The following information is based on an actual annual

report
The following information is based on an actual annual report

The following information is based on an actual annual report. Different names and years are
being used.
Bond and some of its subsidiaries provide certain postretirement medical, dental, and vision
care and life insurance for retirees and their dependents and for the surviving dependents of
eligible employees and retirees. Generally, the employees become eligible for postretirement
benefits if they retire no earlier than age 55 with 10 years of service. The liability for
postretirement benefits is funded through trust funds based on actuarially determined
contributions that consider the amount deductible for income tax purposes. The health care
plans are contributory, funded jointly by the companies and the participating retirees. The
December 31, 2018 and 2017, postretirement benefit liabilities and related data were
determined using the January 1, 2018, actuarial valuations.
Information related to the accumulated postretirement benefit obligation plan for the years 2018
and 2017 follows:

The assumed discount rates used to determine the benefit obligation as of December 31, 2018
and 2017, were 7.75% and 6.75%, respectively. The fair value of plan assets excludes $9
million and $7 million held in a grantor trust as of December 31, 2018 and 2017, respectively, for
the payment of postretirement medical benefits.
The components of other postretirement benefit costs, portions of which were recorded as
components of construction costs for the years 2018, 2017, and 2016 follow:

The other postretirement benefit curtailment losses in December 2018 represent the recognition
of $3,000 of additional prior service costs and a $27,000 increase in the benefit obligations
resulting from special termination benefits.
The health care cost trend rates used to measure the expected cost of the postretirement
medical benefits are assumed to be 8.0% for pre-Medicare recipients and 6.0% for Medicare
recipients for 2018. Those rates are assumed to decrease in 0.5% annual increments to 5% for
the years 2021 and 2020, respectively, and to remain level thereafter. The health care cost
trend rates, used to measure the expected cost of postretirement dental and vision benefits, are
a level 3.5% and 2.0% per year, respectively. Assumed health care cost trend rates have a
significant effect on the amounts reported for the health care plans. A percentage change of one
point in the assumed health care cost trend rates would have the following effects:
____________________________________________________1 Percentage Point
($ in thousands) Increase Decrease
Effect on total 2018 service and interest cost components...$ 26,000.......$ (20,000)
Effect on APBO as of 12/31/2018...............................190,000.........151,000
Required:
1. Assuming an expected rate of return on plan assets for 2018 and 2017 of 8.8% and 9%,

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