UPS 2014 Annual Report Download - page 89

Download and view the complete annual report

Please find page 89 of the 2014 UPS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
77
The accumulated postretirement benefit obligation exceeds plan assets for all of our U.S. postretirement medical benefit
plans.
Benefit Obligations and Fair Value of Plan Assets
The following table provides a reconciliation of the changes in the plans’ benefit obligations and fair value of plan assets
as of the respective measurement dates in each year (in millions).
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension
Benefits
2014 2013 2014 2013 2014 2013
Benefit Obligations:
Projected benefit obligation at beginning of year $ 29,508 $ 31,868 $ 4,046 $ 4,412 $ 1,076 $ 1,089
Service cost 1,137 1,349 62 103 43 47
Interest cost 1,604 1,449 152 185 49 44
Gross benefits paid (924) (813)(255)(258)(26)(21)
Plan participants’ contributions — — 15 17 5 4
Plan amendments 5 140 65 4 — —
Actuarial (gain)/loss 6,191 (4,485) 1,069 (417) 194 (55)
Foreign currency exchange rate changes ————
(103)(26)
Curtailments and settlements — — (2,271)— (2)(6)
Other ————38—
Projected benefit obligation at end of year $ 37,521 $ 29,508 $ 2,883 $ 4,046 $ 1,274 $ 1,076
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension
Benefits
2014 2013 2014 2013 2014 2013
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year $ 26,224 $ 24,941 $ 355 $ 460 $ 931 $ 801
Actual return on plan assets 2,471 2,082 22 28 106 81
Employer contributions 1,057 14 122 108 79 90
Plan participants’ contributions — — 15 17 3 1
Gross benefits paid (924) (813)(255)(258)(26)(21)
Foreign currency exchange rate changes ————
(79)(20)
Curtailments and settlements ———— (2)(1)
Other ————30—
Fair value of plan assets at end of year $ 28,828 $ 26,224 $ 259 $ 355 $ 1,042 $ 931
The curtailments and settlements amount in 2014 for the U.S. postretirement medical benefit plans is discussed further in
note 5 under the section entitled "Accounting Impact of Health and Welfare Plan Changes".
Pension and Postretirement Plan Assets
The applicable benefit plan committees establish investment guidelines and strategies, and regularly monitor the
performance of the funds and portfolio managers. Our investment guidelines address the following items: governance, general
investment beliefs and principles, investment objectives, specific investment goals, process for determining/maintaining the
asset allocation policy, long-term asset allocation, rebalancing, investment restrictions/prohibited transactions, portfolio
manager structure and diversification (which addresses limits on the amount of investments held by any one manager to
minimize risk), portfolio manager selection criteria, plan evaluation, portfolio manager performance review and evaluation, and
risk management (including various measures used to evaluate risk tolerance).