Certain TD Auto Finance retirement plans were curtailed during the period.
5
The actual return on plan assets for the principal pension plans was $273 million
for the year ended October 31, 2012 (year ended October 31, 2011 – $163 million).
The Bank selected the expected long-term rate of return on plan assets assumption
of 5.75% (2011 – 6.50%) for the Society and 5.25% (2011 – 4.00%) for the TDPP.
6
As at November 1, 2010, the excess (deficit) of plan assets over projected benefit
obligation was $182 million for the principal pension plans, $(419) million for
the principal non-pension post-retirement benefit plan, and $(413) million for the
other pension and retirement plans.
7
As at November 1, 2010, the unrecognized net loss from past experience, different
from that assumed, and effects of changes in assumptions was nil for the principal
pension plans, nil for the principal non-pension post-retirement benefit plan, and
nil for the other pension and retirement plans.
8
As at November 1, 2010, the unrecognized unvested plan amendment costs
(credits) were nil for the principal pension plans, $(33) million for the principal
non-pension post-retirement benefit plan, and nil for the other pension and
retirement plans.
9
As at November 1, 2010, the prepaid pension asset (accrued benefit liability) was
$182 million for the principal pension plans, $(452) million for the principal non-
pension post-retirement benefit plan, and $(413) million for the other pension
and retirement plans.
10
As at November 1, 2010, the weighted-average discount rate used to determine
the projected benefit obligation was 5.71% for the principal pension plans, 5.60%
for the principal non-pension post-retirement benefit plan, and 5.27% for the
other pension and retirement plans.
11
As at November 1, 2010, the weighted-average rate of compensation increases
used to determine the projected benefit obligation was 3.50% for the principal
pension plans, 3.50% for the principal non-pension post-retirement benefit plan,
and 2.21% for the other pension and retirement plans.