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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
81
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
2015 2014 2015 2014 2015 2014
Benefit Obligations:
Projected benefit obligation at beginning of year $ 37,521 $ 29,508 $ 2,883 $ 4,046 $ 1,274 $ 1,076
Service cost 1,527 1,137 34 62 48 43
Interest cost 1,694 1,604 117 152 44 49
Gross benefits paid (1,056) (924)(262)(255)(30)(26)
Plan participants’ contributions — — 21 15 6 5
Plan amendments — 5 — 65 (2)—
Actuarial (gain)/loss (2,840) 6,191 (120) 1,069 13 194
Foreign currency exchange rate changes ————
(138)(103)
Curtailments and settlements — — — (2,271)(3)(2)
Other ———— 738
Projected benefit obligation at end of year $ 36,846 $ 37,521 $ 2,673 $ 2,883 $ 1,219 $ 1,274
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International
Pension
Benefits
2015 2014 2015 2014 2015 2014
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year $ 28,828 $ 26,224 $ 259 $ 355 $ 1,042 $ 931
Actual return on plan assets 67 2,471 — 22 43 106
Employer contributions 1,048 1,057 111 122 70 79
Plan participants’ contributions — — 21 15 3 3
Gross benefits paid (1,056) (924)(261)(255)(30)(26)
Foreign currency exchange rate changes ————
(113)(79)
Curtailments and settlements ———— (3)(2)
Other ———— 230
Fair value of plan assets at end of year $ 28,887 $ 28,828 $ 130 $ 259 $ 1,014 $ 1,042
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).
We invest pension assets in accordance with applicable laws and regulations. The long-term primary investment
objectives for our pension assets are to: (1) provide for a reasonable amount of long-term growth of capital, with prudent
exposure to risk; and protect the assets from erosion of purchasing power; (2) provide investment results that meet or exceed
the plans’ expected long-term rate of return; and (3) match the duration of the liabilities and assets of the plans to reduce the
potential risk of large employer contributions being necessary in the future. The plans strive to meet these objectives by