Emerson 2014 Annual Report Download - page 48

2014 Emerson > 44
Approximately $193 of the $1,307 of pretax losses deferred in accumulated other comprehensive income (loss)
at September 30, 2014, will be amortized to expense in 2015. As of September 30, 2014, U.S. pension plans were
overfunded by $137 and non-U.S. plans were underfunded by $342. The U.S. funded status includes unfunded plans
totaling $182 and the non-U.S. status includes unfunded plans totaling $218.
As of the September 30, 2014 and 2013 measurement dates, the plans’ total accumulated benefit obligation
was $5,277 and $4,782, respectively. Also as of the measurement dates, the total projected benefit obligation,
accumulated benefit obligation and fair value of plan assets for individual plans with accumulated benefit
obligations in excess of plan assets were $1,028, $928 and $455, respectively, for 2014, and $978, $887 and $464,
respectively, for 2013.
Future benefit payments by U.S. plans are estimated to be $197 in 2015, $207 in 2016, $217 in 2017, $227 in 2018,
$237 in 2019 and $1,304 in total over the five years 2020 through 2024. Based on foreign currency exchange rates
as of September 30, 2014, future benefit payments by non-U.S. plans are estimated to be $48 in 2015, $50 in 2016,
$56 in 2017, $58 in 2018, $60 in 2019 and $346 in total over the five years 2020 through 2024. The Company
expects to contribute approximately $60 to its retirement plans in 2015.
The weighted-average assumptions used in the valuation of pension benefits follow:
u.s. plans non-u.s. plans
2012 2013 2014 2012 2013 2014
Net pension expense:
Discount rate 4.75% 4.00% 4.75% 5.2% 4.1% 4.2%
Expected return on plan assets 7.75% 7.75% 7.50% 5.9% 5.5% 6.6%
Rate of compensation increase 3.00% 3.25% 3.25% 3.5% 3.4% 3.2%
Benefit obligations:
Discount rate 4.00% 4.75% 4.25% 4.1% 4.2% 3.6%
Rate of compensation increase 3.25% 3.25% 3.25% 3.4% 3.2% 3.4%
The discount rate for the U.S. retirement plans was 4.25 percent as of September 30, 2014. An actuarially developed,
company-specific yield curve is used to determine the discount rate. The expected return on plan assets assumption is
determined by reviewing the investment returns of the plans for the past 10 years plus longer-term historical returns
of an asset mix approximating the Company’s asset allocation targets, and periodically comparing these returns to
expectations of investment advisors and actuaries to determine whether long-term future returns are expected to differ
significantly from the past. Defined benefit pension plan expense for 2015 is expected to be approximately $165, versus
$153 in 2014.
The Company’s asset allocations at September 30, 2014 and 2013, and weighted-average target allocations follow:
u.s. plans non-u.s. plans
2013 2014 target 2013 2014 target
Equity securities 66% 65% 60-70% 56% 55% 50-60%
Debt securities 26 26 25-35 30 32 25-35
Other 8 9 3-10 14 13 10-20
Total 100% 100% 100% 100% 100% 100%
The primary objective for the investment of pension assets is to secure participant retirement benefits by earning a
reasonable rate of return. Plan assets are invested consistent with the provisions of the prudence and diversification
rules of ERISA and with a long-term investment horizon. The Company continuously monitors the value of assets
by class and routinely rebalances to remain within target allocations. The strategy for equity assets is to minimize
concentrations of risk by investing primarily in companies in a diversified mix of industries worldwide, while
targeting neutrality in exposure to market capitalization levels, growth versus value profile, global versus regional
markets, fund types and fund managers. The approach for bonds emphasizes investment-grade corporate and
government debt with maturities matching a portion of the longer duration pension liabilities. The bonds strategy