Express Scripts 2013 Annual Report Download - page 93

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93 Express Scripts 2013 Annual Report
The pension and other postretirement benefits liabilities recognized at December 31, 2013 and 2012 are as follows:
Pension
Benefits
Other
Postretirement
Benefits
(in millions) 2013 2012 2013 2012
Accrued expenses $ — $ — $ 0.3 $ 0.5
Other liabilities 46.4 61.6 1.8 2.1
Total pension and other postretirement liabilities $ 46.4 $ 61.6 $ 2.1 $ 2.6
Actuarial assumptions. The Company has elected an accounting policy that measures the pension plan’s benefit
obligation as if participants were to separate immediately. As a result, a discount rate is not used to value the pension benefit
obligation. Also, since both the pension and other postretirement benefit plans are frozen, a rate of compensation increase is not
applicable.
Other
Postretirement
Benefits
2013 2012
Weighted-average assumptions used to determine benefit obligations at fiscal year-end:
Discount rate 3.39% 2.48%
Weighted-average assumptions used to determine net cost for the fiscal year ended:
Discount rate 2.52% 3.30%
Our return on plan assets is calculated based on the actual fair value of plan assets. We recognize actual gains and
losses on pension plan assets immediately in our operating results. Amounts are recorded each period based on estimates, and
adjusted annually when actual results of the plan are measured at December 31st.
For the other postretirement benefit plan, the discount rate is determined annually and is evaluated and modified to
reflect, at the end of our fiscal year, the prevailing market rate of a portfolio of high-quality corporate bond investments that
would provide the future cash flows needed to settle benefit obligations as they come due.
Future costs of the amended postretirement benefit healthcare plan are being capped based on 2004 costs. As a
result, employer liability is not affected by healthcare cost trend. Additionally, the salary growth rate assumption is not
applicable for determination of the benefit obligation at December 31, 2013 and 2012 as a result of the plan freeze.
Pension plan assets. The Company believes the oversight of the investments held under its pension plans is
rigorous and the investment strategies are prudent. Beginning in 2013, we have adopted a dynamic asset allocation policy. The
intent of this policy is to allocate funds to investments with lower expected risk profiles as the funded ratio of the pension plan
improves. The investment objectives of the Company’s qualified pension plan are designed to provide liquidity to meet benefit
payments and expenses payable from the plan to offer a reasonable probability of achieving asset growth to reduce the
underfunded status of the plan and to manage the plan’s assets in a liability framework. The precise amount for which the
benefit obligations will be settled depends on future events, including interest rates and the life expectancy of the plan’s
members. The obligations are estimated using actuarial assumptions based on the current economic environment.