GE 2013 Annual Report Download - page 111

GE 2013 ANNUAL REPORT 109
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Other pension plans’ assets were $11,059 million and
$9,702 million at December 31, 2013 and 2012, respectively.
Equity and debt securities amounting to $9,781 million
and $8,497 million represented approximately 89% of total
investments at both December 31, 2013 and 2012. The plans’
investments were classifi ed as 11% Level 1, 78% Level 2 and 11%
Level 3 at December 31, 2013. The plans’ investments were clas-
sifi ed as 14% Level 1, 75% Level 2 and 11% Level 3 at December
31, 2012. The changes in Level 3 investments were insignifi cant
for the years ended December 31, 2013 and 2012.
PENSION ASSET (LIABILITY)
Principal pension plans Other pension plans
December 31 (In millions) 2013 2012 2013 2012
Funded status (a) (b) $ (9,816) $ (18,764) $ (2,476) $ (3,882)
Pension asset (liability)
recorded in the Statement
of Financial Position
Pension asset $ — $ — $ 325 $ 141
Pension liabilities
Due within one year (c) (170) (159) (67) (62)
Due after one year (9,646) (18,605) (2,734) (3,961)
Net amount recognized $ (9,816) $ (18,764) $ (2,476) $ (3,882)
Amounts recorded in
shareowners’ equity
(unamortized)
Prior service cost
(credit) $ 1,160 $ 1,406 $ 9 $ (4)
Net actuarial loss 11,555 24,437 2,459 3,962
Total $ 12,715 $ 25,843 $ 2,468 $ 3,958
(a) Fair value of assets less PBO, as shown in the preceding tables.
(b) The GE Pension Plan was underfunded by $4.7 billion and $13.3 billion at
December 31, 2013 and December 31, 2012, respectively.
(c) For principal pension plans, represents the GE Supplementary Pension
Plan liability.
In 2014, we estimate that we will amortize $215 million of prior
service cost and $2,565 million of net actuarial loss for the prin-
cipal pension plans from shareowners’ equity into pension cost.
For other pension plans, the estimated prior service cost and
net actuarial loss to be amortized in 2014 will be $5 million and
$215 million, respectively. Comparable amortized amounts in
2013, respectively, were $246 million and $3,664 million for the
principal pension plans and $7 million and $343 million for other
pension plans.
ESTIMATED FUTURE BENEFIT PAYMENTS
(In millions) 2014 2015 2016 2017 2018
2019–
2023
Principal
pension plans $ 3,105 $ 3,175 $ 3,240 $ 3,310 $ 3,380 $ 18,370
Other pension
plans $ 495 $ 505 $ 510 $ 525 $ 540 $ 2,935
Retiree Health and Life Benefits
We sponsor a number of retiree health and life insurance benefi t
plans (retiree benefi t plans). Principal retiree benefi t plans are
discussed below; other such plans are not signifi cant individually
or in the aggregate. We use a December 31 measurement date
for our plans.
PRINCIPAL RETIREE BENEFIT PLANS provide health and life
insurance benefi ts to certain eligible participants and these
participants share in the cost of healthcare benefi ts. In 2012, we
amended our principal retiree benefi t plans such that, effective
January 1, 2015, our post-65 retiree medical plans will be closed
to salaried and retired salaried employees who are not enrolled
in the plans as of that date, and we will no longer offer com-
pany-provided life insurance in retirement for certain salaried
employees who retire after that date. These plans cover approxi-
mately 198,000 retirees and dependents.
COST OF PRINCIPAL RETIREE BENEFIT PLANS
(In millions) 2013 2012 2011
Service cost for benefits earned $ 229 $ 219 $ 216
Prior service cost amortization 393 518 647
Expected return on plan assets (60) (73) (97)
Interest cost on benefit obligations 410 491 604
Net actuarial loss (gain)
amortization (45) 32 (110)
Net curtailment/settlement gain — (101) —
Retiree benefit plans cost $ 927 $ 1,086 $ 1,260
ACTUARIAL ASSUMPTIONS are described below. The actuarial
assumptions at December 31 are used to measure the year-end
benefi t obligations and the retiree benefi t plan costs for the
subsequent year.
December 31 2013 2012 2011 2010
Discount rate 4.61% 3.74% (a) 4.09% (a) 5.15%
Compensation increases 4.00 3.90 3.75 4.25
Expected return on assets 7.00 7.00 7.00 8.00
Initial healthcare trend rate (b) 6.00 6.50 7.00 7.00
(a) Weighted average discount rates of 3.77% and 3.94% were used for
determination of costs in 2013 and 2012, respectively.
(b) For 2013, ultimately declining to 5% for 2030 and thereafter.
To determine the expected long-term rate of return on retiree life
plan assets, we consider current and target asset allocations, his-
torical and expected returns on various categories of plan assets,
as well as expected benefi t payments and resulting asset levels.
In developing future return expectations for retiree benefi t plan
assets, we formulate views on the future economic environment,
both in the U.S. and abroad. We evaluate general market trends
and historical relationships among a number of key variables that
impact asset class returns such as expected earnings growth,
infl ation, valuations, yields and spreads, using both internal and
external sources. We also take into account expected volatility
by asset class and diversifi cation across classes to determine
expected overall portfolio results given current and target allo-
cations. Based on our analysis of future expectations of asset
performance, past return results, our current and target asset