Pension, Savings, And Other Employee Benefits

6 Months Ended

Jun. 30, 2011

Pension, Savings, And Other Employee Benefits

Pension, Savings, And Other Employee Benefits

Note 10 — Pension, Savings, and Other Employee Benefits

Pension plan. FHN sponsors a noncontributory, qualified defined benefit pension plan to employees hired or re-hired on or before September 1, 2007. Pension benefits are based on years of service, average compensation near retirement or other termination, and estimated social security benefits at age 65. The contributions are based upon actuarially determined amounts necessary to fund the total benefit obligation. FHN did not make any contributions to the qualified pension plan in 2010 or the first two quarters of 2011. Future decisions will be based upon pension funding requirements under the Pension Protection Act, the maximum deductible under the Internal Revenue Code, and the actual performance of plan assets. At this time, FHN does not expect to make a contribution to the qualified pension plan in 2011.

FHN also maintains non-qualified plans including a supplemental retirement plan that covers certain employees whose benefits under the pension plan have been limited. These other non-qualified pension plans are unfunded, and contributions to these plans cover all benefits paid under the non-qualified plans. Contributions to non-qualified plans were $4.5 million for 2010, and FHN anticipates making a $5.1 million contribution in 2011.

Savings plan. Effective January 1, 2008, a special Employee Non-voluntary Elective Contribution ("ENEC") program was added under the FHN savings plan and is provided only to employees who are not eligible for the pension plan. With the ENEC program, FHN will generally make contributions to eligible employees' savings plan accounts based upon company performance. Contribution amounts will be a percentage of each employee's base salary (as defined in the savings plan) earned the prior year. FHN contributed $1.2 million for the plan in 2010 related to the 2009 plan year, and FHN expects to contribute $1.3 million for the plan in 2011 related to the 2010 plan year.

Other employee benefits. FHN provides postretirement life insurance benefits to certain employees and also provides postretirement medical insurance to retirement-eligible employees. The postretirement medical plan is contributory with retiree contributions adjusted annually and is based on criteria that are a combination of the employee's age and years of service. For any employee retiring on or after January 1, 1995, FHN contributes a fixed amount based on years of service and age at the time of retirement. FHN's postretirement benefits include prescription drug benefits. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("the Act") introduced a prescription drug benefit under Medicare Part D as well as a federal subsidy to sponsors of retiree health care that provide a benefit that is actuarially equivalent to Medicare Part D. FHN currently anticipates receiving a prescription drug subsidy under the Act through 2015.

The components of net periodic benefit cost for the three months ended June 30 are as follows:

	Pension Benefits						Other Benefits
(Dollars in thousands)	2011			2010			2011			2010
Components of net periodic benefit cost
Service cost	$	4,301		$	3,778		$	144		$	136
Interest cost		8,147			7,836			552			595
Expected return on plan assets		(11,724	)		(11,879	)		(297	)		(287	)
Amortization of unrecognized:
Transition obligation		—			—			246			247
Prior service cost/(credit)		104			67			(2	)		(2	)
Actuarial (gain)/loss		5,027			3,772			(260	)		(216	)
Net periodic benefit cost	$	5,855		$	3,574		$	383		$	473

The components of net periodic benefit cost for the six months ended June 30 are as follows:

	Pension Benefits						Other Benefits
(Dollars in thousands)	2011			2010			2011			2010
Components of net periodic benefit cost
Service cost	$	8,602		$	7,556		$	288		$	272
Interest cost		16,294			15,673			1,104			1,190
Expected return on plan assets		(23,446	)		(23,759	)		(596	)		(575	)
Amortization of unrecognized:
Transition obligation		—			—			492			494
Prior service cost/(credit)		208			134			(4	)		(4	)
Actuarial (gain)/loss		10,054			7,543			(520	)		(431	)
Net periodic benefit cost	$	11,712		$	7,147		$	764		$	946