Pension, Savings, And Other Employee Benefits

9 Months Ended

Sep. 30, 2012

Pension, Savings, And Other Employee Benefits [Abstract]

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 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. Management has assessed the need for future fund contributions, and does not currently anticipate that FHN will make a contribution to the qualified pension plan in 2012.

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 $3.8million for 2011 and FHN anticipates making an $8.0million contribution in 2012.

In 2009, FHN's Board of Directors determined that the accrual of benefits under the qualified pension plan and the supplemental retirement plan would cease as of December 31, 2012. After that date, employees currently in the pension plan, and those currently in the Employee Non-voluntary Elective Contribution (“ENEC”) program, will be able to participate in the FHN savings plan with a profit sharing feature and an increased company match rate. After that time, pension status will not affect a person's ability to participate in any savings plan feature.

Savings plan. The 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 $1.3million for the plan in 2011 related to the 2010 plan year, and FHN contributed $1.5million for the plan in 2012 related to the 2011 plan year. All contributions made to eligible employees' savings plan accounts in relation to the ENEC program are invested in company stock.

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.

In third quarter 2012, lump sum payments under the supplemental retirement plan triggered settlement accounting. In accordance with its practice, FHN performed a remeasurement of the plan in conjunction with the settlement and recognized the ASC 715 - Compensation - Retirement Benefits ("ASC 715")settlement expense reflected in the following tables.

The components of net periodic benefit cost for the three months ended September 30 are as follows:
		Pension Benefits				Other Benefits
		Three months ended				Three months ended
		September 30				September 30
(Dollars in thousands)		2012		2011		2012		2011
Components of net periodic benefit cost
Service cost		$	2,453	$	2,917	$	102	$	119
Interest cost			8,191		8,323		612		556
Expected return on plan assets			(9,967)		(11,717)		(225)		(296)
Amortization of unrecognized:
	Transition (asset)/obligation		-		-		184		246
	Prior service cost/(credit)		100		104		(3)		(2)
	Actuarial (gain)/loss		9,351		5,861		(60)		(273)
Net periodic benefit cost			10,128		5,488		610		350
ASC 715 settlement expense			1,231		-		-		-
Total periodic benefit costs		$	11,359	$	5,488	$	610	$	350

The components of net periodic benefit cost for the nine months ended September 30 are as follows:
		Pension Benefits				Other Benefits
		Nine months ended				Nine months ended
		September				September
(Dollars in thousands)		2012		2011		2012		2011
Components of net periodic benefit cost
Service cost		$	11,156	$	11,519	$	350	$	407
Interest cost			24,780		24,617		1,724		1,660
Expected return on plan assets			(29,860)		(35,164)		(686)		(892)
Amortization of unrecognized:
	Transition (asset)/obligation		-		-		552		740
	Prior service cost/(credit)		299		313		(7)		(7)
	Actuarial (gain)/loss		26,999		15,914		(366)		(793)
Net periodic benefit cost			33,374		17,199		1,567		1,115
ASC 715 settlement expense			1,231		-		-		-
Total periodic benefit costs		$	34,605	$	17,199	$	1,567	$	1,115