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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
77
U.S. Postretirement Medical Benefits
We also sponsor postretirement medical plans in the U.S. that provide healthcare 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.
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 $104,
$95 and $90 million for 2015, 2014 and 2013, respectively.
Contributions are also made to defined contribution money purchase plans under certain collective bargaining
agreements. Amounts charged to expense were $83, $82 and $80 million for 2015, 2014 and 2013, 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
2015 2014 2013 2015 2014 2013 2015 2014 2013
Net Periodic Benefit Cost:
Service cost $ 1,527 $ 1,137 $ 1,349 $ 34 $ 62 $ 103 $ 48 $ 43 $ 47
Interest cost 1,694 1,604 1,449 117 152 185 44 49 44
Expected return on assets (2,489) (2,257) (2,147)(17)(25)(33)(61)(61)(55)
Amortization of:
Transition obligation — — ———————
Prior service cost 168 169 172 5 — 4 1 1 2
Actuarial (gain) loss 70 991 — 17 767 — 31 48 —
Curtailment and settlement loss — — — — 356 — — — —
Other — — ————— 4(5)
Net periodic benefit cost $ 970 $ 1,644 $ 823 $ 156 $1,312 $ 259 $ 63 $ 84 $ 33
The curtailment and settlement loss 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".
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
2015 2014 2013 2015 2014 2013 2015 2014 2013
Discount rate 4.40% 5.32% 4.42% 4.18% 4.89% 4.21% 3.56% 4.35% 4.00%
Rate of compensation increase 4.29% 4.29% 4.16% N/A N/A N/A 3.08% 3.22% 3.03%
Expected return on assets 8.75% 8.75% 8.75% 8.75% 8.75% 8.75% 6.03% 6.29% 6.90%