obligations and expense reflect the prevailing rates available on high-quality fixed-income debt instruments. At December 31, 2010, the company selected a 4.8 percent discount rate for the major U.S. pension plan and 5.0 percent for its OPEB plan. These rates were selected based on a cash flow analysis that matched estimated future benefit payments to the Citigroup Pension Discount Yield Curve as of year-end 2010. The discount rates at the end of 2009 were 5.3 percent for the major U.S. pension plan and 5.8 percent for the company’s U.S. OPEB plan, and 6.3 percent at the end of 2008 for both the U.S. pension and OPEB plans.

     An increase in the expected long-term return on plan assets or the discount rate would reduce pension plan expense, and vice versa. Total pension expense for 2010 was $1.1 billion. As an indication of the sensitivity of pension expense to the long-term rate of return assumption, a 1 percent increase in the expected rate of return on assets of the  company’s primary U.S. pension plan would have reduced total pension plan expense for 2010 by approximately $65 million. A 1 percent increase in the discount rate for this same plan, which accounted for about 61 percent of the companywide pension obligation, would have reduced total pension plan expense for 2010 by approximately $140 million.

     An increase in the discount rate would decrease the pension obligation, thus changing the funded status of a plan reported on the Consolidated Balance Sheet. The total pension liability on the Consolidated Balance Sheet at December 31, 2010, for underfunded plans was approximately $3.3 billion. As an indication of the sensitivity of pension liabilities to the discount rate assumption, a 0.25 percent increase in the discount rate applied to the company’s primary U.S. pension plan would have reduced the plan obligation by approximately $300 million, which would have decreased the plan’s underfunded status from approximately $0.9 billion to $0.6 billion. Other plans would be less underfunded as discount rates increase. The actual rates of return on plan assets and discount rates may vary significantly from estimates because of unanticipated changes in the world’s financial markets.

     In 2010, the company’s pension plan contributions were $1.45 billion (including $1.19 billion to the U.S. plans). In 2011, the company estimates contributions will be approximately $950 million. Actual contribution amounts are dependent upon investment results, changes in pension obligations, regulatory requirements and other economic factors. Additional funding may be required if investment returns are insufficient to offset increases in plan obligations.

     For the company’s OPEB plans, expense for 2010 was $166 million and the total liability, which reflected the unfunded status of the plans at the end of 2010, was $3.6 billion.

     As an indication of discount rate sensitivity to the determination of OPEB expense in 2010, a 1 percent increase in the discount rate for the company’s primary U.S. OPEB plan, which accounted for about 69 percent of the companywide OPEB expense, would have decreased OPEB expense by approximately $15 million. A