JP Morgan Chase 2014 Annual Report Download - page 222

Notes to consolidated financial statements
220 JPMorgan Chase & Co./2014 Annual Report
Gains and losses
For the Firm’s defined benefit pension plans, fair value is
used to determine the expected return on plan assets.
Amortization of net gains and losses is included in annual
net periodic benefit cost if, as of the beginning of the year,
the net gain or loss exceeds 10% of the greater of the PBO
or the fair value of the plan assets. Any excess is amortized
over the average future service period of defined benefit
pension plan participants, which for the U.S. defined benefit
pension plan is currently seven years. In addition, prior
service costs are amortized over the average remaining
service period of active employees expected to receive
benefits under the plan when the prior service cost is first
recognized. The average remaining amortization period for
current prior service costs is five years.
For the Firm’s OPEB plans, a calculated value that
recognizes changes in fair value over a five-year period is
used to determine the expected return on plan assets. This
value is referred to as the market related value of assets.
Amortization of net gains and losses, adjusted for gains and
losses not yet recognized, is included in annual net periodic
benefit cost if, as of the beginning of the year, the net gain
or loss exceeds 10% of the greater of the accumulated
postretirement benefit obligation or the market related
value of assets. Any excess net gain or loss is amortized
over the average expected lifetime of retired participants,
which is currently twelve years; however, prior service costs
resulting from plan changes are amortized over the average
years of service remaining to full eligibility age, which is
currently two years.
The following table presents pretax pension and OPEB amounts recorded in AOCI.
Defined benefit pension plans
December 31, U.S. Non-U.S. OPEB plans
(in millions) 2014 2013 2014 2013 2014 2013
Net gain/(loss) $ (3,346) $ (1,726) $ (628) $ (658) $ 130 $ 125
Prior service credit/(cost) 102 196 11 14 —1
Accumulated other comprehensive income/(loss), pretax, end of year $ (3,244) $ (1,530) $ (617) $ (644) $ 130 $ 126
The following table presents the components of net periodic benefit costs reported in the Consolidated statements of income
and other comprehensive income for the Firm’s U.S. and non-U.S. defined benefit pension, defined contribution and OPEB
plans.
Pension plans
U.S. Non-U.S. OPEB plans
Year ended December 31, (in millions) 2014 2013 2012 2014 2013 2012 2014 2013 2012
Components of net periodic benefit cost
Benefits earned during the year $ 281 $ 314 $ 272 $ 33 $ 34 $ 41 $ — $ 1 $ 1
Interest cost on benefit obligations 534 447 466 137 125 126 38 35 44
Expected return on plan assets (985) (956) (861) (172) (142) (137) (101) (92) (90)
Amortization:
Net (gain)/loss 25 271 289 47 49 36 —1 (1)
Prior service cost/(credit) (41) (41) (41) (2) (2) — (1) — —
Net periodic defined benefit cost (186) 35 125 43 64 66 (64) (55) (46)
Other defined benefit pension plans(a) 14 15 15 614 8 NA NA NA
Total defined benefit plans (172) 50 140 49 78 74 (64) (55) (46)
Total defined contribution plans 438 447 409 329 321 302 NA NA NA
Total pension and OPEB cost included in compensation
expense $ 266 $ 497 $ 549 $ 378 $ 399 $ 376 $ (64) $ (55) $ (46)
Changes in plan assets and benefit obligations
recognized in other comprehensive income
Net (gain)/loss arising during the year $ 1,645 $(1,817) $ 434 $ 57 $ 19 $ 146 $ (5) $ (257) $ (43)
Prior service credit arising during the year 53 — — —— (6) —— —
Amortization of net loss (25) (271) (289) (47) (49) (36) —(1) 1
Amortization of prior service (cost)/credit 41 41 41 22 — 1— —
Foreign exchange impact and other —— — (39) (a) 14 (a) 22 (a) —— (1)
Total recognized in other comprehensive income $ 1,714 $(2,047) $ 186 $ (27) $ (14) $ 126 $ (4) $ (258) $ (43)
Total recognized in net periodic benefit cost and other
comprehensive income $ 1,528 $(2,012) $ 311 $ 16 $ 50 $ 192 $ (68) $ (313) $ (89)
(a) Includes various defined benefit pension plans which are individually immaterial.