Duke Energy 2013 Annual Report Download - page 212

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PART II
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. •
DUKE ENERGY PROGRESS, INC. • DUKE ENERGY FLORIDA, INC. • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Sensitivity to Changes in Assumed Health Care Cost Trend Rates
Year Ended December 31, 2013
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
1-Percentage Point Increase
Effect on total service and interest costs $ 11 $ 2 $ 7 $ 4 $ 3 $ 1 $ 1
Effect on post-retirement benefit obligation 42 10 20 9 10 2 4
1-Percentage Point Decrease
Effect on total service and interest costs (9) (1) (6) (3) (2) — (1)
Effect on post-retirement benefit obligation (36) (9) (16) (7) (8) (1) (4)
Expected Benefit Payments
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Years ending December 31,
2014 $ 85 $ 21 $ 36 $ 17 $ 17 $ 4 $ 11
2015 88 22 38 17 17 4 12
2016 89 23 38 18 17 4 12
2017 89 23 38 18 17 3 11
2018 89 24 38 18 17 3 11
2019 – 2023 413 109 180 81 84 17 47
PLAN ASSETS
Description and Allocations
Duke Energy Master Retirement Trust
Assets for both the qualified pension and other post-retirement benefits
are maintained in the Duke Energy Master Retirement Trust. Approximately 98
percent of the Duke Energy Master Retirement Trust assets were allocated to
qualified pension plans and approximately 2 percent were allocated to other
post-retirement plans, as of December 31, 2013 and 2012. The investment
objective of the Duke Energy Master Retirement Trust is to achieve reasonable
returns, subject to a prudent level of portfolio risk, for the purpose of enhancing
the security of benefits for plan participants.
The asset allocation targets were set after considering the investment
objective and the risk profile. Equity securities are held for their high expected
return. Debt securities, hedge funds, real estate and other global securities are
held for diversification. Investments within asset classes are to be diversified
to achieve broad market participation and reduce the impact of individual
managers or investments. Duke Energy regularly reviews its actual asset
allocation and periodically rebalances its investments to the targeted allocation
when considered appropriate.
Qualified pension and other post-retirement benefits for the Subsidiary
Registrants are derived from the Duke Energy Master Retirement Trust, as such,
each are allocated their proportionate share of the assets discussed below.
The following table includes the target asset allocations by asset class at
December 31, 2013 and the actual asset allocations for the Duke Energy Master
Retirement Trust.
Target
Allocation
Actual Allocation at December 31,
2013 2012
U.S. equity securities 10% 10% 28%
Non-U.S. equity securities 8% 8% 15%
Global equity securities 10% 10% 10%
Global private equity securities 3% 3% 3%
Debt securities 63% 63% 32%
Hedge funds 2% 3% 4%
Real estate and cash 2% 1% 4%
Other global securities 2% 2% 4%
Total 100% 100% 100%