Quarterly report pursuant to Section 13 or 15(d)

Pension and Postretirement Plans

v2.4.0.8
Pension and Postretirement Plans
 6 Months Ended
Jun. 30, 2013
Compensation and Retirement Disclosure [Abstract]  
Pension and Postretirement plans
NOTE 15 – Pension, Postretirement and Certain Compensation Plans
 
Pension and Postretirement Plans

The Corporation sponsors noncontributory trusteed pension plans, a number of noncontributory nonqualified pension plans, and postretirement health and life plans that cover eligible employees. As a result of acquisitions, the Corporation assumed the obligations related to the pension plans of certain legacy companies. These acquired pension plans have been merged into a separate defined benefit pension plan which, together with the Bank of America Pension Plan, are referred to as the Qualified Pension Plans. Effective June 30, 2012, the benefits earned in the Qualified Pension Plans were frozen. Additional information on these plans is presented in Note 18 – Employee Benefit Plans to the Consolidated Financial Statements of the Corporation's 2012 Annual Report on Form 10-K.

Net periodic benefit cost of the Corporation's plans for the three and six months ended June 30, 2013 and 2012 included the following components.

Components of Net Periodic Benefit Cost
 
Three Months Ended June 30, 2013
(Dollars in millions)
Qualified Pension Plans
 
Non-U.S. Pension Plans
 
Nonqualified and Other Pension Plans (1)
 
Postretirement
Health and Life
Plans
Service cost
$
—

 
$
8

 
$
1

 
$
3

Interest cost
151

 
25

 
29

 
15

Expected return on plan assets
(252
)
 
(31
)
 
(28
)
 
(1
)
Amortization of prior service cost
—

 
—

 
—

 
1

Amortization of net actuarial loss (gain)
70

 
—

 
6

 
(5
)
Net periodic benefit cost (income)
$
(31
)
 
$
2

 
$
8

 
$
13

 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2012
Service cost
$
117

 
$
10

 
$
—

 
$
3

Interest cost
169

 
25

 
35

 
18

Expected return on plan assets
(312
)
 
(35
)
 
(38
)
 
(1
)
Amortization of transition obligation
—

 
—

 
—

 
8

Amortization of prior service cost (credits)
4

 
—

 
(2
)
 
1

Amortization of net actuarial loss (gain)
115

 
(2
)
 
2

 
(5
)
Recognized loss due to settlements and curtailments
—

 
—

 
1

 
—

Net periodic benefit cost (income)
$
93

 
$
(2
)
 
$
(2
)
 
$
24

 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2013
Service cost
$
—

 
$
17

 
$
1

 
$
7

Interest cost
302

 
50

 
59

 
28

Expected return on plan assets
(505
)
 
(63
)
 
(55
)
 
(2
)
Amortization of prior service cost
—

 
—

 
—

 
2

Amortization of net actuarial loss (gain)
141

 
1

 
12

 
(10
)
Recognized loss (gain) due to settlements and curtailments
17

 
(7
)
 
—

 
—

Net periodic benefit cost (income)
$
(45
)
 
$
(2
)
 
$
17

 
$
25

 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2012
Service cost
$
231

 
$
20

 
$
—

 
$
7

Interest cost
341

 
49

 
70

 
36

Expected return on plan assets
(621
)
 
(69
)
 
(76
)
 
(3
)
Amortization of transition obligation
—

 
—

 
—

 
16

Amortization of prior service cost (credits)
9

 
—

 
(4
)
 
2

Amortization of net actuarial loss (gain)
238

 
(4
)
 
5

 
(10
)
Recognized loss due to settlements and curtailments
58

 
—

 
4

 
—

Net periodic benefit cost (income)
$
256

 
$
(4
)
 
$
(1
)
 
$
48

(1) 
Includes nonqualified pension plans and the terminated Merrill Lynch U.S. pension plan.
The Corporation's best estimate of its contributions to be made to the Non-U.S. Pension Plans, Nonqualified and Other Pension Plans, and Postretirement Health and Life Plans in 2013 is $122 million, $103 million and $107 million, respectively. For the six months ended June 30, 2013, the Corporation contributed $88 million, $59 million and $54 million, respectively, to these plans. The Corporation has not made and does not expect to make a contribution to the Qualified Pension Plans in 2013.

The Corporation expects to merge certain pension plans during the three months ending September 30, 2013. The benefit structures of the merged plans will not change and there will be no impact to plan participants. The merger of the pension plans will require a remeasurement of the qualified pension obligations and plan assets at fair value as of the merger date. The remeasurement is expected to marginally decrease the amount of unamortized net periodic benefit costs that are recorded in accumulated OCI, net-of-tax. The plan merger is not expected to change the Corporation's estimate of contributions as described above.

Certain Compensation Plans

During the six months ended June 30, 2013, the Corporation granted 183 million restricted stock unit (RSU) awards to certain employees under the Key Associate Stock Plan. Generally, one-third of the RSUs vest on each of the first three anniversaries of the grant date provided that the employee remains continuously employed with the Corporation during that time. Except for two million RSUs that are authorized to settle in shares of common stock of the Corporation, the RSUs will be paid in cash to the employees on the vesting date based on the fair value of the Corporation's common stock as of the vesting date. The RSUs are expensed ratably over the vesting period, net of estimated forfeitures, for non-retirement eligible employees based upon the fair value of the Corporation's common stock on the accrual date. For RSUs granted to employees who are retirement eligible or will become retirement eligible during the vesting period, the RSUs are expensed as of the grant date or ratably over the period from the grant date to the date the employee becomes retirement eligible, respectively, net of estimated forfeitures. The accrued liability for the RSUs is adjusted to fair value based on changes in the fair value of the Corporation's common stock. The Corporation enters into cash-settled equity derivatives for a significant portion of the RSUs to minimize the change in expense driven by fluctuations in the fair value of the RSUs over the applicable vesting period. For additional information, see Note 19 – Stock-based Compensation Plans to the Consolidated Financial Statements of the Corporation's 2012 Annual Report on Form 10-K.