Eli Lilly 2013 Annual Report Download - page 77
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63
The following represents our weighted-average assumptions as of December 31:
Defined Benefit
Pension Plans
Retiree Health
Benefit Plans
(Percents) 2013 2012 2011 2013 2012 2011
Discount rate for benefit obligation . . . . . . . . . . . . . . . . . . . . . . . 4.9 4.3 5.0 5.0 4.3 5.1
Discount rate for net benefit costs . . . . . . . . . . . . . . . . . . . . . . . 4.3 5.0 5.6 4.3 5.1 5.8
Rate of compensation increase for benefit obligation. . . . . . . . . 3.4 3.4 3.7
Rate of compensation increase for net benefit costs . . . . . . . . . 3.4 3.7 3.7
Expected return on plan assets for net benefit costs . . . . . . . . . 8.4 8.4 8.5 8.8 8.8 8.8
We annually evaluate the expected return on plan assets in our defined benefit pension and retiree health
benefit plans. In evaluating the expected rate of return, we consider many factors, with a primary analysis of
current and projected market conditions; asset returns and asset allocations; and the views of leading
financial advisers and economists. We may also review our historical assumptions compared with actual
results, as well as the assumptions and trend rates utilized by similar plans, where applicable. Health-care-
cost trend rates are assumed to increase at an annual rate of 6.6 percent for the year ended December 31,
2014, decreasing by approximately 0.3 percent per year to an ultimate rate of 5.0 percent by 2020.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid
as follows:
2014 2015 2016 2017 2018 2019-2023
Defined benefit pension plans . . $ 430.9 $ 440.1 $ 453.0 $ 469.0 $ 486.0 $ 2,726.0
Retiree health benefit plans-
gross . . . . . . . . . . . . . . . . . . . $94.0 $98.0 $ 102.3 $ 106.4 $ 111.0 $ 612.3
Medicare rebates. . . . . . . . . . . . (6.8) (7.6) (8.2) (9.0) (9.8) (60.5)
Retiree health benefit plans-net. $ 87.2 $ 90.4 $ 94.1 $ 97.4 $ 101.2 $ 551.8
Amounts relating to defined benefit plans with projected benefit obligations in excess of plan assets were as
follows at December 31:
2013 2012
Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,773.6 $ 9,151.2
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395.4 6,888.6
Amounts relating to defined benefit plans with accumulated benefit obligations in excess of plan assets were
as follows at December 31:
2013 2012
Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,384.6 $ 8,021.0
Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181.8 6,580.6
The total accumulated benefit obligation for our defined benefit pension plans was $9.13 billion and
$9.46 billion at December 31, 2013 and 2012, respectively.