Unum 2013 Annual Report Download - page 150

148 / UNUM 2013 ANNUAL REPORT
Notes To Consolidated Financial Statements
The methodology underlying the return assumption included the various elements of the expected return for each asset class such
as long-term rates of return, volatility of returns, and the correlation of returns between various asset classes. The expected return for the
total portfolio was calculated based on the plan’s strategic asset allocation. Investment risk is measured and monitored on an ongoing
basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. Risk tolerance is
established through consideration of plan liabilities, plan funded status, and corporate financial condition.
The expected return assumption for the life insurance reserve for our OPEB plan at December 31, 2013 and 2012 was 5.75 percent,
which was based on full investment in fixed income securities with an average book yield of 5.58 percent and 5.77 percent in 2013 and
2012, respectively.
Our rate of compensation increase assumption is generally based on periodic studies of compensation trends.
For measurement purposes at December 31, 2013 and 2012, the annual rate of increase in the per capita cost of covered
postretirement health care benefits assumed for the next calendar year was 7.50 percent and 8.00 percent, respectively, for benefits
payable to both retirees prior to Medicare eligibility as well as Medicare eligible retirees. The rate was assumed to change gradually
to 5.00 percent by 2019 and remain at that level thereafter.
The medical and dental premium used to determine the per retiree employer subsidy are capped. If the cap is not reached by the year
2015, the caps are then set equal to the year 2015 premium. Certain of the current retirees and all future retirees are subject to the cap.
Net Periodic Benefit Cost
The following table provides the components of the net periodic benefit cost for the plans described above for the years ended
December 31.
Pension Benefits
U.S. Plans Non U.S. Plans OPEB
(in millions of dollars) 2013 2012 2011 2013 2012 2011 2013 2012 2011
Service Cost $ 59.4 $ 48.8 $ 42.7 $ 4.3 $ 4.2 $ 4.8 $ 0.7 $ 1.6 $ 1.9
Interest Cost 86.3 84.4 77.6 8.6 8.5 8.8 8.0 9.6 10.0
Expected Return on Plan Assets (105.5) (88.8) (87.6) (12.5) (11.1) (12.2) (0.6) (0.7) (0.7)
Amortization of:
Net Actuarial Loss 31.7 45.9 31.9 1.2 0.5 — — — —
Prior Service Credit (0.1) (0.4) (0.5) — — — (4.9) (2.6) (2.6)
Curtailment 0.7 — — (3.7) — — — — —
Total $ 72.5 $ 89.9 $ 64.1 $ (2.1) $ 2.1 $ 1.4 $ 3.2 $ 7.9 $ 8.6
A one percent increase or decrease in the assumed health care cost trend rate at December 31, 2013 would have increased (decreased)
the service cost and interest cost by $0.2 million and $(0.1) million, respectively, and the postretirement benefit obligation by $2.4 million
and $(1.7) million, respectively.