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Prudential Financial 2001 Annual Report - page 139 / 172

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Prudential Financial, Inc.

Notes to Consolidated Financial Statements

16.

Employee Benefit Plans (continued)

The assumptions at September 30, used by the Company to calculate the benefit obligations as of that date and to determine the benefit cost in the subsequent year are as follows:

Weighted-average assumptions Discount rate (beginning of period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discount rate (end of period) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rate of increase in compensation levels (beginning of period) . . . . . . . Rate of increase in compensation levels (end of period) . . . . . . . . . . . . Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Health care cost trend rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ultimate health care cost trend rate after

2001

2000

1999

7.75% 7.25% 4.50% 4.50% 9.50%

7.75% 7.75% 4.50% 4.50% 9.50%

6.50% 7.75% 4.50% 4.50% 9.50%

gradual decrease until 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7.75%

7.75%

6.50%

7.25%

7.75%

7.75%

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

9.00%

9.00%

9.00%

6.76–8.76%

7.10–9.50%

7.50–10.30%

5.00%

5.00%

5.00%

Pension Benefits

Other Postretirement Benefits

2001

2000

1999

Assumed health care cost trend rates have a significant effect on one-percentage point increase and decrease in assumed health care

the amounts reported for the health care plan. A cost trend rates would have the following effects:

Other Postretirement Benefits

2001 (In Millions)

One percentage point increase Increase in total service and interest costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10 128

One percentage point decrease Decrease in total service and interest costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease in postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

8 110

Postemployment Benefits The Company accrues postemployment benefits primarily for life and health benefits provided to former or inactive employees who are not retirees. The net accumulated liability for these benefits at December 31, 2001 and 2000 was $189 million and $152 million, respectively, and is included in “Other liabilities.”

Other Employee Benefits The Company sponsors voluntary savings plans for employees (401(k) plans). The plans provide for salary reduction contributions by employees and matching contributions by the Company of up to 4%, 3% and 3% of annual salary for 2001, 2000 and 1999, respectively. The matching contributions by the Company included in “General and administrative expenses” are as follows:

Company match . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less amount included in discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$72

$62

$60 (8)

401(k) Company match included in general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$72

$62

$52

401(k) Company Match 2001 2000 1999 (In Millions)

Prudential Financial 2001 Annual Report

137

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