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Retirement Plans
 6 Months Ended
Jun. 30, 2011
Retirement Plans [Abstract]  
Retirement Plans [Text Block]

5. Retirement Plans

 

Pension and Other Postretirement Benefits

 

Pension Plans – We provide defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment, with specific reductions made for early retirements.

 

Other Postretirement Benefits (OPEB) – We provide medical and life insurance benefits for eligible retirees. These benefits are funded as medical claims and life insurance premiums are paid.

Expense

 

Both pension and OPEB expense are determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes changes in fair value over a five-year period. This practice is intended to reduce year-to-year volatility in pension expense, but it can have the effect of delaying the recognition of differences between actual returns on assets and expected returns based on long-term rate of return assumptions. Differences in actual experience in relation to assumptions are not recognized in net income immediately, but are deferred and, if necessary, amortized as pension or OPEB expense.

 

The components of our net periodic pension cost were as follows:

 

 Three Months Ended  Six Months Ended
 June 30, June 30,
Millions 2011 2010  2011 2010 
Service cost$11 $11  $22 $22 
Interest cost 36  35   72  70 
Expected return on plan assets  (45)  (44)   (90)  (89)
Amortization of:         
Prior service cost  - 1  1  2 
Actuarial loss 18  10   35  21 
Net periodic pension cost$20 $13  $40 $26 

The components of our net periodic OPEB cost/(benefit) were as follows:

 

 Three Months Ended  Six Months Ended
 June 30, June 30,
Millions 2011 2010  2011 2010 
Service cost$ -$ - $ 1$1 
Interest cost 4  4   8  8 
Amortization of:         
Prior service (credit)  (9)  (11)   (18)  (22)
Actuarial loss 4  4   7  7 
Net periodic OPEB benefit$ (1)$ (3) $ (2)$ (6)

Cash Contributions

 

For the six months ended June 30, 2011, we did not make any cash contributions to the qualified pension plan. Any additional contributions made in the second half of the year will be based on cash generated from operations and financial market considerations.

Cash Contributions

 

For the six months ended June 30, 2011, we did not make any cash contributions to the qualified pension plan. Any additional contributions made in the second half of the year will be based on cash generated from operations and financial market considerations. Our policy with respect to funding the qualified plans is to fund at least the minimum required by law and not more than the maximum amount deductible for tax purposes. At June 30, 2011, we do not have minimum funding requirements for 2011.