Eversource 2015 Annual Report Download - page 89

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9. EMPLOYEE BENEFITS
A. Pension Benefits and Postretirement Benefits Other Than Pensions
As of December 31, 2014, Eversource Service sponsored two defined benefit retirement plans that covered eligible employees, including, among
others, employees of CL&P, NSTAR Electric, PSNH and WMECO. Effective January 1, 2015, these two pension plans were merged into one plan,
sponsored by Eversource Service (Pension Plan). The Pension Plan is subject to the provisions of ERISA, as amended by the PPA of 2006.
Eversource’s policy is to annually fund the Pension Plan in an amount at least equal to an amount that will satisfy all federal funding requirements. In
addition to the Pension Plan, Eversource maintains non-qualified defined benefit retirement plans sponsored by Eversource Service (herein
collectively referred to as the SERP Plans), which provide benefits in excess of Internal Revenue Code limitations to eligible current and retired
participants.
As of December 31, 2014, Eversource Service also sponsored defined benefit postretirement plans that provided certain retiree benefits, primarily
medical, dental and life insurance, to retired employees that met certain age and service eligibility requirements, including, among others, employees
of CL&P, NSTAR Electric, PSNH and WMECO. Effective January 1, 2015, these postretirement plans were merged into one plan, sponsored by
Eversource Service (PBOP Plan). Under certain circumstances, eligible retirees are required to contribute to the costs of postretirement benefits. The
benefits provided under the PBOP Plan are not vested and the Company has the right to modify any benefit provision subject to applicable laws at
that time. Eversource annually funds postretirement costs through tax deductible contributions to external trusts.
Because the Regulated companies recover the retiree benefit costs from customers through rates, regulatory assets are recorded in lieu of recording an
adjustment to Accumulated Other Comprehensive Income/(Loss) for the funded status of the Pension, SERP and PBOP Plans. Regulatory
accounting is also applied to the portions of the Eversource Service costs that support the Regulated companies, as these costs are also recovered
from customers. Adjustments to the Pension and PBOP Plans funded status for the unregulated companies are recorded on an after-tax basis to
Accumulated Other Comprehensive Income/(Loss). For further information, see Note 2, “Regulatory Accounting,” and Note 14, “Accumulated
Other Comprehensive Income/(Loss),” to the financial statements.
For the year ended December 31, 2015, the difference between the actual return and calculated expected return on plan assets for the Pension and
PBOP Plans are reflected as a component of unrecognized actuarial gains or losses, which are recorded in Regulatory Assets or Accumulated Other
Comprehensive Income/(Loss). Unrecognized actuarial gains or losses are amortized as a component of pension and PBOP expense over the
estimated average future employee service period.
Pension and SERP Plans: On January 1, 2014, NSTAR Electric & Gas was merged into Eversource Service (service company merger) and,
concurrently, all employees were transferred to the company they predominantly provide services for: Eversource Service, NSTAR Electric or
NSTAR Gas. As a result of these employee transfers, the pension and SERP assets and liabilities of NSTAR Electric & Gas were attributed by
participant and transferred to the applicable operating company’s balance sheets. This change had no impact on the income statement or net assets of
NSTAR Electric or Eversource.
The Pension and SERP Plans are accounted for under the multiple-employer approach, with each operating company’s balance sheet reflecting its
share of the funded status of the plans. Although Eversource maintains marketable securities in a benefit trust, the SERP Plans do not contain any
assets. For further information, see Note 5, “Marketable Securities,” to the financial statements. The following tables provide information on the
Pension and SERP Plan benefit obligations, fair values of Pension Plan assets, and funded status:
Pension and SERP
Eversource As of December 31,
(Millions of Dollars)
2015 2014
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year $
(5,486.2)
$ (4,676.5)
Service Cost
(91.4)
(79.9)
Interest Cost
(227.0)
(225.7)
Actuarial Gain/(Loss) 331.5 (739.6)
Benefits Paid - Pension 238.5 230.3
Benefits Paid - Lump Sum 149.5 -
Benefits Paid - SERP 5.0 5.2
Benefit Obligation as of End of Year $
(5,080.1)
$ (5,486.2)
Change in Pension Plan Assets
Fair Value of Pension Plan Assets as of Beginning of Year $ 4,126.5 $ 3,985.9
Employer Contributions 154.6 171.6
Actual Return on Pension Plan Assets 12.3 199.3
Benefits Paid
(238.5)
(230.3)
Benefits Paid - Lump Sum
(149.5)
-
Fair Value of Pension Plan Assets as of End of Year $ 3,905.4 $ 4,126.5
Funded Status as of December 31
st
$
(1,174.7)
$ (1,359.7)