This excerpt taken from the AFL 10-K filed Feb 28, 2007.
During 2005, the Japanese plan was amended. As a result of this amendment, participant salary and future salary increases are not factors in determining pension benefit cost or the related pension benefit obligation and accumulated benefit obligation.
We base the long-term rate of return on U.S. plan assets on the historical rates of return over the last 15 years and the expectation of similar returns over the long-term investment goals and objectives of U.S. plan assets. We base the long-term rate of return on the Japanese plan assets on the historical rates of return over the last 10 years.
In addition to the benefit obligations for funded employee plans, we also maintain unfunded supplemental retirement plans for certain officers and beneficiaries. Retirement expense for these unfunded supplemental plans was $16 million in 2006, $20 million in 2005, and $32 million in 2004. The accrued retirement liability for the unfunded supplemental retirement plans was $209 million at December 31, 2006, compared with $203 million a year ago. The assumptions used in the valuation of these plans were the same as for the funded plans.