DuPont 2014 Annual Report Download - page 88

E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (continued)
(Dollars in millions, except per share)
F-35
For determining U.S. pension plans' net periodic benefit costs, the discount rate, expected return on plan assets and the rate of
compensation increase were 4.90 percent, 8.75 percent and 4.50 percent for 2014.
For determining U.S. pension plans' net periodic benefit costs, the discount rate, expected return on plan assets and the rate of
compensation increase were 4.10 percent, 8.75 percent and 4.40 percent for 2013.
In connection with the planned sale of the Performance Coatings business (See Note 2), the company updated the discount rate
and expected return on plan assets for the U.S. pension plans during 2012. For determining the U.S. pension plans' net periodic
benefit costs, the weighted discount rate, weighted expected return on plan assets and the rate of compensation increase were 4.38
percent, 8.96 percent and 4.40 percent for 2012. With the continuing challenges in the global economy, the company lowered its
long-term expected return on plan assets during 2012.
In the U.S., the discount rate is developed by matching the expected cash flow of the benefit plans to a yield curve constructed
from a portfolio of high quality fixed-income instruments provided by the plan's actuary as of the measurement date. For non-
U.S. benefit plans, the company utilizes prevailing long-term high quality corporate bond indices to determine the discount rate
applicable to each country at the measurement date.
The long-term rate of return on assets in the U.S. was selected from within the reasonable range of rates determined by historical
real returns (net of inflation) for the asset classes covered by the investment policy, expected performance, and projections of
inflation over the long-term period during which benefits are payable to plan participants. Consistent with prior years, the long-
term rate of return on plan assets in the U.S. reflects the asset allocation of the plan and the effect of the company's active management
of the plans' assets. For non-U.S. plans, assumptions reflect economic assumptions applicable to each country.
In October 2014, the Society of Actuaries released final reports of new mortality tables and a mortality improvement scale for
measurement of retirement program obligations in the U.S. The company has adopted these tables in measuring the 2014 long-
term employee benefits.
Assumed health care cost trend rates at December 31, 2014 2013
Health care cost trend rate assumed for next year 7% 7%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5% 5%
Year that the rate reaches the ultimate trend rate 2022 2022
Assumed health care cost trend rates have a modest effect on the amount reported for the health care plan. A one-percentage point
change in assumed health care cost trend rates would have the following effects:
1-Percentage
Point Increase 1-Percentage Point Decrease
Increase (decrease) on total of service and interest cost $ 2 $ (2)
Increase (decrease) on post-retirement benefit obligation 30 (30)