GE 2015 Annual Report Download - page 195

FINANCIAL STATEMENTS POSTRETIREMENT BENEFIT PLANS
GE 2015 FORM 10-K 167
NOTE 12. POSTRETIREMENT BENEFIT PLANS
ABOUT OUR PLANS
We sponsor a number of pension plans, including our two principal pension plans for certain U.S. employees as well as other affiliate
pension plans. Our principal pension plans, the GE Pension Plan and the GE Supplementary Pension Plan, are discussed below. A
summary of other postretirement plans is also provided.
The GE Pension Plan is a defined benefit plan that covers 231,000 retirees and beneficiaries, 167,000 vested former employees and
75,000 active employees. This plan is closed to new participants. The GE Supplementary Pension Plan is an unfunded plan that
provides supplementary benefits to higher-level, longer-service employees. The GE Supplementary Pension Plan annuity benefit is
closed to new participants and has been replaced by an installment benefit. We use a December 31 measurement date for these plans.
On our balance sheet, we measure our plan assets at fair value and the obligations at the present value of the estimated payments to
plan participants. Participants earn benefits based on their service and pay. Those estimated payment amounts are determined based
on assumptions. Differences between our actual results and what we assumed are recorded in a separate component of equity each
period. These differences are amortized into earnings over the remaining average future service of active employees or the expected
life of participants, as applicable, who participate in the plan.
THE COST OF OUR PLANS
The amount we report in our earnings as pension cost consists of the following components:
x Service cost - the cost of benefits earned.
x Prior service cost amortization ± the effect of benefit changes resulting from plan amendments.
x Expected return on plan assets ± the return we expect to earn on plan investments.
x Interest cost ± the accrual of interest on the pension obligation due to the passage of time.
x Net actuarial loss amortization ± changes in estimates of the amount of the net pension obligation (based on assumption
changes and actual experience).
x Curtailment loss ± immediate recognition of amounts previously deferred (due to an event, such as the sale of a business,
which shortens future service or eliminates future benefits).
Pension cost components follow.
COST OF PENSION PLANS
Principal pension plans
(In millions) 2015 2014 2013
Service cost for benefits earned $ 1,424 $ 1,205 $ 1,535
Prior service cost amortization 205 214 246
Expected return on plan assets (3,302) (3,190) (3,500)
Interest cost on benefit obligations 2,778 2,745 2,460
Net actuarial loss amortization 3,288 2,565 3,664
Curtailment loss 105 65 -
Pension cost $ 4,498 $ 3,604 $ 4,405
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ASSUMPTIONS USED IN PENSION CALCULATIONS
Accounting requirements necessitate the use of assumptions to reflect the uncertainties and the length of time over which the pension
obligations will be paid. The actual amount of future benefit payments will depend upon when participants retire, the amount of their
benefit at retirement and how long they live. To reflect the obligation in WRGD\¶V dollars, we discount the future payments using a rate
that matches the time frame over which the payments will be made. We also need to assume a long-term rate of return that will be
earned on investments used to fund these payments.
GE 2015 FORM 10-K 167