Eversource 2001 Annual Report Download - page 42

4. Employee Benefits
A. Pension Benefits and Postretirement Benefits
Other Than Pensions
The NU system companies, participate in a uniform noncontrib-
utory defined benefit retirement plan covering substantially all
regular NU system employees. Benefits are based on years of ser-
vice and the employees’ highest eligible compensation during 60
consecutive months of employment. The total pension credit,
part of which was credited to utility plant, was $191.7 million in
2001, $97.9 million in 2000, and $33.7 million in 1999.
In conjunction with the Voluntary Separation Program (VSP)
that was announced in December 2000, NU recorded $90.7 mil-
lion in settlement and curtailment gains in 2001. This amount is
included in the $191.7 million in pension credit recorded in
2001. The VSP was intended to reduce the generation-related
support staff between March 1, 2001, and February 28, 2002,
and was available to nonbargaining unit employees who, by Feb-
ruary 1, 2002, would be at least age 50, with a minimum of five
years of credited service, and as of December 15, 2000, were
assigned to certain groups and in eligible job classifications.
One component of the VSP included special termination ben-
efits equal to the greater of 5 years added to both age and credited
service of eligible participants or two weeks pay for each year of
service subject to a minimum level of 12 weeks and a maximum
level of 52 weeks for eligible participants. The special termination
benefits associated with the VSP approximated $93.3 million.
The net of the settlement and curtailment gains and the special
termination benefits was approximately $2.6 million, of which
$7.5 million was included in earnings, $5.1 million was deferred
as a regulatory liability and is expected to be returned to cus-
tomers and $0.2 million was billed to the joint owners of Mill-
stone and Seabrook.
Currently, the NU system companies’ policy is to annually
fund an amount at least equal to that which will satisfy the
requirements of the Employee Retirement Income Security Act
and Internal Revenue Code.
The NU system companies also provide certain health care
benefits, primarily medical and dental, and life insurance benefits
through a benefit plan to retired employees. These benefits are
available for employees retiring from the NU system who have
met specified service requirements. For current employees and
certain retirees, the total benefit is limited to two times the 1993
per retiree health care cost. These costs are charged to expense over
the estimated work life of the employee. The NU system compa-
nies annually fund postretirement costs through external trusts
with amounts that have been rate-recovered and which also are tax
deductible.
Pension and trust assets are invested primarily in domestic and
international equity securities and bonds.
The following table represents information on the plans’ bene-
fit obligation, fair value of plan assets, and the respective plans’
funded status:
At December 31,
Pension Benefits Postretirement Benefits
(Millions of Dollars) 2001 2000 2001 2000
Change in benefit obligation
Benefit obligation at beginning of year $(1,670.9) $ (1,516.6) $(335.3) $ (306.8)
Yankee merger —(66.7) —(9.9)
Service cost (35.7) (41.2) (6.2) (7.6)
Interest cost (119.7) (118.5) (27.2) (25.5)
Employee contribution ———(0.1)
Actuarial loss (72.2) (39.4) (76.2) (13.6)
Benefits paid 228.3 109.5 38.0 27.5
Settlements and other (17.4) 2.0 6.9 0.7
Benefit obligation at end of year $ (1,687.6) $ (1,670.9) $(400.0) $ (335.3)
Change in plan assets
Fair value of plan assets at beginning of year $2,319.4 $ 2,330.2 $197.6 $ 170.7
Yankee merger —107.5 —16.1
Actual return on plan assets (100.7) (8.8) (17.1) 8.6
Employer contribution ——28.6 29.6
Employee contribution ———0.1
Benefits paid (228.3) (109.5) (38.0) (27.5)
Fair value of plan assets at end of year $ 1,990.4 $ 2,319.4 $171.1 $ 197.6
Funded status at December 31 $302.8 $ 648.5 $(228.9) $ (137.7)
Unrecognized transition (asset)/obligation (3.6) (5.8) 159.1 180.9
Unrecognized prior service cost 72.8 90.9 ——
Unrecognized net (gain)/loss (139.6) (594.1) 55.4 (35.5)
Prepaid/(accrued) benefit cost $ 232.4 $ 139.5 $(14.4) $ 7.7
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