Sears 2012 Annual Report Download - page 83

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
83
plan's target asset allocation was 55% to 75% fixed income and 25% to 45% equity. To develop the expected long-
term rate of return on assets assumption, we considered the historical returns and the future expectations for returns
for each asset class, as well as the target asset allocation of the pension portfolio.
Future Cash Flows of Benefit Plans
Information regarding expected future cash flows for our benefit plans is as follows:
millions SHC
Domestic Sears
Canada Total
Pension benefits:
Employer contributions:
2013 (expected) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 352 $ 29 $ 381
Expected benefit payments:
2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 335 $ 93 $ 428
2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 93 430
2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340 92 432
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342 92 434
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344 91 435
2018-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,725 450 2,175
Postretirement benefits:
Employer contributions:
2013 (expected) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28 $ 1 $ 29
Expected employer contribution for benefit payments:
2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28 $ 17 $ 45
2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 17 43
2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 17 42
2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 18 42
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 18 40
2018-2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 88 178
Domestic Pension Plan Funding
Contributions to our pension plans remain a significant use of our cash on an annual basis. While the
Company's pension plan is frozen, and thus associates do not currently earn pension benefits, the Company has a
legacy pension obligation for past service performed by Kmart and Sears associates. During 2012, we contributed
$516 million to our domestic pension plans. We estimate that the domestic pension contribution will be $352 million
in 2013 and approximately $510 million in 2014, though the ultimate amount of pension contributions could be
affected by changes in the applicable regulations as well as financial market and investment performance.
As previously reported, on July 6, 2012, federal legislation signed into law allows pension plan sponsors to use
higher interest rate assumptions in valuing plan liabilities and determining funding obligations. As a result of this
legislation, the Company's domestic pension plan was within $203 million of being 80% funded under applicable
law. In order to reduce the risks of gross pension obligations, the Company elected to contribute an additional $203
million to its domestic pension plan on September 14, 2012, after which its domestic pension plan was 80% funded
under applicable law.
Effective September 17, 2012, the Company amended its domestic pension plan, primarily related to lump sum
benefit eligibility, and began notifying certain former employees of the Company of its offer to pay those employees'
pension benefit in a lump sum. These amendments did not have a significant impact on our plan. Former employees
eligible for the voluntary lump sum payment option are generally those who are vested traditional formula