AIG 2014 Annual Report Download - page 326

ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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309
Total recognized in Accumulated other
comprehensive income (loss) $ (793) $ 823 $(250) $(40) $103 $(36) $(21) $ 30 $ (23) $(11) $16 $(11)
Total recognized in net periodic benefit cost
and other comprehensive income (loss) $ (915) $ 569 $(447) $(94) $31 $(117) $(23) $ 27 $ (29) $(15) $13 $(15)
The estimated net loss and prior service credit that will be amortized from Accumulated other comprehensive income into net
periodic benefit cost over the next fiscal year are $141 million and $35 million, respectively, for our combined defined benefit
pension plans. For the defined benefit postretirement plans, the estimated amortization from Accumulated other
comprehensive income for net loss and prior service credit that will be amortized into net periodic benefit cost over the next
fiscal year is a $10 million credit in the aggregate.
The annual pension expense in 2015 for the AIG U.S. and non-U.S. defined benefit pension plans is expected to be
approximately $289 million. A 100 basis point increase in the discount rate or expected long-term rate of return would
decrease the 2015 expense by approximately $95 million and $47 million, respectively, with all other items remaining the
same. Conversely, a 100 basis point decrease in the discount rate or expected long-term rate of return would increase the
2015 expense by approximately $104 million and $47 million, respectively, with all other items remaining the same.
Assumptions
The following table summarizes the weighted average assumptions used to determine the benefit obligations:
Pension Postretirement
U.S. Plans Non-U.S. Plans* U.S. Plans Non-U.S. Plans*
December 31, 2014
Discount rate 3.94 % 2.33 % 3.78 % 4.04 %
Rate of compensation increase 3.40 % 2.89 % N/A 3.29 %
December 31, 2013
Discount rate 4.83 % 2.77 % 4.59 % 4.77 %
Rate of compensation increase 3.50 % 2.89 % N/A 3.34 %
* The non-U.S. plans reflect those assumptions that were most appropriate for the local economic environments of each of the subsidiaries providing such
benefits.
The following table summarizes assumed health care cost trend rates for the U.S. plans:
At December 31, 2014 2013
Following year:
Medical (before age 65) 7.07% 7.21%
Medical (age 65 and older) 6.75% 6.80%
Ultimate rate to which cost increase is assumed to decline 4.50% 4.50%
Year in which the ultimate trend rate is reached:
Medical (before age 65) 2027 2027
Medical (age 65 and older) 2027 2027
A one percent point change in the assumed healthcare cost trend rate would have the following effect on our
postretirement benefit obligations:
One Percent One Percent
At December 31, Increase Decrease
(in millions) 2014 2013 2014 2013
U.S. plans $ 5 $ 6 $(5) $(3)
Non-U.S. plans $12 $ 11 $(12) $(7)
Our postretirement plans provide benefits primarily in the form of defined employer contributions rather than defined employer
benefits. Changes in the assumed healthcare cost trend rate have a minimal impact for U.S. plans because for post-1992
retirees, benefits are fixed dollar amounts based on service at retirement. Our non-U.S. postretirement plans are not subject to
caps.