Annual Report - CoBank

The projected benefit obligation and the accumulatedbenefit obligation for the Retirement Plans as of December 31of each year are as follows.2011 2010 2009Projected Benefit Obligation:Funded Plans $ 177,216 $ 154,366 $ 141,164Unfunded SERP/ERP 28,488 24,926 20,452Total $ 205,704 $ 179,292 $ 161,616Accumulated Benefit Obligation:Funded Plans $ 159,497 $ 135,881 $ 123,373Unfunded SERP/ERP 24,050 19,132 11,686Total $ 183,547 $ 155,013 $ 135,059The $171.4 million in fair value of plan assets shown inthe table on page 88 relates only to the qualified retirementplans. As depicted in the preceding table, such plans had aprojected benefit obligation and an accumulated benefitobligation of $177.2 million and $159.5 million, respectively,as of December 31, 2011.We hold assets in trust accounts related to our SERP andERP plans. Such assets had a fair value of $17.3 million as ofDecember 31, 2011, which is included in “Other Assets” inthe consolidated balance sheet. Unlike the assets related to thequalified plans, those funds remain Bank assets and would besubject to general creditors in a bankruptcy or liquidation.Accordingly, they are not included as part of the assets in thetable on page 88. As depicted in the preceding table, our SERPand ERP plans had a projected benefit obligation and anaccumulated benefit obligation of $28.5 million and$24.1 million, respectively, as of December 31, 2011.The following table provides the amounts recognized in the consolidated balance sheets as of December 31 of each year.Retirement PlansOther Postretirement Benefits2011 2010 2009 2011 2010 2009Prepaid Pension Assets $ - $ 13,430 $ 15,481$ - $ - $-Accrued Benefit Liabilities (34,343) (24,926) (20,452) (5,596) (5,342) (4,171)Net Amounts Recognized $ (34,343) $ (11,496) $ (4,971)$ (5,596) $ (5,342) $ (4,171)The following table presents the components of net periodic benefit cost for the plans.Retirement PlansOther Postretirement Benefits2011 2010 2009 2011 2010 2009Service Cost $ 6,113 $ 6,117 $ 5,735$ 402 $ 178 $158Interest Cost on Benefit Obligation 9,327 8,960 8,865 272 228 255Expected Return on Plan Assets (13,463) (12,902) (11,275) - - -Amortization of Prior Service Cost (133) 284 (228) - (12) (16)Curtailment Gain (1) - (351) - - - -Recognized Actuarial Loss (Gain) 3,482 1,496 1,340 (52) (152) (131)Net Periodic Benefit Cost $ 5,326 $ 3,604 $ 4,437$ 622 $ 242 $266(1) Curtailment gain resulted from the departure of senior officers from the ERP in 2010.We anticipate that our total pension expense for the Retirement Plans will be approximately $7.5 million in 2012, as compared to$5.3 million in 2011. The increase is primarily the result of a 2012 reduction in the expected rate of return on plan assets to7.25 percent from 8.00 percent.The following table displays the amounts included in accumulated other comprehensive income (OCI), a component ofshareholders’ equity, related to our pension and other postretirement benefit plans.Amounts Included in Accumulated OCI (Pre-Tax)at December 31, 2011QualifiedRetirementPlansNonqualifiedRetirementPlansOtherPostretirementBenefitsNet Actuarial Loss (Gain) $ 68,874 $ 11,689 $ (1,407) $79,156Prior Service Cost (Credit) 2,254 870 - 3,124Amount Recognized in Accumulated OCI (1) $ 71,128 $ 12,559 $ (1,407) $82,280(1) Amount recognized in accumulated OCI, net of tax, is $51.0 million as of December 31, 2011. Approximately $2.8 million, net of tax, will be amortized from OCI into net periodic benefitcost in 2012.TotalCoBank 2011 Annual Report89