Proctor and Gamble 2016 Annual Report Download - page 64

50 The Procter & Gamble Company
Amounts in millions of dollars except per share amounts or as otherwise specified.
NOTE 8
POSTRETIREMENT BENEFITS AND EMPLOYEE
STOCK OWNERSHIP PLAN
We offer various postretirement benefits to our employees.
Defined Contribution Retirement Plans
We have defined contribution plans which cover the majority
of our U.S. employees, as well as employees in certain other
countries. These plans are fully funded. We generally make
contributions to participants' accounts based on individual base
salaries and years of service. Total global defined contribution
expense was $292, $305 and $311 in 2016, 2015 and 2014,
respectively.
The primary U.S. defined contribution plan (the U.S. DC plan)
comprises the majority of the expense for the Company's
defined contribution plans. For the U.S. DC plan, the
contribution rate is set annually. Total contributions for this
plan approximated 14% of total participants' annual wages and
salaries in 2016 and 2015 and 15% in 2014.
We maintain The Procter & Gamble Profit Sharing Trust
(Trust) and Employee Stock Ownership Plan (ESOP) to
provide a portion of the funding for the U.S. DC plan and other
retiree benefits (described below). Operating details of the
ESOP are provided at the end of this Note. The fair value of
the ESOP Series A shares allocated to participants reduces our
cash contribution required to fund the U.S. DC plan.
Defined Benefit Retirement Plans and Other Retiree
Benefits
We offer defined benefit retirement pension plans to certain
employees. These benefits relate primarily to local plans
outside the U.S. and, to a lesser extent, plans assumed in
previous acquisitions covering U.S. employees.
We also provide certain other retiree benefits, primarily health
care and life insurance, for the majority of our U.S. employees
who become eligible for these benefits when they meet
minimum age and service requirements. Generally, the health
care plans require cost sharing with retirees and pay a stated
percentage of expenses, reduced by deductibles and other
coverages. These benefits are primarily funded by ESOP
Series B shares and certain other assets contributed by the
Company.
Obligation and Funded Status.The following provides a reconciliation of benefit obligations, plan assets and funded status of
these defined benefit plans:
Pension Benefits
(1)
Other Retiree Benefits
(2)
Years ended June 30 2016 2015 2016 2015
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year
(3)
$ 15,951 $ 17,053 $ 4,904 $ 5,505
Service cost 314 317 124 156
Interest cost 466 545 219 240
Participants' contributions 17 19 74 71
Amendments 817 (40) (325)
Actuarial loss/(gain) 1,927 524 589 (399)
Acquisitions/(divestitures) (21) 7(7) —
Special termination benefits 611 12 23
Currency translation and other (826) (1,908) (14) (134)
Benefit payments (557) (634) (229) (233)
BENEFIT OBLIGATION AT END OF YEAR
(3)
$ 17,285 $ 15,951 $ 5,632 $ 4,904
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 10,605 $ 11,098 $ 3,470 $ 3,574
Actual return on plan assets 630 1,016 408 10
Acquisitions/(divestitures) (13) ———
Employer contributions 306 262 32 18
Participants' contributions 17 19 74 71
Currency translation and other (719) (1,156) (8) (6)
ESOP debt impacts
(4)
——40 36
Benefit payments (557) (634) (229) (233)
FAIR VALUE OF PLAN ASSETS AT END OF YEAR $ 10,269 $ 10,605 $ 3,787 $ 3,470
Reclassification of net obligation to held for sale liabilities 402 336 16 —
FUNDED STATUS $ (6,614) $ (5,010) $ (1,829) $ (1,434)
(1)
Primarily non-U.S.-based defined benefit retirement plans.
(2)
Primarily U.S.-based other postretirement benefit plans.
(3)
For the pension benefit plans, the benefit obligation is the projected benefit obligation. For other retiree benefit plans, the benefit obligation
is the accumulated postretirement benefit obligation.
(4)
Represents the net impact of ESOP debt service requirements, which is netted against plan assets for other retiree benefits.