PBF Energy 2013 Annual Report Download - page 144

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PBF ENERGY INC. AND
PBF HOLDING COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)
F- 48
The assumed health care cost trend rates as of December 31, 2013 and 2012 were as follows:
Post Retirement
Medical Plan
2013 2012
Health care cost trend rate assumed for next year 6.8% 7.0%
Rate to which the cost trend rate was assumed to decline (the ultimate
trend rate) 4.5% 4.5%
Year that the rate reached the ultimate trend rate 2027 2027
Assumed health care costs trend rates have a significant effect on the amounts reported for retiree health care plans.
A one percentage-point change in assumed health care costs trend rates would have the following effects on the
medical postretirement benefits:
1%
Increase
1%
Decrease
Effect on total of service and interest cost components $ 159 $ (135)
Effect on accumulated postretirement benefit obligation 907 (794)
The tables below present the fair values of the assets of the Company’s Qualified Plan as of December 31, 2013
and 2012 by level of fair value hierarchy. Assets categorized in Level 1 of the hierarchy are measured at fair value
using a market approach based on published net asset values of mutual funds. As noted above, the Company’s post
retirement medical plan is funded on a pay-as-you-go basis and has no assets.
Fair Value Measurements Using
Quoted Prices in Active Markets
(Level 1)
December 31,
2013 2012
Equities:
Domestic equities $ 7,603 $ —
Developed international equities 3,685 —
Emerging market equities 1,775 —
Global low volatility equities 2,132 —
Fixed-income 9,855 —
Government securities:
Vanguard Intermediate-Term Treasury Fund — 10,232
Cash and cash equivalents — —
Total $ 25,050 $ 10,232
The Company’s investment strategy for its Qualified Plan is to achieve a reasonable return on assets that supports
the plan’s interest credit rating, subject to a moderate level of portfolio risk that provides liquidity. Consistent with
these financial objectives as of December 31, 2013, the plan's target allocations for plan assets are 60% invested
in equity securities and 40% fixed income investments. Equity securities include international stocks and a blend
of U.S. growth and value stocks of various sizes of capitalization. Fixed income securities include bonds and notes
issued by the U.S. government and its agencies, corporate bonds, and mortgage-backed securities. The aggregate
asset allocation is reviewed on an annual basis.
The overall expected long-term rate of return on plan assets for the Qualified Plan is based on the Company’s
view of long-term expectations and asset mix.