notes to consolidated financial statements COST OF PENSION PLANS (In millions) 2006 Total Principal pension plans Other pension plans 2005 2004 2006 2005 2004 2006 2005 2004 Expected return on plan assets $(4,211) $(4,242) $(4,256) $(3,811) $(3,885) $(3,958) $(400) $(357) $(298) Service cost for benefi ts earned 1,719 1,618 1,436 1,402 1,359 1,178 317 259 258 Interest cost on benefi t obligation 2,685 2,609 2,511 2,304 2,248 2,199 381 361 312 Prior service cost 258 262 316 253 256 311 5 6 5 Net actuarial loss recognized 893 480 242 729 351 146 164 129 96 Total cost (income) $ 1,344 $ 727 $ 249 $ 877 $ 329 $ (124) $ 467 $ 398 $ 373 ACTUARIAL ASSUMPTIONS are described below. The discount rates at December 31 were used to measure the year-end benefi t obligations and the earnings effects for the subsequent year. ACTUARIAL ASSUMPTIONS December 31 2006 Principal pension plans Other pension plans (weighted average) 2005 2004 2003 2006 2005 2004 2003 Discount rate 5.75% 5.50% 5.75% 6.00% 4.97% 4.74% 5.28% 5.53% Compensation increases 5.00 5.00 5.00 5.00 4.26 4.20 4.03 3.87 Expected return on assets 8.50 8.50 8.50 8.50 7.44 7.47 7.67 7.56 To determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset alloca- tions, as well as historical and expected returns on various categories of plan assets. For the principal pension plans, we apply our expected rate of return to a market-related value of assets, which stabilizes variability in assets to which we apply that expected return. We amortize experience gains and losses, as well as the effects of changes in actuarial assumptions and plan provisions over a period no longer than the average future service of employees. FUNDING POLICY for the GE Pension Plan is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts as we may determine to be appropriate. We have not made contri- butions to the GE Pension Plan since 1987. We will not make any contributions to the GE Pension Plan in 2007. In 2007, we expect to pay approximately $140 million for benefi t payments under our GE Supplementary Pension Plan and administrative expenses of our principal pension plans ($121 million in 2006), and expect to contribute approximately $570 million to other pension plans ($451 million in 2006). BENEFIT OBLIGATIONS are described in the following tables. Accumulated and projected benefit obligations (ABO and PBO) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefi ts earned to date with benefits computed based on current compensation levels. PBO is ABO increased to refl ect expected future compensation. PROJECTED BENEFIT OBLIGATION Principal pension plans Other pension plans (In millions) 2006 2005 2006 2005 Balance at January 1 $43,331 $39,969 $8,097 $7,122 Service cost for benefi ts earned 1,402 1,359 317 259 Interest cost on benefi t obligations 2,304 2,248 381 361 Participant contributions 162 174 37 36 Plan amendments 80 — (18) 3 Actuarial (gain) loss(a) (1,514) 1,988 27 909 Benefi ts paid (2,472) (2,407) (287) (256) Exchange rate adjustments — — 520 (402) Acquired plans and other — — (40) 65 Balance at December 31(b) $43,293 $43,331 $9,034 $8,097 (a) Principally associated with discount rate changes. (b) The PBO for the GE Supplementary Pension Plan was $3,554 million and $3,534 million at year-end 2006 and 2005, respectively. 82 ge 2006 annual report

ABO balances for our pension plans follow. ACCUMULATED BENEFIT OBLIGATION December 31 (In millions) GE Pension Plan GE Supplementary Pension Plan Other pension plans 2006 $38,137 2,314 8,053 2005 $38,044 2,178 7,194 Following is information about our pension plans in which the accu- mulated benefit obligation exceeds the fair value of plan assets. PLANS WITH ASSETS LESS THAN ABO December 31 (In millions) 2006 2005 Funded plans with assets less than ABO Plan assets $4,833 $4,737 Accumulated benefi t obligations 5,828 6,096 Projected benefi t obligations 6,667 6,967 Unfunded plans(a) Accrued pension liability 4,310 3,323 Accumulated benefi t obligations 3,052 2,859 Projected benefi t obligations 4,310 4,235 (a) Primarily related to the GE Supplementary Pension Plan. Pension plan assets are described below. FAIR VALUE OF PLAN ASSETS Principal pension plans Other pension plans (In millions) 2006 2005 2006 2005 Balance at January 1 $49,096 $46,665 $5,213 $4,602 Actual gain on plan assets 7,851 4,558 679 670 Employer contributions 121 106 451 365 Participant contributions 162 174 37 36 Benefi ts paid (2,472) (2,407) (287) (256) Exchange rate adjustments — — 340 (233) Acquired plans and other — — 2 29 Balance at December 31 $54,758 $49,096 $6,435 $5,213 Our pension plan assets are held in trust, as follows: PLAN ASSET ALLOCATION Principal pension plans 2006 2005 Target Actual Actual December 31 allocation allocation allocation U.S. equity securities 30–45% 41% 42% Non-U.S. equity securities 15–25 22 21 Debt securities 15–30 17 18 Real estate 4–10 6 6 Private equities 5–11 7 7 Other 1–12 7 6 Total 100% 100% notes to consolidated financial statements Plan fiduciaries of the GE Pension Plan set investment policies and strategies for the GE Pension Trust. Long-term strategic invest- ment objectives include preserving the funded status of the plan and balancing risk and return. These plan fi duciaries oversee the investment allocation process, which includes selecting investment managers, commissioning periodic asset-liability studies, setting long-term strategic targets and monitoring asset allocations. Target allocation ranges are guidelines, not limitations, and occa- sionally plan fiduciaries will approve allocations above or below a target range. GE Pension Trust assets are invested subject to the following additional guidelines: • Short-term securities must be rated A1/P1 or better, other than 15% of short-term holdings which may be rated A2/P2, • Real estate may not exceed 25% of total assets (6% of trust assets at December 31, 2006), • Investments in securities not freely tradable may not exceed 20% of total assets (13% of trust assets at December 31, 2006), and • GE stock is limited by statute when it reaches 10% of total trust assets (6.1% and 6.4% at the end of 2006 and 2005, respectively). Other pension plans (weighted average) 2006 2005 Target Actual Actual December 31 allocation allocation allocation Equity securities 66% 67% 65% Debt securities 28 26 28 Real estate 3 3 3 Other 3 4 4 Total 100% 100% ge 2006 annual report 83