Verizon Wireless 2013 Annual Report Download - page 60

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
NOTE 11
EMPLOYEE BENEFITS
We maintain non-contributory dened benet pension plans for many
of our employees. In addition, we maintain postretirement health care
and life insurance plans for our retirees and their dependents, which
are both contributory and non-contributory, and include a limit on our
share of the cost for certain recent and future retirees. In accordance
with our accounting policy for pension and other postretirement ben-
ets, operating expenses include pension and benet related credits
and/or charges based on actuarial assumptions, including projected
discount rates and an estimated return on plan assets. These estimates
are updated in the fourth quarter to reect actual return on plan assets
and updated actuarial assumptions. The adjustment is recognized in the
income statement during the fourth quarter or upon a remeasurement
event pursuant to our accounting policy for the recognition of actuarial
gains/losses.
Pension and Other Postretirement Benets
Pension and other postretirement benets for many of our employees
are subject to collective bargaining agreements. Modications in benets
have been bargained from time to time, and we may also periodically
amend the benefits in the management plans. The following tables
summarize benet costs, as well as the benet obligations, plan assets,
funded status and rate assumptions associated with pension and postre-
tirement health care and life insurance benet plans.
Obligations and Funded Status
(dollars in millions)
Pension Health Care and Life
At December 31, 2013 2012 2013 2012
Change in Benet
Obligations
Beginning of year $ 26,773 $ 30,582 $ 26,844 $ 27,369
Service cost 395 358 318 359
Interest cost 1,002 1,449 1,095 1,284
Plan amendments (149) 183 (119) (1,826)
Actuarial (gain) loss, net (2,327) 6,074 (3,576) 1,402
Benets paid (1,777) (2,735) (1,520) (1,744)
Curtailment and termination
benets 4 – – –
Annuity purchase – (8,352) – –
Settlements paid (889) (786) – –
End of year $ 23,032 $ 26,773 $ 23,042 $ 26,844
Change in Plan Assets
Beginning of year $ 18,282 $ 24,110 $ 2,657 $ 2,628
Actual return on plan assets 1,388 2,326 556 312
Company contributions 107 3,719 1,360 1,461
Benets paid (1,777) (2,735) (1,520) (1,744)
Settlements paid (889) (786) – –
Annuity purchase – (8,352) – –
End of year $ 17,111 $ 18,282 $ 3,053 $ 2,657
Funded Status
End of year $ (5,921) $ (8,491) $ (19,989) $ (24,187)
(dollars in millions)
Pension Health Care and Life
At December 31, 2013 2012 2013 2012
Amounts recognized on the
balance sheet
Noncurrent assets $ 339 $ 236 $ – $ –
Current liabilities (137) (129) (710) (766)
Noncurrent liabilities (6,123) (8,598) (19,279) (23,421)
Total $ (5,921) $ (8,491) $ (19,989) $ (24,187)
Amounts recognized in
Accumulated Other
Comprehensive Income
(Pre–tax)
Prior Service Benet (Cost) $ 25 $ 181 $ (2,120) $ (2,247)
Total $ 25 $ 181 $ (2,120) $ (2,247)
Beginning in 2013, as a result of federal health care reform, Verizon no
longer les for the Retiree Drug Subsidy (RDS) and instead contracts with
a Medicare Part D plan on a group basis to provide prescription drug
benets to Medicare eligible retirees.
During 2012, we reached agreements with the Communications Workers
of America and the International Brotherhood of Electrical Workers on
new, three-year contracts that cover approximately 43,000 Wireline
employees. This resulted in the adoption of plan amendments which will
result in lower other postretirement benet costs in 2013 and beyond.
The accumulated benefit obligation for all defined benefit pension
plans was $22.9 billion and $26.5 billion at December 31, 2013 and 2012,
respectively.
Information for pension plans with an accumulated benet obligation in
excess of plan assets follows:
(dollars in millions)
At December 31, 2013 2012
Projected benet obligation $ 22,610 $ 26,351
Accumulated benet obligation 22,492 26,081
Fair value of plan assets 16,350 17,623