Eversource 2014 Annual Report Download - page 89

Download and view the complete annual report

Please find page 89 of the 2014 Eversource annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

77
Pension and SERP
As of December 31, 2014 As of December 31, 2013
NSTAR NSTAR
 CL&P Electric PSNH WMECO CL&P Electric
(1)
PSNH WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year $(1,083.4) $(1,353.3) $ (529.0) $ (223.9) $ (1,178.0) $(1,430.0) $ (576.0) $ (243.1)
Decrease due to transfer of employees 26.4 479.9 32.2 6.2 - - - -
Service Cost (20.2) (13.6) (9.7) (3.5) (24.9) (33.1) (13.1) (4.7)
Interest Cost (50.5) (41.3) (23.8) (10.3) (48.3) (58.0) (23.6) (10.0)
Actuarial Gain/(Loss) (161.0) (107.0) (73.3) (29.8) 110.7 96.6 62.4 22.4
Benefits Paid -Pension 58.3 52.4 22.8 11.9 56.6 71.2 21.1 11.5
Benefits Paid -SERP 0.3 0.3 0.1 - 0.5 - 0.2 -
Benefit Obligation as of End of Year $(1,230.1) $ (982.6) $ (580.7) $ (249.4) $ (1,083.4) $(1,353.3) $ (529.0) $ (223.9)
Change in Pension Plan Assets
Fair Value of Plan Assets as of Beginning of Year $1,016.3 $1,235.3 $528.6 $240.4 $937.6 $1,069.1 $386.6 $218.5
Decrease due to transfer of employees (26.4) (441.4) (32.2) (6.2) - - - -
Employer Contributions - 101.0 - - - 82.0 108.3 -
Actual Return on Plan Assets 49.2 36.5 24.8 11.7 135.3 155.4 54.8 33.4
Benefits Paid (58.3) (52.4) (22.8) (11.9) (56.6) (71.2) (21.1) (11.5)
Fair Value of Plan Assets as of End of Year $980.8 $879.0 $498.4 $234.0 $1,016.3 $1,235.3 $528.6 $240.4
Funded Status as of December 31
st
$ (249.3) $ (103.6) $ (82.3) $(15.4) $(67.1) $ (118.0) $ (0.4) $16.5
(1) NSTAR Electric amounts do not include benefit obligations of the NSTAR SERP Plan as of December 31, 2013.
During 2014, the Society of Actuaries released a series of updated mortality tables resulting from recent studies that measured mortality rates for
various groups of individuals. The updated mortality tables released in 2014 increased life expectancy of plan participants by 3 to 5 years and have
the effect of increasing the estimate of benefits to be provided to plan participants. The impact of this adoption on NU's funded status liability for the
year ended December 31, 2014 was an increase of approximately $340 million. In addition, the decreases in the discount rates resulted in an increase
on NU's funded status liability of approximately $530 million. Partially offsetting these increases are the impact of other actuarial assumptions.
As of December 31, 2013, prepaid pension assets for PSNH and WMECO were included in Other Long-Term Assets on their accompanying balance
sheets. The pension and SERP benefits funded status includes the current portion of the SERP liability, which is included in Other Current Liabilities
on the accompanying balance sheets. Although NU maintains marketable securities in a supplemental benefit trust, the SERP plan itself does not
contain any assets. See Note 5, "Marketable Securities," to the financial statements.
The accumulated benefit obligation for the Pension and SERP Plans is as follows:
 NU CL&P NSTAR Electric
(1)
PSNH WMECO
2014 $5,000.1 $1,101.4 $910.4 $524.5 $226.4
2013 4,538.8 1,058.0 1,280.6 520.1 220.6
(1)
NSTAR Electric amounts do not include the accumulated benefit obligation for the SERP Plan as of December 31, 2013.
The following actuarial assumptions were used in calculating the Pension and SERP Plans'year end funded status:
Pension and SERP
As of December 31,
2014 2013
Discount Rate 4.20 %4.85 % - 5.03 %
Compensation/Progression Rate 3.50 %3.50 % - 4.00 %
NU charges net periodic pension expense to its subsidiaries based on the actual participant demographic data for each
subsidiary's participants. Benefit payments to participants and contributions are also tracked for each subsidiary. The actual investment return in the
trust is allocated to each of the subsidiaries annually in proportion to the investment return expected to be earned during the year. For the years ended
December 31, 2013 and 2012 (prior to the service company merger), the net periodic pension expense recorded at NSTAR Electric represented the
full cost of the plan with a portion of the costs allocated to affiliated companies based on participant demographic data.