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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
59
Net Periodic Cost
The following table summarizes the benet (income) cost related to our pension and postretirement health care and life insurance plans:
(dollars in millions)
Pension Health Care and Life
Years Ended December 31, 2013 2012 2011 2013 2012 2011
Service cost $ 395 $ 358 $ 307 $ 318 $ 359 $ 299
Amortization of prior service cost (credit) 6 (1) 72 (247) (89) (57)
Subtotal 401 357 379 71 270 242
Expected return on plan assets (1,245) (1,795) (1,976) (143) (171) (163)
Interest cost 1,002 1,449 1,590 1,095 1,284 1,421
Subtotal 158 11 (7) 1,023 1,383 1,500
Remeasurement (gain) loss, net (2,470) 5,542 4,146 (3,989) 1,262 1,787
Net periodic benet (income) cost (2,312) 5,553 4,139 (2,966) 2,645 3,287
Curtailment and termination benets 4 – – – – –
Total $ (2,308) $ 5,553 $ 4,139 $ (2,966) $ 2,645 $ 3,287
Other pre-tax changes in plan assets and benet obligations recognized in other comprehensive (income) loss are as follows:
(dollars in millions)
Pension Health Care and Life
At December 31, 2013 2012 2013 2012
Prior service cost $ (149) $ 183 $ (119) $ (1,826)
Reversal of amortization items
Prior service cost (6) 1 247 89
Total recognized in other comprehensive (income) loss (pre-tax) $ (155) $ 184 $ 128 $ (1,737)
The estimated prior service cost for the dened benet pension plan that
will be amortized from Accumulated other comprehensive income (loss)
into net periodic benet cost over the next scal year is not signicant.
The estimated prior service cost for the dened benet postretirement
plans that will be amortized from Accumulated other comprehensive
income into net periodic benet (income) cost over the next scal year
is $0.3 billion.
Assumptions
The weighted-average assumptions used in determining benet obligations follow:
Pension Health Care and Life
At December 31, 2013 2012 2013 2012
Discount Rate 5.00 % 4.20 % 5.00 % 4.20 %
Rate of compensation increases 3.00 3.00 N/A N/A
The weighted-average assumptions used in determining net periodic cost follow:
Pension Health Care and Life
At December 31, 2013 2012 2011 2013 2012 2011
Discount Rate 4.20 % 5.00 % 5.75 % 4.20 % 5.00 % 5.75 %
Expected return on plan assets 7.50 7.50 8.00 5.60 7.00 6.00
Rate of compensation increases 3.00 3.00 3.00 N/A N/A N/A
In order to project the long-term target investment return for the total
portfolio, estimates are prepared for the total return of each major asset
class over the subsequent 10-year period. Those estimates are based on
a combination of factors including the current market interest rates and
valuation levels, consensus earnings expectations and historical long-
term risk premiums. To determine the aggregate return for the pension
trust, the projected return of each individual asset class is then weighted
according to the allocation to that investment area in the trust’s long-
term asset allocation policy.