Pension And Other Postretirement Benefits

12 Months Ended

Dec. 31, 2011

Pension And Other Postretirement Benefits [Abstract]

Pension And Other Postretirement Benefits

NOTE 18: Pension and Other Postretirement Benefits

Webster offered a defined benefit noncontributory pension plan through December 31, 2007 for eligible employees who met certain minimum service and age requirements. Pension plan benefits were based upon employee earnings during the period of credited service. A supplemental defined benefit retirement plan was also offered to certain employees who were at the Executive Vice President level or above through December 31, 2007. The supplemental defined benefit retirement plan provides eligible participants with additional pension benefits. Webster also provides postretirement healthcare benefits to certain retired employees (referred to as "other benefits" below).

The Webster Bank Pension Plan and the supplemental defined benefit retirement plan were frozen as of December 31, 2007. Employees hired on or after January 1, 2007 receive no qualified or supplemental retirement income under the plans. All other employees accrue no additional supplemental retirement income on or after January 1, 2008, and the amount of their qualified and supplemental retirement income will not exceed the amount of benefits determined as of December 31, 2007. There were $0.1 million in Company contributions to the plans for the years ended December 31, 2011 and 2010.

The Bank is also a sponsor of a multiple-employer plan administered by Pentegra (the "Fund") for the benefit of former employees of a bank acquired by Webster. The Fund does not segregate the assets or liabilities of its participating employers in the ongoing administration of this plan. According to the Fund's administrators, as of July 1, 2011, the date of the latest actuarial valuation, Webster's portion of the plan was underfunded by $5.9 million. Webster made $1.4 million and $0.8 million in contributions in 2011, and 2010, respectively.

The following table sets forth contributions and funding status of the Pentegra multiple-employer plan:

	Pension Protection Act Zone Status						RIP/RP Status Pending/ Implemented		Contributions by Webster  Bank Period Ending December 31,						Surcharge Imposed		Expiration Date of Collective- Borrowing Agreement
(In thousands) EIN/Pension Plan Number	2011			2010					2011		2010		2009
13-5645888/333		N/A	*		N/A	*		No	$	1,429	$	833	$	959		No		N/A
		Total contributions							$	1,429	$	833	$	959

* Plan funding at July 1, 2011 and 2010 was between 65% and 80%

The Pentegra defined benefit plan for financial institutions is a multiple-employer plan for which multi-employer accounting is applied. As a multiple-employer plan, there are no collective bargained contracts affecting its contribution or benefit provisions. All shortfall amortization bases are being amortized over seven years, as required by the Pension Protection Act.

All benefit accruals were frozen as of September 1, 2004.

Year contributions to Fund exceeded more than 5 percent of total contributions

FYE 2011	No
FYE 2010	No
FYE 2009	No

Webster provides an employee retirement savings plan governed by section 401(k) of the Internal Revenue Code ("the Code"). Prior to January 1, 2008, Webster matched 100% of the first 2% and 50% of the next 6% of employees pretax contributions based on annual compensation. For the period from January 1, 2008 through March 31, 2009, Webster matched 100% of the first 2% and 50% of the next 4% of employees' pretax contributions based on annual compensation. Webster also made non-elective contributions to all plan participants equal to 2% of compensation. Employees 35 or over on January 1, 2008 who were participants in the Webster Bank Pension Plan prior to the freeze also received special transition credits ranging from 1% to 6% of annual compensation. Effective March 1, 2009, Webster matches 100% of a participant's pre-tax contributions to the extent the pre-tax contributions do not exceed 5% of compensation. If a participant fails to make a pre-tax contribution election within 90 days of his or her date of hire, automatic pre-tax contributions will commence 90 days after his or her date of hire at a rate equal to 3% of compensation. The 2% non-elective contribution has been eliminated. However, Webster continues to contribute the special transition credits under the employee retirement savings plan.

Compensation expense included $12.1 million, $11.9 million and $12.9 million for the years ending December 31, 2011, 2010 and 2009, respectively, for employer contributions.

December 31^st is the measurement date used for the pension, supplemental pension and postretirement benefit plans. The following table sets forth changes in benefit obligation, changes in plan assets and the funded status of the pension plans and other postretirement benefit plans at December 31:

	Webster Pension						Webster SERP						Other Benefits
(In thousands)	2011			2010			2011			2010			2011			2010
Change in benefit obligation:
Benefit obligation at beginning of year	$	137,335		$	122,943		$	7,074		$	6,353		$	4,916		$	4,516
Service cost		175			250			—			—			—			—
Interest cost		7,463			7,270			350			360			215			241
Actuarial loss		28,691			10,450			760			433			452			633
Benefits paid and administrative expenses		(4,488	)		(3,578	)		(91	)		(72	)		(457	)		(474	)
Benefit obligation at end of year		169,176			137,335			8,093			7,074			5,126			4,916
Change in plan assets:
Fair value of plan assets at beginning of year		138,423			126,881			—			—			—			—
Actual return on plan assets		2,970			15,120			—			—			—			—
Employer contributions		—			—			91			72			457			474
Benefits paid and administrative expenses		(4,488	)		(3,578	)		(91	)		(72	)		(457	)		(474	)
Fair value of plan assets at end of year		136,905			138,423			—			—			—			—
(Underfunded) overfunded at end of year	$	(32,271	)	$	1,088		$	(8,093	)	$	(7,074	)	$	(5,126	)	$	(4,916	)

The pension plan held no shares of Webster common stock at December 31, 2011 and 2010.

The components of accumulated other comprehensive loss related to pensions and other postretirement benefits, on a pre-tax basis, at December 31, 2011 and 2010 are summarized below. Webster expects that $6.5 million in net actuarial loss and $73.0 thousand in prior service cost will be recognized as components of net periodic benefit cost in 2012.

	2011						2010
(In thousands)	Webster Pension		Webster SERP		Other Benefits		Webster Pension		Webster SERP		Other Benefits
Net actuarial loss	$	70,547	$	1,423	$	1,396	$	36,950	$	663	$	1,009
Prior service cost		—		—		305		—		—		378
Total pre-tax amounts recognized in accumulated other comprehensive loss	$	70,547	$	1,423	$	1,701	$	36,950	$	663	$	1,387

The funded status of the pension and other postretirement benefit plans has been recognized as follows in the Consolidated Balance Sheets at December 31, 2011 and 2010. An asset is recognized for an overfunded plan and a liability is recognized for an underfunded plan.

	2011									2010
(In thousands)	Webster Pension			Webster SERP			Other Benefits			Webster Pension		Webster SERP			Other Benefits
Prepaid expenses and other assets	$	—		$	—		$	—		$	1,088	$	—		$	—
Accrued expenses and other liabilities		(32,271	)		(8,093	)		(5,126	)		—		(7,074	)		(4,916	)
(Underfunded) overfunded	$	(32,271	)	$	(8,093	)	$	(5,126	)	$	1,088	$	(7,074	)	$	(4,916	)

The accumulated benefit obligation for the pension plans and the postretirement benefit plan was $182.4 million and $149.3 million at December 31, 2011 and 2010, respectively.

Expected future benefit payments for the pension plans and other postretirement benefit plans are presented below:

(In thousands)	Webster Pension		Webster SERP		Other Benefits
2012	$	5,788	$	1,115	$	484
2013		5,779		950		484
2014		6,473		1,518		479
2015		6,801		624		468
2016		6,866		492		451
2017-2021		40,347		1,652		1,935

Net periodic benefit cost recognized in net income and changes in funded status recognized in accumulated other comprehensive income (loss) for the years ended December 31 included the following components:

	Webster Pension									Webster SERP							Other Benefits
(In thousands)	2011			2010			2009			2011		2010		2009			2011			2010			2009
Net Periodic Benefit Cost Recognized in Net Income:
Service cost (benefits earned during the period)	$	175		$	250		$	250		$	—	$	—	$	—		$	—		$	—		$	—
Interest cost on benefit obligations		7,463			7,270			6,971			350		360		436			215			241			258
Expected return on plan assets		(10,550	)		(10,008	)		(8,190	)		—		—		—			—			—			—
Amortization of prior service cost		—			—			—			—		—		—			73			73			73
Recognized net loss		2,674			2,250			3,363			—		—		—			65			22			—
Settlement		—			—			—			—		—		(87	)		—			—			—
Net periodic (income) benefit cost recognized in net income		(238	)		(238	)		2,394			350		360		349			353			336			331
Changes in Funded Status Recognized in Other Comprehensive Income:
Current year actuarial loss (gain)		36,272			5,337			(6,917	)		760		434		668			452			691			222
Amortization of prior service cost		—			—			—			—		—		—			(73	)		(73	)		(73	)
Amortization of net (loss) gain		(2,674	)		(2,250	)		(3,363	)		—		—		—			(65	)		(22	)		—
Total loss (gain) recognized in other comprehensive income (loss)		33,598			3,087			(10,280	)		760		434		668			314			596			149
Total recognized in total comprehensive income (loss)	$	33,360		$	2,849		$	(7,886	)	$	1,110	$	794	$	1,017		$	667		$	932		$	480

Fair Value Measurements: The following is a description of the valuation methodologies used for the pension plan assets measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy. See Note 17 – Fair Value Measurements for further information related to fair value measurements.

Registered investment companies: Exchange traded funds are quoted at market prices in an exchange and active market, which represent the net asset values of shares held by the plan at year end. Money market funds are shown at cost, which approximates fair value.

Common collective trusts: There are no readily available market quotations for these funds. The fair value of the fund is based on the securities in the portfolio, which typically is the amount that the fund might reasonably expect to receive for the securities upon a sale. These funds are either valued on a daily or monthly basis.

Investment contract with insurance company: These investments are valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit-worthiness of the issuer. Holdings of insurance company investment contracts are classified as Level 3 investments. See Note 17 – Fair Value Measurements for further information related to fair value measurements.

	At December 31, 2011								At December 31, 2010
(In thousands)	Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Fair value of financial assets of the Plan:
Registered investment companies:
Common collective funds	$	103,078	$	—	$	103,078	$	—	$	—	$	—	$	—	$	—
Exchange traded funds		32,415		32,415		—		—		136,485		136,485		—		—
Money market mutual funds		11		11		—		—		541		541		—		—
Insurance company investment contract		1,401		—		—		1,401		1,397		—		—		1,397
Total	$	136,905	$	32,426	$	103,078	$	1,401	$	138,423	$	137,026	$	—	$	1,397

The following table sets forth a summary of changes in the fair value of the plan's level 3 assets for the years ended December 31, 2011 and 2010.

(In thousands)	2011			2010
Level 3—pension assets, beginning of period	$	1,397		$	1,326
Transfers into Level 3 (a)		—			—
Unrealized gains relating to instruments still held at the reporting date		78			146
Benefit payments, admin expenses and interest income, net		(74	)		(75	)
Balance, end of year	$	1,401		$	1,397

(a) – There were no transfers to Level 3 for the years ended 2011 and 2010.

The allocation of the fair value of the pension plan's assets at the December 31 measurement date is shown in the following table:

	2011			2010
Assets Category:
Fixed income investments		49	%		50	%
Equity investments		51			49
Cash and cash equivalents		—			1
Total		100	%		100	%

The Retirement Plan Committee (the "Committee") is a fiduciary under ERISA and is charged with the responsibility for directing and monitoring the investment management of the pension plan. To assist the Committee in this function, it engages the services of investment managers and advisors who possess the necessary expertise to manage the pension plan assets within the established investment policy guidelines and objectives. The statement of investment policy guidelines and objectives is not intended to remain static and is reviewed no less often than annually by the Committee.

The investment policy guidelines in effect as of December 31, 2011 set the following asset allocation targets:

	Target
Assets Category:
Fixed income investments		50	%
Equity investments		50
Cash and cash equivalents		—
Total		100	%

The primary objective of the pension plan investment strategy is to provide long-term total return through capital appreciation and dividend and interest income. The Plan invests in registered investment companies and bank collective trusts. The performance benchmarks for the plan include a composite of the Standard and Poor's 500 Stock Index, the S&P 400 Mid Cap Index, the Russell 2000 Index, the MSCI EAFE Index, the JP Morgan Global Bond Index and the Barclays Capital Aggregate Bond Index. The volatility, as measured by standard deviation, of the pension plan's assets should not exceed that of the Composite Index. The investment policy guidelines allow the plan assets to be invested in certain types of cash equivalents, fixed income securities, equity securities, mutual funds and collective trusts. Investments in mutual funds and collective trust funds are substantially limited to funds with the securities characteristics of their assigned benchmarks.

The basis for Webster's 2011 assumption for the expected long-term rate of return on assets is as follows:

	Portfolio			Return
Asset Category:
Fixed income investments		50	%		5.5	%
U.S. equity investments		39			9.8
International equity investments		11			9.8

The investment strategy for the pension plan assets is to maintain a diversified portfolio designed to achieve our target rate of an average long-term rate of 7.75%. While we believe we can achieve a long-term average rate of return of 7.75%, we cannot be certain that portfolio will perform to our expectations. Actual asset allocations are monitored monthly, and rebalancing actions are executed at least quarterly, if needed.

Weighted-average assumptions used to determine benefit obligations at December 31 are as follows:

	Webster Pension						Webster SERP						Other Benefits
	2011			2010			2011			2010			2011			2010
Discount rate		4.35	%		5.50	%		4.00	%		5.10	%		3.60	%		4.55	%
Rate of compensation increase		n/a			n/a			n/a			n/a			n/a			n/a

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 are as follows:

	Webster Pension									Webster SERP									Other Benefits
	2011			2010			2009			2011			2010			2009			2011			2010			2009
Discount rate		5.50	%		5.95	%		6.0	%		5.10	%		5.75	%		6.40	%		4.55	%		5.25	%		6.30	%
Expected long-term return on assets		7.75			8.0			8.0			n/a			n/a			n/a			n/a			n/a			n/a
Rate of compensation increase		n/a			n/a			n/a			n/a			n/a			n/a			n/a			n/a			n/a
Assumed healthcare cost trend		n/a			n/a			n/a			n/a			n/a			n/a			8.0			8.0			8.0

The assumed healthcare cost-trend rate is 8.0% for 2011 and 2012, declining 1.0% each year after until 2015 when the rate will be 5.0%. An increase of 1.0% in the assumed healthcare cost trend rate for 2011 would have increased the net periodic postretirement benefit cost by $11,784 and increased the accumulated benefit obligation by $311,619. A decrease of 1.0% in the assumed healthcare cost trend rate for 2011 would have decreased the net periodic postretirement benefit cost by $10,607 and decreased the accumulated benefit obligation by $279,218.