A higher discount rate decreases the present value of benefit obligations and decreases expense.
The expected rate of return for our retirement benefit plans represents the average rate of return expected to be
earned on plan assets over the period that benefits included in the benefit obligation are expected to be paid. The
expected rate of return for Schlumberger’s United States pension plans has been determined based upon expectations
regarding future rates of return for the investment portfolio, with consideration given to the distribution of investments
by asset class and historical rates of return for each individual asset class. The expected rate of return on plan assets
for the United States pension plans was 7.50% in 2011 and 8.50% in 2010. The weighted average expected rate of return
on plan assets for the international plans was 7.50% in 2011 and 8.00% in 2010. A lower expected rate of return would
increase pension expense.
Schlumberger’s medical cost trend rate assumptions are developed based on historical cost data, the near-term
outlook and an assessment of likely long-term trends. The overall medical cost trend rate assumption utilized to
determine both the 2011 postretirement medical expense as well as the postretirement medical liability as of
December 31, 2011 was 8% graded to 5% over the next six years.
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant,
for the United States and international pension plans:
(Stated in millions)
Change in Assumption
Effect on 2011
Pretax Pension
Expense
Effect on
Dec. 31, 2011
Liability
25 basis point decrease in discount rate
+$32
+$299
25 basis point increase in discount rate
-$28
- $283
25 basis point decrease in expected return on plan assets
+$15
–
25 basis point increase in expected return on plan assets
-$15
–
The following illustrates the sensitivity to changes in certain assumptions, holding all other assumptions constant,
for Schlumberger’s United States postretirement medical plans:
(Stated in millions)
Change in Assumption
Effect on 2011
Pretax Postretirement
Medical Expense
Effect on
Dec. 31, 2011
Liability
25 basis point decrease in discount rate
+ $4
+ $44
25 basis point increase in discount rate
- $4
- $41
100 basis point decrease per annum in medical cost trend rate
- $24
- $160
100 basis point increase per annum in medical cost trend rate
+ $28
+ $196
30
