Berkshire Hathaway 2015 Annual Report Download - page 70

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Notes to Consolidated Financial Statements (Continued)
(21) Pension plans (Continued)
Weighted average interest rate assumptions used in determining projected benefit obligations and net periodic pension
expense were as follows.
2015 2014 2013
Applicable to pension benefit obligations:
Discount rate ................................................................ 4.1% 3.8% 4.6%
Expected long-term rate of return on plan assets .................................... 6.5 6.7 6.7
Rate of compensation increase .................................................. 3.4 3.4 3.5
Discount rate applicable to net periodic pension expense ................................. 3.8 4.6 4.1
Benefits payments expected over the next ten years are as follows (in millions): 2016 – $919; 2017 – $879; 2018 – $889;
2019 – $901; 2020 – $912; and 2021 to 2025 – $4,560. Sponsoring subsidiaries expect to contribute $199 million to defined
benefit pension plans in 2016.
The funded status of our pension plans is recognized in our Consolidated Balance Sheets as follows (in millions).
December 31,
2015 2014
Accounts payable, accruals and other liabilities ........................................... $2,484 $2,550
Losses and loss adjustment expenses ................................................... 400 332
Other assets ....................................................................... (456) (361)
$2,428 $2,521
Fair value measurements of plan assets as of December 31, 2015 and 2014 follow (in millions).
Total
Fair Value
Quoted Prices
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31, 2015
Cash and equivalents ...................................... $ 839 $ 544 $ 295 $—
Equity securities .......................................... 7,319 7,305 14 —
Government obligations .................................... 786 726 60 —
Other fixed maturity securities ............................... 990 87 903 —
Investment funds and other ................................. 2,897 357 2,200 340
$12,831 $9,019 $3,472 $340
December 31, 2014
Cash and equivalents ...................................... $ 482 $ 250 $ 232 $—
Equity securities .......................................... 7,950 7,739 211 —
Government obligations .................................... 811 701 110 —
Other fixed maturity securities ............................... 908 67 841 —
Investment funds and other ................................. 3,215 595 2,287 333
$13,366 $9,352 $3,681 $333
Refer to Note 18 for a discussion of the three levels in the hierarchy of fair values. Plan assets measured at fair value with
significant unobservable inputs (Level 3) for the years ending December 31, 2015 and 2014 consisted primarily of real estate
and limited partnership interests. Plan assets are generally invested with the long-term objective of producing earnings to
adequately cover expected benefit obligations, while assuming a prudent level of risk. Allocations may change as a result of
changing market conditions and investment opportunities. The expected rates of return on plan assets reflect subjective
assessments of expected invested asset returns over a period of several years. Generally, past investment returns are not given
significant consideration when establishing assumptions for expected long-term rates of return on plan assets. Actual experience
will differ from the assumed rates.
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