The funding policy is to annually contribute amounts that are based upon a number of factors including the actuarial
accrued liability, amounts that are deductible for income tax purposes, legal funding requirements and available cash
flow. Schlumberger currently anticipates contributing approximately $650 million to its postretirement benefit plans in
2013, subject to market and business conditions.
Postretirement Benefits Other than Pensions
Schlumberger provides certain health care benefits to former US employees who have retired.
The actuarial assumptions used to determine the accumulated postretirement benefit obligation and net periodic
benefit cost for the US postretirement medical plan were as follows:
Benefit Obligation
at December 31,
Net Periodic Benefit Cost
for the year
2012 2011
2012 2011 2010
Discount rate
4.25%
5.00%
5.00%
5.50% 6.00%
Return on plan assets
–
–
7.00%
7.00% 8.00%
Current medical cost trend rate
7.50%
8.00%
8.00%
8.00% 8.00%
Ultimate medical cost trend rate
5.00%
5.00%
5.00%
5.00% 5.00%
Year that the rate reaches the ultimate trend rate
2023
2018
2018
2017 2016
The net periodic benefit cost for the US postretirement medical plan included the following components:
(Stated in millions)
2012 2011 2010
Service cost – benefits earned during the period
$ 29
$ 24 $ 23
Interest cost on projected benefit obligation
58
57
58
Expected return on plan assets
(30)
(20)
(6)
Amortization of net loss
16
13
11
Amortization of prior service credit
(8)
(12) (21)
$ 65
$ 62 $ 65
The changes in the accumulated postretirement benefit obligation, plan assets and funded status were as follows:
(Stated in millions)
2012 2011
Change in Accumulated Postretirement Benefit Obligation
Benefit obligation at beginning of year
$1,188
$1,051
Service cost
29
24
Interest cost
58
57
Contributions by plan participants
6
6
Actuarial losses
171
90
Benefits paid
(42)
(40)
Benefit obligation at end of year
$1,410
$1,188
Change in Plan Assets
Plan assets at fair value at beginning of year
$ 443
$ 290
Company contributions
106
165
Contributions by plan participants
6
6
Benefits paid
(42)
(40)
Actual return on plan assets
63
22
Plan assets at fair value at end of year
$ 576
$ 443
Unfunded Liability
$ (834)
$ (745)
Amounts Recognized in Accumulated
Other Comprehensive Loss
Actuarial losses
$ 411
$ 286
Prior service cost
(16)
(24)
$ 395
$ 262
The unfunded liability is included in
Postretirement Benefits
in the Consolidated Balance Sheet.
The assets of the US postretirement medical plan are invested 63% in US equity securities and 37% 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.
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