CenterPoint Energy 2013 Annual Report Download - page 109

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87
benefit based upon 5% of eligible earnings and accrued interest. Participants are 100% vested in their benefit after completing
three years of service. In addition to the non-contributory qualified defined benefit pension plan, CenterPoint Energy maintains
unfunded non-qualified benefit restoration plans which allow participants to receive the benefits to which they would have been
entitled under CenterPoint Energy’s non-contributory pension plan except for federally mandated limits on qualified plan benefits
or on the level of compensation on which qualified plan benefits may be calculated.
CenterPoint Energy provides certain healthcare and life insurance benefits for retired employees on both a contributory and
non-contributory basis. Employees become eligible for these benefits if they have met certain age and service requirements at
retirement, as defined in the plans. Under plan amendments, effective in early 1999, healthcare benefits for future retirees were
changed to limit employer contributions for medical coverage.
Such benefit costs are accrued over the active service period of employees. The net unrecognized transition obligation is being
amortized over approximately 20 years.
CenterPoint Energy’s net periodic cost includes the following components relating to pension, including the benefit restoration
plan, and postretirement benefits:
Year Ended December 31,
2013 2012 2011
Pension
Benefits
Post-
retirement
Benefits Pension
Benefits
Post-
retirement
Benefits Pension
Benefits
Post-
retirement
Benefits
(in millions)
Service cost .................................................................. $ 44 $ 2 $ 35 $ 1 $ 33 $ 1
Interest cost .................................................................. 90 20 100 23 100 24
Expected return on plan assets ..................................... (135)(7)(121)(7)(115)(10)
Amortization of prior service cost................................ 1018333
Amortization of net loss ............................................... 63 6 60 4 57 1
Amortization of transition obligation........................... — 7 — 7 — 7
Benefit enhancement .................................................... — — — 1 — 1
Net periodic cost........................................................... $ 72 $ 29 $ 82 $ 32 $ 78 $ 27
CenterPoint Energy used the following assumptions to determine net periodic cost relating to pension and postretirement
benefits:
Year Ended December 31,
2013 2012 2011
Pension
Benefits
Post-
retirement
Benefits Pension
Benefits
Post-
retirement
Benefits Pension
Benefits
Post-
retirement
Benefits
Discount rate ................................................................ 4.00% 3.90% 4.90% 4.80% 5.25% 5.20%
Expected return on plan assets ..................................... 8.00 5.50 8.00 5.50 8.00 7.05
Rate of increase in compensation levels ...................... 4.00 — 4.20 — 4.60 —
In determining net periodic benefits cost, CenterPoint Energy uses fair value, as of the beginning of the year, as its basis for
determining expected return on plan assets.