Cigna 2014 Annual Report Download - page 113

PART II
ITEM 8. Financial Statements and Supplementary Data
Pension and Other Postretirement Benefit Plans
A. Pension and Other Postretirement Benefit Plans
The Company and certain of its subsidiaries provide pension, health When the parties agree on a final plan amendment, the pension
care and life insurance defined benefits to eligible retired employees, benefit obligation will be updated to reflect additional benefits
spouses and other eligible dependents through various domestic and resulting from this litigation.
foreign plans. The effect of its foreign pension and other In the first quarter of 2013, the Company also announced a change in
postretirement benefit plans is immaterial to the Company’s results of the cost sharing arrangement with retirees for pharmacy subsidy
operations, liquidity and financial position. The Company froze its payments received from the U.S. Government effective January 1,
defined benefit postretirement medical plan in the first quarter of 2014, resulting in a reduced other postretirement benefit obligation of
2013 and its primary domestic pension plans in 2009. $57 million. This reduction was recorded in accumulated other
As further discussed in Note 23, the Company and the Cigna Pension comprehensive income, net of deferred taxes, resulting in an after-tax
Plan are defendants in a class action lawsuit that has yet to be resolved. increase to shareholders’ equity of $37 million.
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) 2014 2013 2014 2013
Change in benefit obligation
Benefit obligation, January 1 $ 4,700 $ 5,267 $ 323 $ 442
Service cost 23–1
Interest cost 206 181 12 12
(Gain) loss from past experience 679 (464) 31 (37)
Effect of plan amendment 2 – – (57)
Benefits paid from plan assets (291) (262) (5) (3)
Benefits paid – other (29) (25) (26) (28)
Curtailment – – – (7)
Benefit obligation, December 31 5,269 4,700 335 323
Change in plan assets
Fair value of plan assets, January 1 4,089 3,665 16 20
Actual return on plan assets 257 488 1 (1)
Benefits paid (291) (262) (5) (3)
Contributions 115 198 – –
Fair value of plan assets, December 31 4,170 4,089 12 16
Funded Status $ (1,099) $ (611) $ (323) $ (307)
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) 2014 2013 2014 2013
Unrecognized net gain (loss) $ (2,317) $ (1,696) $ (16) $ 14
Unrecognized prior service cost (7) (5) 54 57
POSTRETIREMENT BENEFITS LIABILITY ADJUSTMENT $ (2,324) $ (1,701) $ 38 $ 71
During 2014, the Company’s postretirement benefits liability liability was primarily due to a change in the mortality assumption (as
adjustment increased by $656 million pre-tax ($426 million after-tax) discussed further in the assumptions section of this note) and a
resulting in a decrease to shareholders’ equity. The increase in the decrease in the discount rate.
CIGNA CORPORATION - 2014 Form 10-K 81
NOTE 9