N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
| 9. Retirement Plans
Benefit Summary The Corporation provides defined benefit retirement income to eligible non-union employees through qualified and non-qualified (supplemental) pension plans. In addition, the Corporation provides a defined contribution plan (thrift plan) to eligible non-union employees. All non-union and certain of the Corporation's union employees participate in defined contribution medical and life insurance programs for retirees. All Railroad employees are covered by the Railroad Retirement System (the System).
Funding and Benefit Payments Qualified and non-qualified pension benefits are based on years of service and the highest compensation during the latest years of employment. The qualified plans are funded based on the Projected Unit Credit actuarial funding method and are funded at not less than the minimum funding standards set forth in the Employee Retirement Income Security Act of 1974, as amended. The Corporation has settled a portion of the non-qualified unfunded supplemental plan's accumulated benefit obligation by purchasing annuities. Corporation contributions into the thrift plan are based on 50% of the participant's contribution, limited to 3% of the participant's base salary. Corporation thrift plan contributions were $11 million, $11 million and $10 million for the years ended December 31, 2000, 1999 and 1998, respectively. The Corporation also provides medical and life insurance benefits on a cost sharing basis for qualifying employees. These costs are funded as incurred. In addition, contributions made to the System are expensed as incurred and amounted to approximately $430 million in 2000, $426 million in 1999 and $411 million in 1998.
The following illustrates the change in the Corporation's projected benefit obligation for the years ended December 31, 2000 and 1999:
Changes in the Corporation's benefit plan assets are summarized as follows for the years ended December 31, 2000 and 1999:
The components of funded status of the benefit plans for the years ended December 31, 2000 and 1999 were as follows:
At both December 31, 2000 and 1999, $30 million of the total pension and other post-retirement liability were classified as a current liability.
Amounts recognized for the benefit plan liabilities in the consolidated statements of financial position for December 31, 2000 and 1999 consisted of:
The components of the Corporation's net periodic pension costs for the years ended December 31, 2000, 1999 and 1998 were as follows:
As of December 31, 2000 and 1999, approximately 32% and 25%, respectively, of the funded plans' assets were held in fixed-income and short-term securities, with the remainder in equity securities.
The weighted-average actuarial assumptions for the years ended December 31, 2000, 1999 and 1998 were as follows:
Assumed health care cost trend rates have a significant effect on the amount reported for health care plans. A one percentage point change in the assumed health care cost trend rates would have the following effects:
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