Verizon Wireless 2014 Annual Report Download - page 63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued
61
NOTE 12
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 and 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, 2014 2013 2014 2013
Change in Benet
Obligations
Beginning of year $ 23,032 $ 26,773 $ 23,042 $ 26,844
Service cost 327 395 258 318
Interest cost 1,035 1,002 1,107 1,095
Plan amendments (89) (149) (412) (119)
Actuarial (gain) loss, net 2,977 (2,327) 4,645 (3,576)
Benets paid (1,566) (1,777) (1,543) (1,520)
Curtailment and termination
benets 11 4 – –
Settlements paid (407) (889) – –
End of year $ 25,320 $ 23,032 $ 27,097 $ 23,042
Change in Plan Assets
Beginning of year $ 17,111 $ 18,282 $ 3,053 $ 2,657
Actual return on plan assets 1,778 1,388 193 556
Company contributions 1,632 107 732 1,360
Benets paid (1,566) (1,777) (1,543) (1,520)
Settlements paid (407) (889) – –
End of year $ 18,548 $ 17,111 $ 2,435 $ 3,053
Funded Status
End of year $ (6,772) $ (5,921) $ (24,662) $ (19,989)
(dollars in millions)
Pension Health Care and Life
At December 31, 2014 2013 2014 2013
Amounts recognized on the
balance sheet
Noncurrent assets $ 337 $ 339 $ – $ –
Current liabilities (122) (137) (528) (710)
Noncurrent liabilities (6,987) (6,123) (24,134) (19,279)
Total $ (6,772) $ (5,921) $ (24,662) $ (19,989)
Amounts recognized in
Accumulated Other
Comprehensive Income
(Pre-tax)
Prior Service Benet (Cost) $ (56) $ 25 $ (2,280) $ (2,120)
Total $ (56) $ 25 $ (2,280) $ (2,120)
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.
The accumulated benefit obligation for all defined benefit
pension plans was $25.3 billion and $22.9 billion at December 31, 2014
and 2013, respectively.
Information for pension plans with an accumulated benet obligation in
excess of plan assets follows:
(dollars in millions)
At December 31, 2014 2013
Projected benet obligation $ 24,919 $ 22,610
Accumulated benet obligation 24,851 22,492
Fair value of plan assets 17,810 16,350