3M 2015 Annual Report Download - page 82

TableofContents
3M’sprimaryU.S.qualifieddefinedbenefitplandoesnothaveamandatorycashcontributionbecausetheCompanyhasa
significantcreditbalancefrompreviousdiscretionarycontributionsthatcanbeappliedtoanyPensionProtectionActfunding
requirements.
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AsaresultofchangesmadetoitsU.S.postretirementhealthcarebenefitplansin2010,theCompanyhastransitionedallcurrentand
futureretireestoasavingsaccountbenefits-basedplan.ThesechangesbecameeffectivebeginningJanuary1,2013,forallMedicare
eligibleretireesandtheirMedicareeligibledependentsandbecameeffectivebeginningJanuary1,2016,forallnon-Medicare
eligibleretireesandtheireligibledependents.InAugust2015,3Mmodifiedthe3MRetireeWelfareBenefitPlanpostretirement
medicalbenefitreducingthefuturebenefitforparticipantsnotretiredasofJanuary1,2016.ForparticipantsretiringafterJanuary1,
2016,theRetireeMedicalSavingsAccount(RMSA)isnolongercreditedwithinterestandtheindexationonboththeRMSAand
theMedicareHealthReimbursementArrangementisreducedfrom3percentto1.5percentperyear(forthoseemployeeswhoare
eligiblefortheseaccounts).AlsoeffectiveJanuary1,2016,3Mnolongeroffers3MRetireeHealthCareAccountstonewhires.Due
tothesechangestheplanwasre-measuredinthethirdquarterof2015,resultinginadecreasetotheprojectedbenefitobligation
liabilityofapproximately$233million,andarelatedincreasetoshareholders’equity,specificallyaccumulatedothercomprehensive
income.
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Inthethirdquarterof2014,formerU.S.employeeswhohaveapensionbenefitforwhichtheyhavenotbegunreceivingpayment
(termvested)wereofferedalumpsumpayoutoftheirpensionbenefit.Asaresultofthisaction,theprojectedbenefitobligation
(PBO)liabilitywasreducedinthefourthquarterof2014byapproximately$270million,withtheactualcashpayoutof
approximatelythesameamountpaidfromtheplan’sassetsinthefourthquarterof2014.ThePBOliabilityreductionwas34%ofthe
termvestedeligiblePBOanda2%reductionintheoverallU.S.pensionPBOliabilitybasedontheDecember31,2013,valuation.
Therewasnopensionexpenseimpactasaresultofthisactionon3M’sconsolidatedstatementofincomein2014.
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Inthefourthquarterof2014,3M’sBoardofDirectorsapprovedanamendmentoftheU.S.definedbenefitpensionplantoincludea
lumpsumpaymentoptionforemployeesthathavevestedretirementbenefitswhocommencetheirpensionJanuary1,2015,orlater.
Thisoptionisalsoavailabletovestedemployeeswholeave3Mbeforebecomingeligibletoretireatthetimeoftermination.This
changereduced3M’syear-end2014U.S.pensionPBOliabilitybyapproximately$266million.
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AsofDecember31,2014,theCompanyconvertedtothe“RP2014MortalityTables”andupdatedthemortalityimprovementscale
itusedforcalculatingtheyear-end2014U.S.definedbenefitpensionannuitantandpostretirementobligationsand2015expense.
Theimpactofthischangeincreasedtheyear-end2014U.S.pensionPBObyapproximately$820millionandtheU.S.accumulated
postretirementbenefitobligationbyapproximately$100million.
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InMarch2015,3MJapanmodifiedtheJapanLimitedDefinedBenefitCorporatePensionPlan(DBCPP).BeginningJuly1,2015,
eligibleemployeesreceiveacompanyprovidedcontributionmatchof6.12%oftheireligiblesalarytotheirdefinedcontribution
plan.EmployeesnolongerearnadditionalservicetowardstheirdefinedbenefitpensionplansafterJuly1,2015,exceptforeligible
salariesabovethestatutorydefinedcontributionlimits.Asaresultofthisplanmodification,theCompanyre-measuredtheDBCPP,
whichresultedina$17millionpre-taxcurtailmentgainfortheyearendingDecember31,2015.InMarch2015,3Malsoreceived
afavorableInternalRevenueServicetaxdeterminationlettertoterminateafrozendefinedbenefitpensionplanofoneof3M’s
acquiredsubsidiaries.Bytheendof2015,thisplanmadefinaldistributionsof$16milliontoparticipants.TheCompanyalso
hadothersettlements,curtailments,specialterminationbenefitsandotheritemsin2015aggregatingtotheamountsindicatedin
thesecomponentsintheapplicabletablesthatfollow.
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3Mwasinformedduringthefirstquarterof2009,thatthegeneralpartnersofWGTradingCompany,inwhich3M’sbenefitplans
holdlimitedpartnershipinterests,arethesubjectofacriminalinvestigationaswellascivilproceedingsbytheSECandCFTC
(CommodityFuturesTradingCommission).InMarch2011,overtheobjectionsof3MandsixotherlimitedpartnersofWGTrading
Company,thedistrictcourtjudgeruledinfavorofthecourtappointedreceiver’sproposeddistributionplan(andinApril2013,the
UnitedStatesCourtofAppealsfortheSecondCircuitaffirmedthedistrictcourt’sruling).ThebenefitplantrusteeholdingsofWG
TradingCompanyinterestswereadjustedtoreflectthedecreasedestimatedfairmarketvalue,inclusiveofestimatedinsurance
proceeds,asoftheannualmeasurementdates.
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