Motorola 2013 Annual Report Download - page 81

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Actuarial Assumptions
Certain actuarial assumptions such as the discount rate and the long-term rate of return on plan assets have a significant
effect on the amounts reported for net periodic cost and benefit obligation. The assumed discount rates reflect the prevailing
market rates of a universe of high-quality, non-callable, corporate bonds currently available that, if the obligation were settled
at the measurement date, would provide the necessary future cash flows to pay the benefit obligation when due. The long-term
rates of return on plan assets represent an estimate of long-term returns on an investment portfolio consisting of a mixture of
equities, fixed income, cash and other investments similar to the actual investment mix. In determining the long-term return on
plan assets, the Company considers long-term rates of return on the asset classes (both historical and forecasted) in which the
Company expects the plan funds to be invested.
Weighted average actuarial assumptions used to determine costs for the plans were as follows:
U.S. Pension Benefit
Plans Non U.S. Pension Benefit Plans
Postretirement
Health Care
Benefits Plan
December 31 2013 2012 2013 2012 2013 2012
Discount rate 4.35% 5.10% 4.16% 4.61% 3.80% 4.75%
Investment return assumption 7.00% 8.25% 6.05% 6.24% 7.00% 8.25%
Weighted average actuarial assumptions used to determine benefit obligations for the plans were as follows:
U.S. Pension Benefit
Plans Non U.S. Pension Benefit Plans
Postretirement
Health Care
Benefits Plan
December 31 2013 2012 2013 2012 2013 2012
Discount rate 5.15% 4.35% 4.14% 4.11% 4.65% 3.80%
Future compensation increase rate n/a n/a 2.57% 2.58% n/a n/a
The accumulated benefit obligations for the plans were as follows:
U.S. Pension Benefit
Plans Non U.S. Pension Benefit Plans
December 31 2013 2012 2013 2012
Accumulated benefit obligation $ 7,317 $ 8,288 $ 1,950 $ 1,770
The health care cost trend rate used to determine the December 31, 2013 accumulated postretirement benefit obligation
for the Postretirement Health Care Benefits Plan was 8.50% for 2013, grading down to a rate of 5% in 2020. The health care
cost trend rate used to determine the December 31, 2012 accumulated postretirement benefit obligation was 7.25% for 2013,
remaining flat at 7.25% through 2015, then grading down to a rate of 5% in 2019.
Changing the health care trend rate by one percentage point would change the accumulated postretirement benefit
obligation and the net Postretirement Health Care Benefits Plan benefits as follows:
1% Point
Increase 1% Point Decrease
Increase (decrease) in:
Accumulated postretirement benefit obligation $ 1 $ (1)
Net Postretirement Health Care Benefit Plan benefit — —
The Company maintains a lifetime cap on postretirement health care costs, which reduces the liability duration of the
plan. A result of this lower duration is a decreased sensitivity to a change in the discount rate trend assumption with respect to
the liability and related expense.