Unum 2010 Annual Report Download - page 141

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139
Unum 2010 Annual Report
The medical and dental premium used to determine the per retiree employer subsidy are capped. If the cap is not reached by the year
2015, the caps are then set equal to the year 2015 premium. Certain of the current retirees and all future retirees are subject to the cap.
Net Periodic Benefit Cost
The following table provides the components of the net periodic benefit cost for the plans described above for the years ended
December 31.
Pension Benefits
U.S. Plans Non U.S. Plans OPEB
(in millions of dollars) 2010 2009 2008 2010 2009 2008 2010 2009 2008
Service Cost $ 36.5 $ 29.6 $ 28.7 $ 4.9 $ 4.9 $ 7.8 $ 2.6 $ 2.9 $ 3.3
Interest Cost 71.1 64.0 58.2 9.5 8.7 10.3 10.8 11.3 11.5
Expected Return on Plan Assets (70.5) (52.8) (59.7) (10.7) (9.4) (12.0) (0.6) (0.7) (0.7)
Amortization of:
Net Actuarial Loss 29.8 41.1 13.9 2.4 2.4 2.3 — — —
Prior Service Credit (0.5) (0.5) (2.2) — — — (2.6) (2.8) (3.4)
Transition Asset — — — — — (0.2) — — —
Total $ 66.4 $ 81.4 $ 38.9 $ 6.1 $ 6.6 $ 8.2 $10.2 $10.7 $10.7
A one percent increase or decrease in the assumed health care cost trend rate at December 31, 2010 would have increased
(decreased) the service cost and interest cost by $0.3 million and $(0.2) million, respectively, and the postretirement benefit obligation by
$3.4 million and $(2.7) million, respectively.
Our OPEB plan currently receives a subsidy from the federal government under the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Medicare Act). This act allows an employer to choose whether to coordinate prescription drug benefits
under a retiree medical plan with the Medicare prescription drug benefit or to keep the company plan design as it is and receive a subsidy
from the federal government. When the Medicare Act became effective in 2006, we initially elected to receive the subsidy from the federal
government with plans to defer our coordination with the new prescription drug benefit until a later date. This anticipated change was
reected in the net periodic benet cost. In 2009, we amended the plan design to stop the deferral of coordination of benets and elected
to continue receiving the existing subsidy from the federal government. This election resulted in a $4.4 million prior service credit that
began amortization in 2010. We received subsidy payments of $1.4 million and $1.2 million in 2010 and 2009, respectively. Our expected
benefit payments in future years have been reduced by the amount of subsidy payments we expect to receive.
The unrecognized net actuarial loss, prior service credit, and transition asset included in accumulated other comprehensive income and
expected to be amortized and included in net periodic pension cost during 2011 is $31.4 million before tax and $20.4 million after tax. The
prior service credit expected to be amortized and included as a reduction to net periodic cost for our OPEB plan during 2011 is $2.6 million
before tax and $1.7 million after tax.