Notes to Consolidated Financial Statements
NOTE 15 (1 OF 3)
EMPLOYEE BENEFITS
We maintain non-contributory defined benefit pension plans for many of our employees. In addition, we maintain postretirement health care and life insurance plans for our retirees and their dependents, which are both contributory and non-contributory and include a limit on the Company's share of cost for certain recent and future retirees. We also sponsor defined contribution savings plans to provide opportunities for eligible employees to save for retirement on a tax-deferred basis. We use a measurement date of December 31 for our pension and postretirement health care and life insurance plans.
Refer to Note 1 for a discussion of the adoption of SFAS No. 158, which was effective December 31, 2006.
Pension and Other Postretirement Benefits
Pension and other postretirement benefits for many of our employees are subject to collective bargaining agreements. Modifications in benefits have been bargained from time to time, and we may also periodically amend the benefits in the management plans.
As of June 30, 2006, Verizon management employees no longer earned pension benefits or earned service towards the company retiree medical subsidy. In addition, new management employees hired after December 31, 2005 are not eligible for pension benefits and managers with less than 13.5 years of service as of June 30, 2006 are not eligible for company-subsidized retiree healthcare or retiree life insurance benefits. Beginning July 1, 2006, management employees receive an increased company match on their savings plan contributions.
The following tables summarize benefit costs, as well as the benefit obligations, plan assets, funded status and rate assumptions associated with pension and postretirement health care and life insurance benefit plans:
Obligations and Funded Status
(dollars in millions) |
||||||||||||
|
Pension |
|
Health Care and Life |
|
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
At December 31, |
2008 |
|
2007 |
|
2008 |
|
2007 |
|
||||
Change in Benefit Obligations |
||||||||||||
Beginning of year |
$ |
32,495 |
|
$ |
34,159 |
|
$ |
27,306 |
|
$ |
27,330 |
|
Service cost |
|
382 |
|
|
442 |
|
|
306 |
|
|
354 |
|
Interest cost |
|
1,966 |
|
|
1,975 |
|
|
1,663 |
|
|
1,592 |
|
Plan amendments |
|
300 |
|
|
– |
|
|
24 |
|
|
– |
|
Actuarial (gain) loss, net |
|
(154 |
) |
|
123 |
|
|
(483 |
) |
|
(409 |
) |
Benefits paid |
|
(2,577 |
) |
|
(4,204 |
) |
|
(1,529 |
) |
|
(1,561 |
) |
Termination benefits |
|
32 |
|
|
– |
|
|
7 |
|
|
– |
|
Curtailment gain |
|
– |
|
|
– |
|
|
(29 |
) |
|
– |
|
Acquisitions and divestitures, net |
|
(183 |
) |
|
– |
|
|
(169 |
) |
|
– |
|
Settlements |
|
(1,867 |
) |
|
– |
|
|
– |
|
|
– |
|
End of year |
$ |
30,394 |
|
$ |
32,495 |
|
$ |
27,096 |
|
$ |
27,306 |
|
|
||||||||||||
Change in Plan Assets |
||||||||||||
Beginning of year |
$ |
42,659 |
|
$ |
41,509 |
|
$ |
4,142 |
|
$ |
4,303 |
|
Actual return on plan assets |
|
(10,680 |
) |
|
4,591 |
|
|
(1,285 |
) |
|
352 |
|
Company contributions |
|
487 |
|
|
737 |
|
|
1,227 |
|
|
1,048 |
|
Benefits paid |
|
(2,577 |
) |
|
(4,204 |
) |
|
(1,529 |
) |
|
(1,561 |
) |
Settlements |
|
(1,867 |
) |
|
– |
|
|
– |
|
|
– |
|
Acquisitions and divestitures, net |
|
(231 |
) |
|
26 |
|
|
– |
|
|
– |
|
End of year |
$ |
27,791 |
|
$ |
42,659 |
|
$ |
2,555 |
|
$ |
4,142 |
|
|
||||||||||||
Funded Status |
|
|||||||||||
End of year |
$ |
(2,603 |
) |
$ |
10,164 |
|
$ |
(24,541 |
) |
$ |
(23,164 |
) |
|
||||||||||||
Amounts recognized on the balance sheet |
||||||||||||
Noncurrent assets |
$ |
3,132 |
|
$ |
13,745 |
|
$ |
– |
|
$ |
– |
|
Current liabilities |
|
(122 |
) |
|
(130 |
) |
|
(496 |
) |
|
(360 |
) |
Noncurrent liabilities |
|
(5,613 |
) |
|
(3,451 |
) |
|
(24,045 |
) |
|
(22,804 |
) |
Total |
$ |
(2,603 |
) |
$ |
10,164 |
|
$ |
(24,541 |
) |
$ |
(23,164 |
) |
|
||||||||||||
Amounts recognized in Accumulated Other |
||||||||||||
Comprehensive Loss (Pretax) |
||||||||||||
Actuarial loss, net |
$ |
13,296 |
|
$ |
13 |
|
$ |
6,848 |
|
$ |
6,040 |
|
Prior service cost |
|
1,162 |
|
|
932 |
|
|
3,235 |
|
|
3,636 |
|
Total |
$ |
14,458 |
|
$ |
945 |
|
$ |
10,083 |
|
$ |
9,676 |
|
Changes in benefit obligations were caused by factors including changes in actuarial assumptions and settlements.
The accumulated benefit obligation for all defined benefit pension plans was $29,405 million and $31,343 million at December 31, 2008 and 2007, respectively.
Information for pension plans with an accumulated benefit obligation in excess of plan assets follows:
(dollars in millions) |
||||||
At December 31, |
2008 |
|
2007 |
|
||
|---|---|---|---|---|---|---|
Projected benefit obligation |
$ |
27,171 |
|
$ |
11,001 |
|
Accumulated benefit obligation |
|
26,641 |
|
|
10,606 |
|
Fair value of plan assets |
|
21,436 |
|
|
8,868 |
|