Lockheed Martin 2015 Annual Report Download - page 103

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The following table provides the amounts recognized in other comprehensive income (loss) related to postretirement
benefit plans, net of tax, for the years ended December 31, 2015, 2014 and 2013 (in millions):
Incurred but Not Yet
Recognized in Net
Periodic Benefit Cost
Recognition of
Previously
Deferred Amounts
2015 2014 2013 2015 2014 2013
Gains (losses) (Gains) losses
Actuarial gains and losses
Qualified defined benefit pension plans $(291) $(5,505) $2,751 $1,034 $758 $ 911
Retiree medical and life insurance plans 46 (160) 140 28 15 28
Other plans 21 (245) 46 47 33 34
(224) (5,910) 2,937 1,109 806 973
Credit (cost) (Credit) cost
Net prior service credit and cost
Qualified defined benefit pension plans (18) 2,959 (69) (251) (98) 53
Retiree medical and life insurance plans (102) (3) — 23 (11)
Other plans (7) 84 — (10) (5) —
(127) 3,040 (69) (259) (100) 42
$(351) $(2,870) $2,868 $ 850 $706 $1,015
We expect that approximately $1.1 billion, or about $693 million net of tax, of actuarial losses and net prior service
credit related to postretirement benefit plans included in accumulated other comprehensive loss at the end of 2015 to be
recognized in net periodic benefit cost during 2016. Of this amount, $1.0 billion, or $629 million net of tax, relates to our
qualified defined benefit plans and is included in our expected 2016 pension expense of $1.0 billion.
Actuarial Assumptions
The actuarial assumptions used to determine the benefit obligations at December 31 of each year and to determine the
net periodic benefit cost for each subsequent year, were as follows:
Qualified Defined Benefit
Pension Plans
Retiree Medical and
Life Insurance Plans
2015 2014 2013 2015 2014 2013
Discount rate 4.375% 4.00% 4.75% 4.25% 3.75% 4.50%
Expected long-term rate of return on assets 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Rate of increase in future compensation levels 4.50% 4.30% 4.30%
Health care trend rate assumed for next year 9.00% 8.50% 8.75%
Ultimate health care trend rate 5.00% 5.00% 5.00%
Year that the ultimate health care trend rate is reached 2032 2029 2029
The increase in the discount rate from December 31, 2014 to December 31, 2015 resulted in a decrease in the projected
benefit obligations of our qualified defined benefit pension plans of approximately $2.1 billion at December 31, 2015. The
decrease in the discount rate from December 31, 2013 to December 31, 2014 resulted in an increase in the projected benefit
obligations of our qualified defined benefit pension plans of approximately $4.8 billion at December 31, 2014.
The long-term rate of return assumption represents the expected long-term rate of earnings on the funds invested, or to
be invested, to provide for the benefits included in the benefit obligations. That assumption is based on several factors
including historical market index returns, the anticipated long-term allocation of plan assets, the historical return data for the
trust funds, plan expenses and the potential to outperform market index returns.
Plan Assets
Investment policies and strategies – Lockheed Martin Investment Management Company (LMIMCo), our wholly-
owned subsidiary, has the fiduciary responsibility for making investment decisions related to the assets of our postretirement
benefit plans. LMIMCo’s investment objectives for the assets of these plans are (1) to minimize the net present value of
95