Proctor and Gamble 2014 Annual Report Download - page 68

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66 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
Defined Benefit Retirement Plans and Other Retiree Benefits
We offer defined benefit retirement pension plans to certain employees. These benefits relate primarily to local plans outside
the U.S. and, to a lesser extent, plans assumed in previous acquisitions covering U.S. employees.
We also provide certain other retiree benefits, primarily health care and life insurance, for the majority of our U.S. employees
who become eligible for these benefits when they meet minimum age and service requirements. Generally, the health care plans
require cost sharing with retirees and pay a stated percentage of expenses, reduced by deductibles and other coverages. These
benefits are primarily funded by ESOP Series B shares and certain other assets contributed by the Company.
Obligation and Funded Status.The following provides a reconciliation of benefit obligations, plan assets and funded status of
these defined benefit plans:
Pension Benefits(1) Other Retiree Benefits(2)
Years ended June 30 2014 2013 2014 2013
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year(3) $ 14,514 $ 13,573 $ 5,289 $ 6,006
Service cost 298 300 149 190
Interest cost 590 560 256 260
Participants' contributions 20 20 72 66
Amendments 4104 (5)—
Actuarial loss/(gain) 1,365 473 (46)(1,022)
Acquisitions —51 ——
Special termination benefits 539 918
Currency translation and other 797 (4)20 5
Benefit payments (540)(602)(239)(234)
BENEFIT OBLIGATION AT END OF YEAR(3) 17,053 14,514 5,505 5,289
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year 8,561 7,974 3,553 2,713
Actual return on plan assets 964 796 124 954
Acquisitions —59 ——
Employer contributions 1,549 391 31 23
Participants' contributions 20 20 72 66
Currency translation and other 544 (77)——
ESOP debt impacts(4) ——33 31
Benefit payments (540)(602)(239)(234)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR 11,098 8,561 3,574 3,553
FUNDED STATUS (5,955)(5,953)(1,931)(1,736)
(1) Primarily non-U.S.-based defined benefit retirement plans.
(2) Primarily U.S.-based other postretirement benefit plans.
(3) For the pension benefit plans, the benefit obligation is the projected benefit obligation. For other retiree benefit plans, the benefit
obligation is the accumulated postretirement benefit obligation.
(4) Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.
The underfunding of pension benefits is primarily a function of the different funding incentives that exist outside of the U.S. In
certain countries, there are no legal requirements or financial incentives provided to companies to pre-fund pension obligations
prior to their due date. In these instances, benefit payments are typically paid directly from the Company's cash as they become
due.