AT&T Wireless 2014 Annual Report Download - page 65

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The following table presents this reconciliation and shows the change in the projected benefit obligation for the years
ended December 31:
Pension Benefits Postretirement Benefits
2014 2013 2014 2013
Benefit obligation at beginning of year $56,560 $58,911 $30,285 $37,431
Service cost – benefits earned during the period 1,134 1,321 233 352
Interest cost on projected benefit obligation 2,470 2,429 1,458 1,532
Amendments (73) — (617) (4,460)
Actuarial (gain) loss 6,269 (2,390) 1,822 (2,098)
Special termination benefits 17 255 — 1
Benefits paid (6,543) (3,966) (2,298) (2,473)
Transfer for sale of Connecticut wireline operations (293) — (174) —
Plan transfers 2 — — —
Benefit obligation at end of year $59,543 $56,560 $30,709 $30,285
The following table presents the change in the value of plan assets for the years ended December 31 and the plans’ funded
status at December 31:
Pension Benefits Postretirement Benefits
2014 2013 2014 2013
Fair value of plan assets at beginning of year $ 47,238 $45,060 $ 8,960 $ 9,295
Actual return on plan assets 4,213 5,935 384 1,347
Benefits paid1 (6,543) (3,966) (1,498) (1,682)
Contributions 562 209 — —
Transfer for sale of Connecticut wireline operations (308) — — —
Other 1 — — —
Fair value of plan assets at end of year3 45,163 47,238 7,846 8,960
Unfunded status at end of year2 $(14,380) $ (9,322) $(22,863) $(21,325)
1 At our discretion, certain postretirement benefits may be paid from AT&T cash accounts, which does not reduce Voluntary Employee Benefit Association (VEBA) assets.
Future benefit payments may be made from VEBA trusts and thus reduce those asset balances.
2 Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund retirement trusts. Required pension funding is determined in
accordance with the Employee Retirement Income Security Act of 1974, as amended (ERISA) regulations.
3 Net assets available for benefits were $54,184 at December 31, 2014 and $56,447 at December 31, 2013 and include the preferred equity interest in AT&T Mobility II LLC
discussed below, which was valued at $9,021 and $9,209, respectively.
change as a change in accounting estimate that is
inseparable from a change in accounting principle
and accordingly have accounted for it prospectively.
Obligations and Funded Status
For defined benefit pension plans, the benefit obligation
is the “projected benefit obligation,” the actuarial present
value, as of our December 31 measurement date, of all
benefits attributed by the pension benefit formula to
employee service rendered to that date. The amount of
benefit to be paid depends on a number of future events
incorporated into the pension benefit formula, including
estimates of the average life of employees/survivors and
average years of service rendered. It is measured based on
assumptions concerning future interest rates and future
employee compensation levels.
For postretirement benefit plans, the benefit obligation is
the “accumulated postretirement benefit obligation,” the
actuarial present value as of a date of all future benefits
attributed under the terms of the postretirement benefit
plan to employee service rendered to the valuation date.
In the fourth quarter of 2014, we changed the method we
use to estimate the service and interest components of net
periodic benefit cost for pension and other postretirement
benefits. This change compared to the previous method
resulted in a decrease in the service and interest
components for pension cost in the fourth quarter.
Historically, we estimated these service and interest cost
components utilizing a single weighted-average discount
rate derived from the yield curve used to measure the
benefit obligation at the beginning of the period. We have
elected to utilize a full yield curve approach in the
estimation of these components by applying the specific
spot rates along the yield curve used in the determination
of the benefit obligation to the relevant projected cash
flows. We have made this change to provide a more precise
measurement of service and interest costs by improving the
correlation between projected benefit cash flows to the
corresponding spot yield curve rates. This change does
not affect the measurement of our total benefit obligations
or our annual net periodic benefit cost as the change in
the service and interest costs is completely offset in the
actuarial (gain) loss reported. We have accounted for this