Allegheny Power 2014 Annual Report Download - page 90

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75
Pension OPEB
Obligations and Funded Status 2014 2013 2014 2013
(In millions)
Change in benefit obligation:
Benefit obligation as of January 1 $ 8,263 $8,975 $879 $1,076
Service cost 167 197 9 13
Interest cost 402 372 39 37
Plan participants’ contributions — — 16 15
Plan amendments 5 2 (97)(37)
Medicare retiree drug subsidy — — —5
Actuarial (gain) loss 1,123 (846) 13 (107)
Benefits paid (711)(437)(102)(123)
Benefit obligation as of December 31 $ 9,249 $8,263 $757 $879
Change in fair value of plan assets:
Fair value of plan assets as of January 1 $ 6,171 $6,671 $495 $508
Actual return on plan assets 349 (77) 38 56
Company contributions 15 14 17 39
Plan participants’ contributions — — 16 15
Benefits paid (711)(437)(102)(123)
Fair value of plan assets as of December 31 $ 5,824 $6,171 $464 $495
Funded Status:
Qualified plan $ (3,064) $ (1,782)
Non-qualified plans (361)(310)
Funded Status $ (3,425) $ (2,092) $ (293) $ (384)
Accumulated benefit obligation $8,744 $7,800 $—$—
Amounts Recognized on the Balance Sheet:
Current liabilities $ (17) $ (15) $ —$—
Noncurrent liabilities (3,408) (2,077) (293)(384)
Net liability as of December 31 $ (3,425) $ (2,092) $ (293) $ (384)
Amounts Recognized in AOCI:
Prior service cost (credit) $ 45 $ 48 $ (479) $ (558)
Assumptions Used to Determine Benefit Obligations
(as of December 31)
Discount rate 4.25%5.00%4.00%4.75%
Rate of compensation increase 4.20%4.20% N/A N/A
Assumed Health Care Cost Trend Rates
(as of December 31)
Health care cost trend rate assumed (pre/post-Medicare) N/A N/A 7.0-7.5% 7.25-7.75%
Rate to which the cost trend rate is assumed to decline (the ultimate
trend rate) N/A N/A 4.5% 5%
Year that the rate reaches the ultimate trend rate (pre/post-Medicare) N/A N/A 2026 2020
Allocation of Plan Assets (as of December 31)
Equity securities 36% 18% 49% 47%
Bonds 33% 40% 40% 40%
Absolute return strategies 14% 23% 1% 3%
Real estate 7% 6% 1% 1%
Derivatives 1% —% —%—%
Cash and short-term securities 9% 13% 9% 9%
Total 100%100%100%100%
The estimated 2015 amortization of pension and OPEB prior service costs (credits) from AOCI into net periodic pension and
OPEB costs (credits) is approximately $9 million and $(134) million, respectively.