Morgan Stanley 2014 Annual Report Download - page 280

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Net Periodic Benefit Expense.
The following table presents the components of the net periodic benefit expense (income) for 2014, 2013 and
2012:
Pension Postretirement
2014 2013 2012 2014 2013 2012
(dollars in millions)
Service cost, benefits earned during the period ............... $ 20 $ 23 $ 26$2$4$4
Interest cost on projected benefit obligation .................. 154 151 156577
Expected return on plan assets ............................ (110) (114) (110) — — —
Net amortization of prior service credit ..................... — — — (14) (13) (14)
Net amortization of actuarial loss .......................... 22 36 27 — 3 2
Curtailment loss ....................................... 3 — ————
Settlement loss ........................................ 2 1 ————
Net periodic benefit expense (income) .................. $ 91 $ 97 $ 99 $ (7) $ 1 $ (1)
Other changes in plan assets and benefit obligations recognized in other comprehensive loss (income) on a pre-
tax basis in 2014, 2013 and 2012 were as follows:
Pension Postretirement
2014 2013 2012 2014 2013 2012
(dollars in millions)
Net loss (gain) ........................................... $ 18 $ 87 $416$9$(52) $ 16
Prior service cost .........................................233(64) — —
Amortization of prior service credit .......................... — — — 14 13 14
Amortization of net loss ................................... (27) (37) (27) — (3) (2)
Total recognized in other comprehensive loss (income) ........... $ (7) $ 53 $392 $ (41) $ (42) $ 28
The Company generally amortizes unrecognized net gains and losses into net periodic benefit expense to the
extent that the gain or loss exceeds 10% of the greater of the projected benefit obligation or the market-related
value of plan assets. The amortization of the unrecognized net gains and losses is generally over the future
service of active participants. The U.S. Qualified Plan amortizes the unrecognized net gains and losses over
the average life expectancy of participants. Effective October 1, 2014, the SEREP amortizes the unrecognized net
gains and losses over the average life expectancy of participants.
The following table presents the weighted average assumptions used to determine net periodic benefit expense
for 2014, 2013 and 2012:
Pension Postretirement
2014 2013 2012 2014 2013 2012
Discount rate(1) ........................................... 4.74% 3.95% 4.57% 3.77% 3.88% 4.56%
Expected long-term rate of return on plan assets ................. 3.75 3.73 3.78 N/A N/A N/A
Rate of future compensation increases ......................... 1.06 0.98 2.14 N/A N/A N/A
N/A—Not Applicable.
(1) The Postretirement discount rate for 2014 changed to 3.77% from 4.75% effective October 31, 2014 with the amendment and
remeasurement of the Morgan Stanley Medical Plan.
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