ADP 2014 Annual Report Download - page 65

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The Company's pension plans with accumulated benefit obligations in excess of plan assets as of J une 30, 2015 and 2014 had the following projected benefit
obligation, accumulated benefit obligation and fair value of plan assets:
June 30,
2015
2014
Projected benefit obligation
$ 131.5
$ 142.6
Accumulated benefit obligation
$ 117.4
$ 127.8
Fair value of plan assets
$ 4.5
$ 16.7
The components of net pension expense were as follows:
2015
2014
2013
Service cost – benefits earned during the period
$ 68.4
$ 66.4
$ 67.2
Interest cost on projected benefits
62.8
62.6
55.1
Expected return on plan assets
(129.7)
(119.4)
(109.5)
Net amortization and deferral
17.2
20.1
30.9
Special termination benefits and plan curtailments
3.2
—
—
Net pension expense
$ 21.9
$ 29.7
$ 43.7
Net pension expense for fiscal 2015 , 2014 , and 2013 includes $4.3 million , $5.4 million , and $6.1 million , respectively, reported within earnings from
discontinued operations on the Statements of Consolidated Earnings. Included within pension expense related to discontinued operations for fiscal 2015 were total
one-time charges of $3.2 million for curtailment charges and special termination benefits directly attributable to the spin-off of CDK .
The net actuarial loss, prior service cost, and transition obligation for the defined benefit pension plans that are included in accumulated other comprehensive
income that have not yet been recognized as components of net periodic benefit cost are $259.1 million , $2.7 million , and $0.2 million , respectively, at J une 30,
2015 . The estimated net actuarial loss, prior service cost, and transition obligation for the defined benefit pension plans that will be amortized from accumulated
other comprehensive income into net periodic pension cost over the next fiscal year are $10.4 million , $0.5 million , and $0.2 million , respectively, at June 30,
2015 .
Assumptions used to determine the actuarial present value of benefit obligations were:
Y ears ended June 30,
2015
2014
Discount rate
4.25%
4.05%
Increase in compensation levels
4.00%
4.00%
Assumptions used to determine the net pension expense generally were:
Y ears ended June 30,
2015
2014
2013
Discount rate
4.05%
4.50%
3.90%
Expected long-term rate of return on assets
7.25%
7.25%
7.25%
Increase in compensation levels
4.00%
4.00%
4.00%
The discount rate is based upon published rates for high-quality fixed-income investments that produce cash flows that approximate the timing and amount of
expected future benefit payments.
The expected long-term rate of return on assets is determined based on historical and expected future rates of return on plan assets considering the target asset mix
and the long-term investment strategy.
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