Form 10-K - Union Pacific

At December 31, 2011, there was $29 million of total unrecognized compensation expense related to
nonvested performance retention awards, which is expected to be recognized over a weighted-average
period of 1.1 years. A portion of this expense is subject to achievement of the ROIC levels established for
the performance stock unit grants.
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.
Plan Amendment
Effective January 1, 2010, Medicare-eligible retirees who are enrolled in the Union Pacific Retiree Medical
Program received a contribution to a Health Reimbursement Account, which can be used to pay eligible
out-of-pocket medical expenses.
Funded Status
We are required by GAAP to separately recognize the overfunded or underfunded status of our pension
and OPEB plans as an asset or liability. The funded status represents the difference between the
projected benefit obligation (PBO) and the fair value of the plan assets. Our non-qualified (supplemental)
pension plan is unfunded by design. The PBO of the pension plans is the present value of benefits
earned to date by plan participants, including the effect of assumed future compensation increases. The
PBO of the OPEB plan is equal to the accumulated benefit obligation, as the present value of the OPEB
liabilities is not affected by compensation increases. Plan assets are measured at fair value. We use a
December 31 measurement date for plan assets and obligations for all our retirement plans.
Changes in our PBO and plan assets were as follows for the years ended December 31:
Funded Status Pension OPEB
Millions 2011 2010 2011 2010
Projected Benefit Obligation
Projected benefit obligation at beginning of year $ 2,759 $ 2,448 $ 318 $ 314
Service cost 40 34 2 2
Interest cost 145 143 15 16
Plan amendments - - 10 (6)
Actuarial loss 377 281 15 16
Gross benefits paid (156) (147) (24) (24)
Projected benefit obligation at end of year $ 3,165 $ 2,759 $ 336 $ 318
Plan Assets
Fair value of plan assets at beginning of year $ 2,404 $ 2,044 $ - $ -
Actual return on plan assets 42 294 - -
Voluntary funded pension plan contributions 200 200 - -
Non-qualified plan benefit contributions 15 13 24 24
Gross benefits paid (156) (147) (24) (24)
Fair value of plan assets at end of year $ 2,505 $ 2,404 $ - $ -
Funded status at end of year $ (660) $ (355) $ (336) $ (318)
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