Cigna 2013 Annual Report Download - page 114

PART II
ITEM 8. Financial Statements and Supplementary Data
Pension and Other Postretirement Benefit Plans
The Company and certain of its subsidiaries provide pension, health During the first quarter of 2013, the Company announced two
care and life insurance defined benefits to eligible retired employees, changes to its postretirement medical plan:
spouses and other eligible dependents through various domestic and Effective March 31, 2013, the Company froze active employees’
foreign plans. The effect of its foreign pension and other future benefit accruals, resulting in a pre-tax curtailment gain of
postretirement benefit plans is immaterial to the Company’s results of $19 million ($12 million after-tax recorded in shareholders’ net
operations, liquidity and financial position. Effective July 1, 2009, the income).
Company froze its primary domestic defined benefit pension plans.
The Company also announced a change in the cost sharing
arrangement with retirees for pharmacy subsidy payments received
from the U.S. Government effective January 1, 2014. This plan
amendment resulted in a reduction to the other post retirement
benefit obligation of $57 million ($37 million after-tax, recorded in
accumulated other comprehensive income).
The Company measures the assets and liabilities of its domestic pension and other postretirement benefit plans as of December 31. The following
table summarizes the projected benefit obligations and assets related to the Company’s domestic and international pension and other
postretirement benefit plans as of, and for the year ended, December 31:
Other Postretirement
Pension Benefits Benefits
(In millions) 2013 2012 2013 2012
Change in benefit obligation
Benefit obligation, January 1 $ 5,267 $ 5,067 $ 442 $ 452
Service cost 3 312
Interest cost 181 198 12 16
(Gain) loss from past experience (464) 283 (37) (2)
Effect of plan amendment – – (57) –
Benefits paid from plan assets (262) (256) (3) (3)
Benefits paid – other (25) (28) (28) (23)
Curtailment – – (7) –
Benefit obligation, December 31 4,700 5,267 323 442
Change in plan assets
Fair value of plan assets, January 1 3,665 3,298 20 22
Actual return on plan assets 488 370 (1) 1
Benefits paid (262) (256) (3) (3)
Contributions 198 253 – –
Fair value of plan assets, December 31 4,089 3,665 16 20
Funded Status $ (611) $ (1,602) $ (307) $ (422)
The postretirement benefits liability adjustment included in accumulated other comprehensive loss consisted of the following as of December 31:
Other Postretirement
Pension Benefits Benefits
(In millions) 2013 2012 2013 2012
Unrecognized net gain (loss) $ (1,696) $ (2,450) $ 14 $ (28)
Unrecognized prior service cost (5) (5) 57 23
POSTRETIREMENT BENEFITS LIABILITY ADJUSTMENT $ (1,701) $ (2,455) $ 71 $ (5)
During 2013, the Company’s postretirement benefits liability investment returns greater than expected in 2013, the effect of the
adjustment decreased by $830 million pre-tax ($539 million after-tax) plan amendment described above, and amortization.
resulting in an increase to shareholders’ equity. The decrease in the Pension benefits. The Company’s pension plans were underfunded
liability was primarily due to an increase in the discount rate, actual by $0.6 billion in 2013 and $1.6 billion in 2012 and had related
82 CIGNA CORPORATION - 2013 Form 10-K
NOTE 9
A. Pension and Other Postretirement Benefit Plans
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