Hertz 2015 Annual Report Download - page 76

Table of Contents

 
based on evolving accident claim history and insurance related state legislation changes. If our estimates change or if actual results differ from
these assumptions, the amount of the recorded liability is adjusted to reflect these results.
See Note 16, "Contingencies and Off-Balance Sheet Commitments," to the Notes to our consolidated financial statements included in this Annual
Report under the caption Item 8, "Financial Statements and Supplementary Data."

We sponsor defined benefit plans worldwide. We also participate in multi-employer defined benefit plans for which Hertz is not the sponsor. Our
employee pension costs and obligations are dependent on our assumptions used by actuaries in calculating such amounts. These assumptions
include discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. Actual results that differ
from our assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense in such future
periods. While we believe that the assumptions used are appropriate, significant differences in actual experience or significant changes in
assumptions would affect our pension costs and obligations. The various employee-related actuarial assumptions (e.g., retirement rates, mortality
rates and salary growth) used in determining pension costs and plan liabilities are reviewed periodically by management, assisted by the enrolled
actuary, and updated as warranted. The discount rate used to value the pension liabilities and related expenses and the expected rate of return on
plan assets are the two most significant assumptions impacting pension expense. The discount rate used is a market based spot rate as of the
valuation date. For the expected return on assets assumption, we use a forward looking rate that is based on the expected return for each asset
class (including the value added by active investment management), weighted by the target asset allocation. The past annualized long-term
performance of the Plans' assets has generally been in line with the long-term rate of return assumption. We utilize fair value to calculate the
market-related value of pension assets for the U.S. Plan for purposes of determining the expected return on plan assets and accounting for asset
gains and losses.
In October, 2014, we amended our BEP and the SERP II non-qualified, unfunded pension plans. Under the amendments and effective as of
December 31, 2014, we have discontinued future benefit accruals as well as new participation under the BEP and the SERP II. Service will
continue to be recognized for vesting and retirement eligibility requirements under the BEP and SERP II.
Effective December 31, 2014, we amended the Hertz Retirement Plan to permanently discontinue future benefit accruals and participation under
the plan for non-union employees. Interest credits under the plan will continue to be credited on existing participant account balances.
In connection with the freezing of the Hertz Retirement Plan, effective January 1, 2015 we increased employer contributions under our qualified
401(k) savings plan (the “401(k) Plan”). Eligible participants under the 401(k) Plan receive a matching employer contribution to their 401(k) Plan
account equal to (i) 100% of the first 3% of employee contributions made by such participant and (ii) 50% of the next 2% of employee
contributions, with the total amount of such matching employer contribution to be completely vested, subject to applicable limits under the United
States Internal Revenue Code. Certain eligible participants under the 401(k) Plan also receive additional employer contribution amounts to their
401(k) Plan account depending on their years of service and age.
See Note 7, "Employee Retirement Benefits," to the Notes to our consolidated financial statements included in this Annual Report under the
caption Item 8, "Financial Statements and Supplementary Data.” For a discussion of the risks associated with our pension plans, see Item 1A,
"Risk Factors” in this Annual Report.
68
 ℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.