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78
Pension and SERP
As of December 31, 2015 As of December 31, 2014
NSTAR
NSTAR
(Millions of Dollars)
CL&P
Electric PSNH WMECO CL&P
Electric PSNH WMECO
Change in Benefit Obligation
Benefit Obligation as of Beginning of Year $
(1,230.1)
$
(982.6) $
(580.7) $
(249.4) $
(1,083.4)
$
(1,353.3) $
(529.0) $
(223.9)
Change due to transfer of employees (4.6)
6.2 (1.9) (1.3) 26.4
479.9 32.2 6.2
Service Cost (24.7)
(14.9) (12.1) (4.3) (20.2)
(13.6) (9.7) (3.5)
Interest Cost (51.1)
(40.2) (24.3) (10.4) (50.5)
(41.3) (23.8) (10.3)
Actuarial Gain/(Loss) 77.8
34.1 38.9 12.6 (161.0)
(107.0) (73.3) (29.8)
Benefits Paid - Pension 60.2
47.6 23.2 12.7 58.3
52.4 22.8 11.9
Benefits Paid - Lump Sum 14.5
- 9.1 2.5 -
- - -
Benefits Paid - SERP 0.4
0.1 0.2 - 0.3
0.3 0.1 -
Benefit Obligation as of End of Year $
(1,157.6)
$
(949.7) $
(547.6) $
(237.6) $
(1,230.1)
$
(982.6) $
(580.7) $
(249.4)
Change in Pension Plan Assets
Fair Value of Pension Plan Assets as of Beginning of Year $
980.8
$
879.0 $
498.4 $
234.0 $
1,016.3
$
1,235.3 $
528.6 $
240.4
Change due to transfer of employees 4.6
(6.2) 1.9 1.3 (26.4)
(441.4) (32.2) (6.2)
Employer Contributions -
5.0 1.0 - -
101.0 - -
Actual Return on Pension Plan Assets 2.8
2.7 1.5 0.7 49.2
36.5 24.8 11.7
Benefits Paid (60.2)
(47.6) (23.2) (12.7) (58.3)
(52.4) (22.8) (11.9)
Benefits Paid - Lump Sum (14.5)
- (9.1) (2.5) -
- - -
Fair Value of Pension Plan Assets as of End of Year $
913.5
$
832.9 $
470.5 $
220.8 $
980.8
$
879.0 $
498.4 $
234.0
Funded Status as of December 31
st
$
(244.1)
$
(116.8) $
(77.1) $
(16.8) $
(249.3)
$
(103.6) $
(82.3) $
(15.4)
In August 2015, Eversource made a total lump-sum payout of $149.5 million, which reduced the projected benefit obligation and Pension Plan assets
by a corresponding amount. Therefore, the lump-sum payment had no impact on the net Accrued Pension Liability reflected on the Eversource,
CL&P, PSNH and WMECO balance sheets as of December 31, 2015.
During 2014, the Society of Actuaries released a series of updated mortality tables resulting from studies that measured mortality rates for various
groups of individuals. The updated mortality tables released in 2014 increased the life expectancy of plan participants by three to five years and had
the effect of increasing the estimated benefits to be provided to plan participants. The impact of adopting the updated mortality tables on
Eversource’s liability as of December 31, 2014 was an increase of approximately $340 million. In 2015, a revised scale for the mortality table was
released having the effect of decreasing the estimate of benefits to be provided to plan participants. The impact of the adoption of the new mortality
scale resulted in a decrease of $48 million on Eversource’s liability as of December 31, 2015.
The increase in the discount rate used to calculate the funded status resulted in a decrease on Eversource’s liability of approximately $267 million as
of December 31, 2015. Decreases in the discount rates resulted in an increase on Eversource’s liability of approximately $530 million as of
December 31, 2014.
The pension and SERP Plans’ funded status includes the current portion of the SERP liability, which is included in Other Current Liabilities on the
accompanying balance sheets.
As of December 31, 2015 and 2014, the accumulated benefit obligation for the Pension and SERP Plans is as follows:
(Millions of Dollars)
Eversource CL&P NSTAR Electric PSNH WMECO
2015
$
4,733.2 $
1,062.7
$
888.8
$
506.4 $
222.3
2014 5,000.1 1,101.4
910.4
524.5 226.4
The following actuarial assumptions were used in calculating the Pension and SERP Plans’ year end funded status:
Pension and SERP
As of December 31,
2015
2014
Discount Rate
4.21
%
-
4.60
%
4.20 %
Compensation/Progression Rate 3.50% 3.50 %
Pension and SERP Expense: Eversource charges net periodic pension expense to its subsidiaries based on the actual participant demographic data
for each subsidiary’s participants. 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 year ended December 31, 2013 (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.