Unum 2015 Annual Report Download - page 39

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Unum 2015 Annual Report
The weighted average assumptions used in the measurement of our net periodic benefit costs for the years ended December 31 are
as follows:
Pension Benefits
U.S. Plans U.K. Plan OPEB
Assumption 2016 2015 2016 2015 2016 2015
Discount Rate 4.80% 4.40% 3.80% 3.60% 4.70% 4.30%
Expected Long-term Rate of Return
on Plan Assets 7.50% 7.50% 4.90% 5.20% 5.75% 5.75%
The following illustrates the sensitivity of the below items to a 50 basis point change in the discount rate or the expected long-term
rate of return on plan assets:
At or for the Year Ended December 31, 2015
Net Periodic Stockholders’
Benefit Cost, Benefit Equity,
Assumption ($ in millions) Change Before Tax Obligation After Tax
Discount Rate +50 bp $(1.6) $(163.3) $ 109.4
Discount Rate -50 bp 1.7 182.4 (122.2)
Expected Long-term Rate of Return on Plan Assets +50 bp (8.6) N/A N/A
Expected Long-term Rate of Return on Plan Assets -50 bp 8.6 N/A N/A
Benefit Obligation and Fair Value of Plan Assets
During 2015, the fair value of plan assets in our U.S. qualified defined benefit pension plan decreased $70.4 million, or 4.8 percent
due primarily to the payment of benefits and expenses and a negative return on assets. The fair value of plan assets in our U.K. pension
plan decreased £1.1 million, or 0.7 percent due to payment of benefits and expenses offset partially by the return on assets. Although
the effect of these decreases in fair value had no impact on our 2015 net periodic pension costs, the less favorable rate of return on plan
assets during 2015 relative to our assumed rate of return will partially offset the favorable impact on our 2016 net periodic pension costs
resulting from the discount rate increase for our plans. We believe our assumptions appropriately reflect the impact of the current
economic environment.
As of December 31, 2015, our pension and OPEB plans have an aggregate unrecognized net actuarial loss of $626.1 million and an
unrecognized prior service credit of $7.9 million, which together represent the cumulative liability and asset gains and losses as well as
the portion of prior service credits that have not been recognized in pension expense. The unrecognized net actuarial loss for our pension
plans, which is $632.3 million at December 31, 2015, will be amortized over the average remaining life expectancy of the plan, which is
approximately 25 years for the U.S. plan and 34 years for the U.K. plan, to the extent that it exceeds the 10 percent corridor, as described
below. The decrease in the average remaining life expectancy of the U.S. plan from the life expectancy of 35 years assumed in the prior
year was due primarily to the 2015 plan amendment as previously discussed. The unrecognized net actuarial gain of $6.2 million for our
OPEB plan will be amortized over the average future working life of OPEB plan participants, estimated at four years, to the extent the loss
is outside of the corridor. The corridor for the pension and OPEB plans is established based on the greater of 10 percent of the plan assets
or 10 percent of the benefit obligation. At December 31, 2015, $423.4 million of the actuarial loss was outside of the corridor for the U.S.
plans and £3.4 million was outside of the corridor for the U.K. plan. At December 31, 2015, none of the actuarial gain was outside of the
corridor for the OPEB plan.