The net periodic benefit cost for the US postretirement medical plan included the following components:
2010 2009 2008
(Stated in millions)
Service cost – benefits earned during the period
$ 23
$ 19 $ 23
Interest cost on projected benefit obligation
58
56
52
Expected return on plan assets
(6)
(2)
(3)
Amortization of prior service credit
(21)
(25) (27)
Amortization of net loss
11
3
10
65
51
55
Curtailment charge
–
6
–
$ 65
$ 57 $ 55
The changes in the accumulated postretirement benefit obligation, plan assets and funded status were as follows:
2010 2009
(Stated in millions)
Change in Accumulated Postretirement Benefit Obligation
Benefit obligation at beginning of year
$ 991
$ 862
Service cost
23
19
Interest cost
58
56
Contributions by plan participants
4
5
Actuarial losses
8
67
Benefits paid
(33)
(31)
Impact of curtailment
–
13
Benefit obligation at end of year
$1,051
$ 991
Change in Plan Assets
Plan assets at fair value at beginning of year
$ 58
$ 29
Company contributions
248
47
Contributions by plan participants
5
5
Benefits paid
(33)
(31)
Actual return on plan assets
12
8
Plan assets at fair value at end of year
$ 290
$ 58
Unfunded Liability
$ (761)
$(933)
Amounts Recognized in Accumulated
Other Comprehensive Income
Actuarial losses
$ 212
$ 223
Prior service cost
(35)
(56)
$ 177
$ 167
The unfunded position is included in
Postretirement Benefits
in the
Consolidated Balance Sheet.
The assets of the US postretirement medical plan are invested 60% in US equity securities and 40% in government and
government-related debt securities. The fair value of these assets were determined based on quoted prices in active
markets for identical instruments.
Assumed health care cost trend rates have a significant effect on the amounts reported for the US postretirement
medical plan. A one percentage point change in assumed health care cost trend rates would have the following effects:
One percentage
point increase
One percentage
point decrease
(Stated in millions)
Effect on total service and interest cost components
$ 15
$ (12)
Effect on accumulated postretirement benefit obligation
$177
$(145)
70
Part II, Item 8
