Aetna 2013 Annual Report Download - page 123

Annual Report- Page 117
The weighted average assumptions used to determine net periodic benefit (income) cost in 2013, 2012 and 2011 for
the pension and OPEB plans were as follows:
Pension Plans OPEB Plans
2013 2012 2011 2013 2012 2011
Discount rate 4.17% 4.98% 5.50% 3.94% 4.78% 5.20%
Expected long-term return on plan assets 7.00 7.50 7.50 4.10 4.25 5.50
Rate of increase in future compensation levels N/A N/A N/A —— —
We assume different health care cost trend rates for medical costs and prescription drug costs in estimating the
expected costs of our OPEB plans. The assumed medical cost trend rate for 2014 is 9%, decreasing gradually to
4.5% by 2023. The assumed prescription drug cost trend rate for 2014 is 9%, decreasing gradually to 4.5% by 2023.
These assumptions reflect our historical as well as expected future trends for retirees. In addition, the trend
assumptions reflect factors specific to our retiree medical plan, such as plan design, cost-sharing provisions, benefits
covered and the presence of subsidy caps. A one-percentage point increase in both the assumed medical cost and
assumed prescription drug cost trend rates would result in an approximately $.4 million pretax increase in the
aggregate of the service and interest cost components of OPEB costs and an approximately $8 million increase in the
OPEB benefit obligation. A one-percentage point decrease in both the assumed medical cost and assumed
prescription drug cost trend rates would result in an approximately $.3 million pretax decrease in the aggregate of the
service and interest cost components of OPEB costs and an approximately $7 million decrease in the OPEB benefit
obligation.
Our current funding strategy for the Aetna Pension Plan is to fund an amount at least equal to the minimum funding
requirement as determined under applicable regulatory requirements with consideration of factors such as the
maximum tax deductibility of such amounts. We do not have any required contribution to the Aetna Pension Plan in
2014, although we may voluntarily contribute approximately $60 million in 2014. Employer contributions related to
the supplemental pension and OPEB plans represent payments to retirees for current benefits. We have no plans to
return any pension or OPEB plan assets to the Company in 2014.
Expected benefit payments, which reflect future employee service, as appropriate, of the pension and OPEB plans to
be paid for each of the next five years and in the aggregate for the next five years thereafter at December 31, 2013
were as follows:
(Millions) Pension
Plans OPEB Plans
2014 $ 336.6 $ 20.1
2015 357.1 19.7
2016 361.6 19.4
2017 369.1 19.1
2018 376.4 18.7
2019-2023 1,926.7 86.7
Assets of the Aetna Pension Plan
The assets of the Aetna Pension Plan (“Pension Assets”) include debt and equity securities, common/collective trusts
and real estate investments. The valuation methodologies used to price these assets are similar to the methodologies
described beginning on pages 108 and 111. Pension Assets also include investments in other assets that are carried at
fair value. The following is a description of the valuation methodology used to price these additional investments,
including the general classification pursuant to the valuation hierarchy.