Shareholders' Letter

Status of pension plans
The pension plan assets and obligations over the year have changed as follows:
Funded Non-funded Funded Non-funded
pension pension pension pension
In CHF million plans plans 2010 plans plans 2009
Defined benefit obligations
Balance at 1 January 7,578 62 7,640 7,044 66 7,110
Current service cost 147 – 147 135 – 135
Interest cost on defined benefit obligations 257 1 258 250 1 251
Plan participants' contributions 139 – 139 138 – 138
Retirement benefits paid (322) (2) (324) (364) (3) (367)
Actuarial (gains) losses 672 – 672 295 (2) 293
Additions from acquisition of subsidiaries 11 – 11 73 – 73
Change in pension plans (138) – (138) – – –
Employment termination benefits 14 – 14 7 – 7
Foreign currency translation adjustments – (5) (5) – – –
Balance at 31 December 8,358 56 8,414 7,578 62 7,640
Plan assets
Balance at 1 January 6,810 – 6,810 6,065 – 6,065
Expected returns on plan assets 272 – 272 245 – 245
Employer contributions 370 – 370 285 – 285
Plan participants' contributions 139 – 139 138 – 138
Retirement benefits paid (322) – (322) (364) – (364)
Actuarial gains (losses) (23) – (23) 378 – 378
Additions from acquisition of subsidiaries 8 – 8 63 – 63
Balance at 31 December 7,254 – 7,254 6,810 – 6,810
Net defined benefit obligations
Net obligations at 31 December 1,104 56 1,160 768 62 830
Unrecognised actuarial gains (losses)
Unrecognised costs of retroactive
(1,477) 272 (1,205) (788) 274 (514)
changes in pension plans
Net defined benefit obligations
123 – 123 (3) – (3)
recorded in balance sheet at 31 December (250) 328 78 (23) 336 313
Movements in recognised defined benefit obligations may be analysed as follows:
Funded Non-funded Funded Non-funded
pension pension pension pension
In CHF million plans plans 2010 plans plans 2009
Balance at 1 January (23) 336 313 90 338 428
Pension cost, net 140 (1) 139 162 1 163
Employer contributions and benefits paid (370) (2) (372) (285) (3) (288)
Additions from acquisition of subsidiaries 3 – 3 10 – 10
Foreign currency translation adjustments – (5) (5) – – –
Balance at 31 December (250) 328 78 (23) 336 313
Thereof defined benefit assets (263) – (263) (38) – (38)
Thereof defined benefit obligations 13 328 341 15 336 351
The plan assets include shares of Swisscom Ltd with a fair value of CHF 5 million (prior year: CHF
5 million). The effective return on plan assets was CHF 249 million (prior year: CHF 623 million).