Unum 2014 Annual Report Download - page 39

UNUM • 2014 ANNUAL REPORT 37
The weighted average assumptions used in the measurement of our net periodic benefit costs for the years ended December 31
are as follows:
Pension Benefits
U.S. Plans U.K. Plan OPEB
Assumption 2015 2014 2015 2014 2015 2014
Discount Rate 4.40% 5.30% 3.60% 4.40% 4.30% 5.00%
Expected Long-term Rate of Return
on Plan Assets 7.50% 7.50% 5.20% 6.10% 5.75% 5.75%
The following illustrates the sensitivity of the below items to a 50 basis point change in the discount rate or the expected long-term
rate of return on plan assets:
At or for the Year Ended December 31, 2014
Net Periodic Stockholders’
Benefit Cost, Benefit Equity,
Assumption ($ in millions) Change Before Tax Obligation After Tax
Discount Rate +50 bp $(3.5) $(181.9) $ 121.4
Discount Rate -50 bp 2.6 205.9 (137.5)
Expected Long-term Rate of Return on Plan Assets +50 bp (9.1) N/A N/A
Expected Long-term Rate of Return on Plan Assets -50 bp 9.1 N/A N/A
Benefit Obligation and Fair Value of Plan Assets
During 2014, the fair value of plan assets in our U.S. qualified defined benefit pension plan decreased $117.0 million, or approximately
7.4 percent, due primarily to the payment of $214.5 million in benefit payments related to our limited-time offer for benefit payouts, offset
partially by an appreciation in the fair value of the remaining plan assets. The fair value of plan assets in our U.K. pension plan increased
£21.7 million, or approximately 15.9 percent. Although the effect of these changes in fair value had no impact on our 2014 net periodic
pension costs, the favorable rate of return on these U.S. plan assets during 2014, in excess of our assumed rate of return for 2014, will have
a favorable impact on our net periodic pension costs for 2015. This favorable impact on costs is offset by a decrease in the discount rate
for all of our plans and a decrease in the expected long-term rate of return assumption for our U.K. pension plan assets. We believe our
assumptions appropriately reflect the impact of the current economic environment.
Our pension and OPEB plans have an aggregate unrecognized net actuarial loss of $631.0 million and an unrecognized prior service
credit of $0.7 million, which together represent the cumulative liability and asset gains and losses as well as the portion of prior service
credits that have not been recognized in pension expense. As of December 31, 2014, the unrecognized net loss for these two items
combined was $630.3 million.
The unrecognized gains or losses are amortized as a component of the net benefit cost. Our 2014, 2013, and 2012 pension and OPEB
expense includes $3.9 million, $27.9 million, and $43.4 million, respectively, of amortization of the unrecognized net actuarial loss and prior
service credit. Our 2014 net periodic benefit cost for our U.S. qualified defined benefit pension plan also includes a $64.4 million settlement
loss related to our 2014 plan amendment, with a corresponding reduction in the unrecognized net actuarial loss in accumulated other
comprehensive income. The unrecognized net actuarial loss for our pension plans, which is $628.4 million at December 31, 2014, will be
amortized over the average remaining life expectancy of the plan participants, which is approximately 35 years for U.S. participants and
34 years for U.K. participants, to the extent that it exceeds the 10 percent corridor, as described below. The unrecognized net actuarial loss
of $2.6 million for our OPEB plan will be amortized over the average future working life of OPEB plan participants, estimated at five years,