International Paper 2015 Annual Report Download - page 89

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In connection with the Temple-Inland acquisition in
February 2012, International Paper assumed
administrative responsibility for the Temple-Inland
Retirement Plan, a defined benefit plan which covers
substantially all employees of Temple-Inland. The
Temple-Inland Retirement Plan merged with the
Retirement Plan of International Paper Company on
December 31, 2014.
The Company also has three unfunded nonqualified
defined benefit pension plans: a Pension Restoration
Plan available to employees hired prior to July 1, 2004
that provides retirement benefits based on eligible
compensation in excess of limits set by the Internal
Revenue Service, and two supplemental retirement
plans for senior managers (SERP), which is an
alternative retirement plan for salaried employees who
are senior vice presidents and above or who are
designated by the chief executive officer as
participants. These nonqualified plans are only funded
to the extent of benefits paid, which totaled $62 million,
$38 million and $28 million in 2015, 2014 and 2013,
respectively, and which are expected to be $22 million
in 2016.
The Company will freeze participation, including
credited service and compensation, for salaried
employees under the Pension Plan, the Pension
Restoration Plan and the two SERP plans for all service
on or after January 1, 2019. Credited service was
previously frozen for the Temple Retirement Plans.
This change will not affect benefits accrued through
December 31, 2018. For service after this date,
employees affected by the freeze will receive
Retirement Savings Account contributions as described
later in this Note 16.
Many non-U.S. employees are covered by various
retirement benefit arrangements, some of which are
considered to be defined benefit pension plans for
accounting purposes.
OBLIGATIONS AND FUNDED STATUS
The following table shows the changes in the benefit
obligation and plan assets for 2015 and 2014, and the
plans’ funded status. The U.S. combined benefit
obligation as of December 31, 2015 decreased by $302
million, due to an increase in the discount rate
assumption used in computing the estimated benefit
obligation partially offset by updated demographic
assumptions. Our mortality assumption for the year
ended December 31, 2014 reflects adoption of the
newly issued Society of Actuaries longevity
improvement sale, with Company specific adjustments.
U.S. plan assets increased by $5 million, primarily
reflecting a $750 million qualified pension contribution
in 2015 offset by benefit payments.
2015 2014
In millions
U.S.
Plans
Non-
U.S.
Plans
U.S.
Plans
Non-
U.S.
Plans
Change in projected benefit
obligation:
Benefit obligation,
January 1 $14,741 $ 233 $12,903 $ 228
Service cost 161 6 145 5
Interest cost 597 10 600 13
Curtailments —— —(4)
Settlements (43) (12) ——
Actuarial loss (gain) (254) (1) 1,755 12
Divestitures ——(23) —
Other —— —12
Plan amendments ——133 —
Benefits paid (764) (7) (772)(13)
Effect of foreign currency
exchange rate
movements —(25) —(20)
Benefit obligation,
December 31 $14,438 $ 204 $14,741 $ 233
Change in plan assets:
Fair value of plan assets,
January 1 $10,918 $ 180 $10,706 $ 181
Actual return on plan
assets (1) 4 593 13
Company contributions 813 9 391 8
Benefits paid (764) (7) (772)(13)
Settlements (43) (12) ——
Other —— —6
Effect of foreign currency
exchange rate
movements —(19) —(15)
Fair value of plan
assets, December 31 $10,923 $ 155 $10,918 $ 180
Funded status,
December 31 $ (3,515) $ (49) $ (3,823) $ (53)
Amounts recognized in the
consolidated balance
sheet:
Non-current asset $—$7$—$8
Current liability (22) (2) (62) (3)
Non-current liability (3,493) (54) (3,761) (58)
$ (3,515) $ (49) $ (3,823) $ (53)
Amounts recognized in
accumulated other
comprehensive income
under ASC 715 (pre-tax):
Prior service cost $ 166 $ — $ 209 $ —
Net actuarial loss 4,899 42 4,812 40
$ 5,065 $ 42 $5,021 $40