UPS 2013 Annual Report Download - page 86

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
74
U.S. Postretirement Medical Benefits
We also sponsor postretirement medical plans in the U.S. that provide health care benefits to our retirees who meet certain
eligibility requirements and who are not otherwise covered by multiemployer plans. Generally, this includes employees with at
least 10 years of service who have reached age 55 and employees who are eligible for postretirement medical benefits from a
Company-sponsored plan pursuant to collective bargaining agreements. We have the right to modify or terminate certain of
these plans. These benefits have been provided to certain retirees on a noncontributory basis; however, in many cases, retirees
are required to contribute all or a portion of the total cost of the coverage.
International Pension Benefits
We also sponsor various defined benefit plans covering certain of our international employees. The majority of our
international obligations are for defined benefit plans in Canada and the United Kingdom. In addition, many of our international
employees are covered by government-sponsored retirement and pension plans. We are not directly responsible for providing
benefits to participants of government-sponsored plans.
Defined Contribution Plans
We also sponsor several defined contribution plans for all employees not covered under collective bargaining agreements,
and for certain employees covered under collective bargaining agreements. The Company matches, in shares of UPS common
stock or cash, a portion of the participating employees’ contributions. Matching contributions charged to expense were $90,
$83 and $80 million for 2013, 2012 and 2011, respectively.
Contributions are also made to defined contribution money purchase plans under certain collective bargaining
agreements. Amounts charged to expense were $80, $80 and $76 million for 2013, 2012 and 2011, respectively.
Net Periodic Benefit Cost
Information about net periodic benefit cost for the company-sponsored pension and postretirement benefit plans is as
follows (in millions):
U.S. Pension Benefits U.S. Postretirement
Medical Benefits International Pension Benefits
2013 2012 2011 2013 2012 2011 2013 2012 2011
Net Periodic Cost:
Service cost $ 1,349 $ 998 $ 870 $ 103 $ 89 $ 89 $ 47 $ 41 $ 34
Interest cost 1,449 1,410 1,309 185 208 207 44 41 39
Expected return on assets (2,147) (1,970) (1,835)(33)(18)(16)(55)(47)(43)
Amortization of:
Transition obligation — — — — — — — — —
Prior service cost 172 173 171 4 5 7 2 2 1
Actuarial (gain) loss — 4,388 736 — 374 — — 69 91
Other — — — — — — (5)(10) —
Net periodic benefit cost $ 823 $ 4,999 $ 1,251 $ 259 $ 658 $ 287 $ 33 $ 96 $ 122
Actuarial Assumptions
The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.
U.S. Pension Benefits U.S. Postretirement
Medical Benefits International Pension Benefits
2013 2012 2011 2013 2012 2011 2013 2012 2011
Discount rate 4.42% 5.64% 5.98% 4.21% 5.47% 5.77% 4.00% 4.63% 5.36%
Rate of compensation increase 4.16% 4.50% 4.50% N/A N/A N/A 3.03% 3.58% 3.57%
Expected return on assets 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 6.90% 7.20% 7.31%