
	Retirement Plans and Postretirement Benefit Plans

Pension Plan and Restoration of Retirement Income Plan

Employees hired or rehired on or after December 1, 2009 do not participate in the Pension Plan but are eligible to participate in the 401(k) Plan where, for each pay period, the Company contributes to the 401(k) Plan, on behalf of each participant, 200 percent of the participant's contributions up to five percent of compensation.

It is the Company's policy to fund the Pension Plan on a current basis based on the net periodic pension expense as determined by the Company's actuarial consultants. During both 2013 and 2012, OGE Energy made contributions to its Pension Plan of $35 million to help ensure that the Pension Plan maintains an adequate funded status. Such contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. During 2014, OGE Energy expects to contribute up to $26 million to its Pension Plan. The expected contribution to the Pension Plan during 2014 would be a discretionary contribution, anticipated to be in the form of cash, and is not required to satisfy the minimum regulatory funding requirement specified by the Employee Retirement Income Security Act of 1974, as amended. OGE Energy could be required to make additional contributions if the value of its pension trust and postretirement benefit plan trust assets are adversely impacted by a major market disruption in the future.

In accordance with ASC Topic 715, "Compensation - Retirement Benefits," a one-time settlement charge is required to be recorded by an organization when lump sum payments or other settlements that relieve the organization from the responsibility for the pension benefit obligation during a plan year exceed the service cost and interest cost components of the organization’s net periodic pension cost. During 2013, the Company experienced an increase in both the number of employees electing to retire and the amount of lump sum payments to be paid to such employees upon retirement. As a result, and based in part on the Company’s historical experience regarding eligible employees who elect to retire in the last quarter of a particular year, the Company recorded pension settlement charges of $22.4 million in the fourth quarter of 2013, of which $17.0 million related to OG&E’s Oklahoma jurisdiction and has been included in the pension tracker. The pension settlement charge did not require a cash outlay by the Company and did not increase the Company’s total pension expense over time, as the charges were an acceleration of costs that otherwise would be recognized as pension expense in future periods.

The Company provides a Restoration of Retirement Income Plan to those participants in the Company's Pension Plan whose benefits are subject to certain limitations of the Code. Participants in the Restoration of Retirement Income Plan receive the same benefits that they would have received under the Company's Pension Plan in the absence of limitations imposed by the Federal tax laws. The Restoration of Retirement Income Plan is intended to be an unfunded plan.

The following table presents the status of the Company's Pension Plan and Restoration of Retirement Income Plan at December 31, 2013 and 2012. These amounts have been recorded in Accrued Benefit Obligations with the offset in Accumulated Other Comprehensive Loss (except OG&E's portion which is recorded as a regulatory asset as discussed in Note 1) in the Company's Consolidated Balance Sheet. The amounts in Accumulated Other Comprehensive Loss and those recorded as a regulatory asset represent a net periodic benefit cost to be recognized in the Consolidated Statements of Income in future periods.



	Pension Plan						Restoration of Retirement Income Plan
December 31 (In millions)	2013			2012			2013			2012
Benefit obligations	$	(658.1	)	$	(747.1	)	$	(14.0	)	$	(14.5	)
Fair value of plan assets	654.9			626.0			—			—
Funded status at end of year	$	(3.2	)	$	(121.1	)	$	(14.0	)	$	(14.5	)

The following table summarizes the benefit payments the Company expects to pay related to its Pension Plan and Restoration of Retirement Income Plan. These expected benefits are based on the same assumptions used to measure the Company's benefit obligation at the end of the year and include benefits attributable to estimated future employee service.



(In millions)	Projected Benefit Payments
2014	$	93.2
2015	82.0
2016	76.7
2017	71.7
2018	64.7
After 2018	270.1

Plan Investments, Policies and Strategies

The Pension Plan assets are held in a trust which follows an investment policy and strategy designed to reduce the funded status volatility of the Plan by utilizing liability driven investing. The purpose of liability driven investing is to structure the asset portfolio to more closely resemble the pension liability and thereby more effectively hedge against changes in the liability. The investment policy follows a glide path approach that shifts a higher portfolio weighting to fixed income as the Plan's funded status increases. The table below sets forth the targeted fixed income and equity allocations at different funded status levels.



Projected Benefit Obligation Funded Status Thresholds	<90%	95%	100%	105%	110%	115%	120%
Fixed income	50%	58%	65%	73%	80%	85%	90%
Equity	50%	42%	35%	27%	20%	15%	10%
Total	100%	100%	100%	100%	100%	100%	100%

Within the portfolio's overall allocation to equities, the funds are allocated according to the guidelines in the table below.



Asset Class	Target Allocation	Minimum	Maximum
Domestic All-Cap/Large Cap Equity	50%	50%	60%
Domestic Mid-Cap Equity	15%	5%	25%
Domestic Small-Cap Equity	15%	5%	25%
International Equity	20%	10%	30%

The Company has retained an investment consultant responsible for the general investment oversight, analysis, monitoring investment guideline compliance and providing quarterly reports to certain of the Company's members and the Company's Investment Committee. The various investment managers used by the trust operate within the general operating objectives as established in the investment policy and within the specific guidelines established for each investment manager's respective portfolio.

The portfolio is rebalanced on an annual basis to bring the asset allocations of various managers in line with the target asset allocation listed above. More frequent rebalancing may occur if there are dramatic price movements in the financial markets which may cause the trust's exposure to any asset class to exceed or fall below the established allowable guidelines.

To evaluate the progress of the portfolio, investment performance is reviewed quarterly. It is, however, expected that performance goals will be met over a full market cycle, normally defined as a three to five year period. Analysis of performance is within the context of the prevailing investment environment and the advisors' investment style. The goal of the trust is to provide a rate of return consistently from three percent to five percent over the rate of inflation (as measured by the national Consumer Price Index) on a fee adjusted basis over a typical market cycle of no less than three years and no more than five years. Each investment manager is expected to outperform its respective benchmark. Below is a list of each asset class utilized with appropriate comparative benchmark(s) each manager is evaluated against:



Asset Class	Comparative Benchmark(s)
Core Fixed Income	Barclays Capital Aggregate Index
Interest Rate Sensitive Fixed Income	Barclays Capital Aggregate Index
Long Duration Fixed Income	Barclays Long Government/Credit
Equity Index	Standard & Poor's 500 Index
All-Cap Equity	Russell 3000 Index
	Russell 3000 Value Index
Mid-Cap Equity	Russell Midcap Index
	Russell Midcap Value Index
Small-Cap Equity	Russell 2000 Index
	Russell 2000 Value Index
International Equity	Morgan Stanley Capital Investment ACWI ex-US

The fixed income manager is expected to use discretion over the asset mix of the trust assets in its efforts to maximize risk-adjusted performance. Exposure to any single issuer, other than the U.S. government, its agencies, or its instrumentalities (which have no limits) is limited to five percent of the fixed income portfolio as measured by market value. At least 75 percent of the invested assets must possess an investment grade rating at or above Baa3 or BBB- by Moody's Investors Services, Standard & Poor's Ratings Services or Fitch Ratings. The portfolio may invest up to 10 percent of the portfolio's market value in convertible bonds as long as the securities purchased meet the quality guidelines. The purchase of any of the Company's equity, debt or other securities is prohibited.

The domestic value equity managers focus on stocks that the manager believes are undervalued in price and earn an average or less than average return on assets, and often pays out higher than average dividend payments. The domestic growth equity manager will invest primarily in growth companies which consistently experience above average growth in earnings and sales, earn a high return on assets, and reinvest cash flow into existing business. The domestic mid-cap equity portfolio manager focuses on companies with market capitalizations lower than the average company traded on the public exchanges with the following characteristics: price/earnings ratio at or near the Russell Midcap Index, small dividend yield, return on equity at or near the Russell Midcap Index and an earnings per share growth rate at or near the Russell Midcap Index. The domestic small-cap equity manager will purchase shares of companies with market capitalizations lower than the average company traded on the public exchanges with the following characteristics: price/earnings ratio at or near the Russell 2000, small dividend yield, return on equity at or near the Russell 2000 and an earnings per share growth rate at or near the Russell 2000. The international global equity manager invests primarily in non-dollar denominated equity securities. Investing internationally diversifies the overall trust across the global equity markets. The manager is required to operate under certain restrictions including: regional constraints, diversification requirements and percentage of U.S. securities. The Morgan Stanley Capital International All Country World ex-US Index is the benchmark for comparative performance purposes. The Morgan Stanley Capital International All Country World ex-US Index is a market value weighted index designed to measure the combined equity market performance of developed and emerging markets countries, excluding the United States. All of the equities which are purchased for the international portfolio are thoroughly researched. Only companies with a market capitalization in excess of $100 million are allowable. No more than five percent of the portfolio can be invested in any one stock at the time of purchase. All securities are freely traded on a recognized stock exchange and there are no 144-A securities and no over-the-counter derivatives. The following investment categories are excluded: options (other than traded currency options), commodities, futures (other than currency futures or currency hedging), short sales/margin purchases, private placements, unlisted securities and real estate (but not real estate shares).

For all domestic equity investment managers, no more than eight percent (five percent for mid-cap and small-cap equity managers) can be invested in any one stock at the time of purchase and no more than 16 percent (10 percent for mid-cap and small-cap equity managers) after accounting for price appreciation. Options or financial futures may not be purchased unless prior approval of the Company's Investment Committee is received. The purchase of securities on margin is prohibited as is securities lending. Private placement or venture capital may not be purchased. All interest and dividend payments must be swept on a daily basis into a short-term money market fund for re-deployment. The purchase of any of the Company's equity, debt or other securities is prohibited. The purchase of equity or debt issues of the portfolio manager's organization is also prohibited. The aggregate positions in any company may not exceed one percent of the fair market value of its outstanding stock.

Plan Investments

The following tables summarize the Pension Plan's investments that are measured at fair value on a recurring basis at December 31, 2013 and 2012. There were no Level 3 investments held by the Pension Plan at December 31, 2013 and 2012.



(In millions)	December 31, 2013			Level 1		Level 2
Common stocks
U.S. common stocks	$	236.8		$	236.8	$	—
Foreign common stocks	39.3			39.3		—
U.S. Government obligations
U.S. treasury notes and bonds (A)	159.8			159.8		—
Mortgage-backed securities	50.3			—		50.3
Bonds, debentures and notes (B)
Corporate fixed income and other securities	110.6			—		110.6
Mortgage-backed securities	22.3			—		22.3
Commingled fund (C)	29.2			—		29.2
Common/collective trust (D)	26.0			—		26.0
Foreign government bonds	4.0			—		4.0
U.S. municipal bonds	2.0			—		2.0
Interest-bearing cash	0.1			0.1		—
Forward contracts
Receivable (foreign currency)	1.1			—		1.1
Payable (foreign currency)	(1.1		)	—		(1.1		)
Total Plan investments	$	680.4		$	436.0	$	244.4
Receivable from broker for securities sold	11.5
Interest and dividends receivable	3.2
Payable to broker for securities purchased	(40.2		)
Total Plan assets	$	654.9



(In millions)	December 31, 2012			Level 1		Level 2
Common stocks
U.S. common stocks	$	232.2		$	232.2	$	—
Foreign common stocks	39.9			39.9		—
U.S. Government obligations
U.S. treasury notes and bonds (A)	138.6			138.6		—
Mortgage-backed securities	55.8			—		55.8
Bonds, debentures and notes (B)
Corporate fixed income and other securities	98.4			—		98.4
Mortgage-backed securities	13.5			—		13.5
Commingled fund (C)	34.9			—		34.9
Common/collective trust (D)	25.6			—		25.6
Foreign government bonds	3.9			—		3.9
U.S. municipal bonds	0.8			—		0.8
Interest-bearing cash	0.2			0.2		—
Preferred stocks (foreign)	—			—		—
Forward contracts
Receivable (foreign currency)	0.4			—		0.4
Payable (foreign currency)	(0.4		)	—		(0.4		)
Total Plan investments	$	643.8		$	410.9	$	232.9
Receivable from broker for securities sold	0.8
Interest and dividends receivable	2.8
Payable to broker for securities purchased	(21.4		)
Total Plan assets	$	626.0


(A)	This category represents U.S. treasury notes and bonds with a Moody's Investors Services rating of Aaa and Government Agency Bonds with a Moody's Investors Services rating of A1 or higher.


(B)	This category primarily represents U.S. corporate bonds with an investment grade rating at or above Baa3 or BBB- by Moody's Investors Services, Standard & Poor's Ratings Services or Fitch Ratings.


(C)	This category represents units of participation in a commingled fund that primarily invested in stocks of international companies and emerging markets.

(D)

This category represents units of participation in an investment pool which primarily invests in foreign or domestic bonds, debentures, mortgages, equipment or other trust certificates, notes, obligations issued or guaranteed by the U.S. Government or its agencies, bank certificates of deposit, bankers' acceptances and repurchase agreements, high grade commercial paper and other instruments with money market characteristics with a fixed or variable interest rate. There are no restrictions on redemptions in the common/collective trust.

The three levels defined in the fair value hierarchy and examples of each are as follows:

Level 1 inputs are quoted prices in active markets for identical unrestricted assets or liabilities that are accessible by the Pension Plan at the measurement date. Instruments classified as Level 1 include investments in common and preferred stocks, U.S. treasury notes and bonds, mutual funds and interest-bearing cash.

Level 2 inputs are inputs other than quoted prices in active markets included within Level 1 that are either directly or indirectly observable at the reporting date for the asset or liability for substantially the full term of the asset or liability. Level 2 inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Instruments classified as Level 2 include corporate fixed income and other securities, mortgage-backed securities, other U.S. Government obligations, commingled fund, a common/collective trust, U.S. municipal bonds, foreign government bonds, a repurchase agreement, money market fund and forward contracts.

Level 3 inputs are prices or valuation techniques for the asset or liability that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Unobservable inputs reflect the Plan's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

Postretirement Benefit Plans

In addition to providing pension benefits, the Company provides certain medical and life insurance benefits for eligible retired members. Regular, full-time, active employees hired prior to February 1, 2000 whose age and years of credited service total or exceed 80 or have attained at least age 55 with 10 or more years of service at the time of retirement are entitled to postretirement medical benefits while employees hired on or after February 1, 2000 are not entitled to postretirement medical benefits. Eligible retirees must contribute such amount as the Company specifies from time to time toward the cost of coverage for postretirement benefits. The benefits are subject to deductibles, co-payment provisions and other limitations. OG&E charges to expense the postretirement benefit costs and includes an annual amount as a component of the cost-of-service in future ratemaking proceedings.

The Company's contribution to the medical costs for pre-65 aged eligible retirees are fixed at the 2011 level and the Company covers future annual medical inflationary cost increases up to five percent. Increases in excess of five percent annually are covered by the pre-65 aged retiree in the form of premium increases. The Company provides Medicare-eligible retirees and their Medicare-eligible spouses an annual fixed contribution to a Company-sponsored health reimbursement arrangement. Medicare-eligible retirees are able to purchase individual insurance policies supplemental to Medicare through a third-party administrator and use their health reimbursement arrangement funds for reimbursement of medical premiums and other eligible medical expenses.

Plan Investments

The following tables summarize the postretirement benefit plans investments that are measured at fair value on a recurring basis at December 31, 2013 and 2012. There were no Level 2 investments held by the postretirement benefit plans at December 31, 2013 and 2012.



(In millions)	December 31, 2013		Level 1		Level 3
Group retiree medical insurance contract (A)	$	53.1	$	—	$	53.1
Mutual funds investment
U.S. equity investments	7.9		7.9		—
Money market funds investment	0.4		0.4		—
Total Plan investments	$	61.4	$	8.3	$	53.1



(In millions)	December 31, 2012		Level 1		Level 3
Group retiree medical insurance contract (A)	$	53.3	$	—	$	53.3
Mutual funds investment
U.S. equity investments	6.0		6.0		—
Money market funds investment	0.3		0.3		—
Total Plan investments	$	59.6	$	6.3	$	53.3


(A)	This category represents a group retiree medical insurance contract which invests in a pool of common stocks, bonds and money market accounts, of which a significant portion is comprised of mortgage-backed securities.

The postretirement benefit plans Level 3 investment includes an investment in a group retiree medical insurance contract. The unobservable input included in the valuation of the contract includes the approach for determining the allocation of the postretirement benefit plans pro-rata share of the total assets in the contract.

The following table summarizes the postretirement benefit plans investments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).



Year ended December 31 (In millions)	2013
Group retiree medical insurance contract
Beginning balance	$	53.3
Net unrealized gains related to instruments held at the reporting date	(0.5		)
Interest income	1.1
Dividend income	0.6
Realized gains	0.4
Administrative expenses and charges	(0.1		)
Claims paid	(1.7		)
Ending balance	$	53.1

The following table presents the status of the Company's postretirement benefit plans at December 31, 2013 and 2012. These amounts have been recorded in Accrued Benefit Obligations with the offset in Accumulated Other Comprehensive Loss (except OG&E's portion which is recorded as a regulatory asset as discussed in Note 1) in the Company's Consolidated Balance Sheet. The amounts in Accumulated Other Comprehensive Loss and those recorded as a regulatory asset represent a net periodic benefit cost to be recognized in the Consolidated Statements of Income in future periods.



December 31 (In millions)	2013			2012
Benefit obligations	$	(258.2	)	$	(301.0	)
Fair value of plan assets	61.4			59.6
Funded status at end of year	$	(196.8	)	$	(241.4	)

The assumed health care cost trend rates have a significant effect on the amounts reported for postretirement medical benefit plans. Future health care cost trend rates are assumed to be 8.35 percent in 2014 with the rates trending downward to 4.48 percent by 2028. A one-percentage point change in the assumed health care cost trend rate would have the following effects:



ONE-PERCENTAGE POINT INCREASE
Year ended December 31 (In millions)	2013		2012		2011
Effect on aggregate of the service and interest cost components	$	—	$	—	$	—
Effect on accumulated postretirement benefit obligations	0.1		0.1		0.1



ONE-PERCENTAGE POINT DECREASE
Year ended December 31 (In millions)	2013		2012		2011
Effect on aggregate of the service and interest cost components	$	0.1	$	0.1	$	0.1
Effect on accumulated postretirement benefit obligations	0.6		0.9		0.6

Medicare Prescription Drug, Improvement and Modernization Act of 2003

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 expanded coverage for prescription drugs. The following table summarizes the gross benefit payments the Company expects to pay related to its postretirement benefit plans, including prescription drug benefits.



(In millions)	Gross Projected Postretirement Benefit Payments
2014	$	15.5
2015	16.1
2016	16.7
2017	17.2
2018	17.7
After 2018	90.7

Obligations and Funded Status

The following table presents the status of the Company's Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans for 2013 and 2012. The benefit obligation for the Company's Pension Plan and the Restoration of Retirement Income Plan represents the projected benefit obligation, while the benefit obligation for the postretirement benefit plans represents the accumulated postretirement benefit obligation. The accumulated postretirement benefit obligation for the Company's Pension Plan and Restoration of Retirement Income Plan differs from the projected benefit obligation in that the former includes no assumption about future compensation levels. The accumulated postretirement benefit obligation for the Pension Plan and the Restoration of Retirement Income Plan at December 31, 2013 was $623.4 million and $12.9 million, respectively. The accumulated postretirement benefit obligation for the Pension Plan and the Restoration of Retirement Income Plan at December 31, 2012 was $705.2 million and $12.7 million, respectively. The details of the funded status of the Pension Plan, the Restoration of Retirement Income Plan and the postretirement benefit plans and the amounts included in the Consolidated Balance Sheets are as follows:



	Pension Plan						Restoration of Retirement Income Plan						Postretirement Benefit Plans
December 31 (In millions)	2013			2012			2013			2012			2013			2012
Change in Benefit Obligation
Beginning obligations	$	(747.1	)	$	(697.7	)	$	(14.5	)	$	(13.3	)	$	(301.0	)	$	(280.6	)
Service cost	(19.0		)	(17.9		)	(1.2		)	(1.0		)	(4.3		)	(4.1		)
Interest cost	(26.7		)	(30.1		)	(0.5		)	(0.6		)	(10.3		)	(11.9		)
Plan amendments	—			—			—			—			—			—
Plan settlements	67.5			—			—			—			—			—
Participants' contributions	—			—			—			—			(3.4		)	(3.5		)
Medicare subsidies received	—			—			—			—			—			(0.5		)
Actuarial gains (losses)	53.0			(61.4		)	2.0			(1.8		)	46.7			(12.9		)
Benefits paid	14.2			60.0			0.2			2.2			14.1			12.5
Ending obligations	$	(658.1	)	$	(747.1	)	$	(14.0	)	$	(14.5	)	$	(258.2	)	$	(301.0	)

Change in Plans' Assets
Beginning fair value	$	626.0		$	589.8		$	—		$	—		$	59.6		$	61.0
Actual return on plans' assets	75.6			61.2			—			—			3.7			4.5
Employer contributions	35.0			35.0			0.2			2.2			8.8			2.6
Plan settlements	(67.5		)	—			—			—			—			—
Participants' contributions	—			—			—			—			3.4			3.5
Medicare subsidies received	—			—			—			—			—			0.5
Benefits paid	(14.2		)	(60.0		)	(0.2		)	(2.2		)	(14.1		)	(12.5		)
Ending fair value	$	654.9		$	626.0		$	—		$	—		$	61.4		$	59.6
Funded status at end of year	$	(3.2	)	$	(121.1	)	$	(14.0	)	$	(14.5	)	$	(196.8	)	$	(241.4	)

Net Periodic Benefit Cost



	Pension Plan									Restoration of Retirement Income Plan						Postretirement Benefit Plans
Year ended December 31 (In millions)	2013			2012			2011			2013		2012		2011		2013			2012			2011
Service cost	$	19.0		$	17.9		$	17.6		$	1.2	$	1.0	$	1.0	$	4.3		$	4.1		$	3.5
Interest cost	26.7			30.1			33.3			0.5		0.6		0.6		10.3			11.9			12.5
Expected return on plan assets	(48.4		)	(46.0		)	(45.5		)	—		—		—		(2.5		)	(3.0		)	(5.1		)
Amortization of transition obligation	—			—			—			—		—		—		—			2.7			2.7
Amortization of net loss	26.5			23.8			19.2			0.4		0.4		0.4		21.5			20.6			18.3
Amortization of unrecognized prior service cost (A)	1.8			2.2			2.4			0.3		0.7		0.7		(16.5		)	(16.5		)	(16.5		)
Settlement	22.4			—			—			—		0.9		—		—			—			—
Total net periodic benefit cost	48.0			28.0			27.0			2.4		3.6		2.7		17.1			19.8			15.4
Less: Amount paid by unconsolidated affiliates	5.9			—			—			0.1		—		—		1.5			—			—
Net periodic benefit cost (B)	$	42.1		$	28.0		$	27.0		$	2.3	$	3.6	$	2.7	$	15.6		$	19.8		$	15.4


(A)	Unamortized prior service cost is amortized on a straight-line basis over the average remaining service period to the first eligibility age of participants who are expected to receive a benefit and are active at the date of the plan amendment.


(B)	In addition to the $60.0 million, $51.4 million and $45.1 million and of net periodic benefit cost recognized in 2013, 2012 and 2011, respectively, the Company recognized the following:


•	an increase in pension expense in 2013, 2012 and 2011 of $5.8 million, $8.3 million and $10.8 million, respectively, to maintain the allowable amount to be recovered for pension expense in the Oklahoma jurisdiction, which are included in the Pension tracker regulatory asset or liability (see Note 1); and


•	an increase in postretirement medical expense in 2013, 2012 and 2011 of $0.6 million, $0.8 million and $3.5 million, respectively, to maintain the allowable amount to be recovered for postretirement medical expense in the Oklahoma jurisdiction which are included in the Pension tracker regulatory asset or liability (see Note 1);


•	a deferral of pension expense in 2013 of $17.0 million related to the pension settlement charge of $22.4 million, in accordance with the Oklahoma pension tracker.

The capitalized portion of the net periodic pension benefit cost was $5.7 million, $6.5 million and $6.1 million at December 31, 2013, 2012 and 2011, respectively. The capitalized portion of the net periodic postretirement benefit cost was $3.5 million, $5.5 million and $3.8 million at December 31, 2013, 2012 and 2011, respectively.

Rate Assumptions



	Pension Plan and Restoration of Retirement Income Plan						Postretirement Benefit Plans
Year ended December 31	2013		2012		2011		2013		2012		2011
Discount rate	4.60	%	3.70	%	4.50	%	4.60	%	3.60	%	4.50	%
Rate of return on plans' assets	8.00	%	8.00	%	8.00	%	4.00	%	4.00	%	6.50	%
Compensation increases	4.20	%	4.20	%	4.40	%	N/A		N/A		N/A
Assumed health care cost trend:
Initial trend	N/A		N/A		N/A		8.35	%	8.55	%	8.75	%
Ultimate trend rate	N/A		N/A		N/A		4.48	%	4.48	%	4.48	%
Ultimate trend year	N/A		N/A		N/A		2028		2028		2028

N/A - not applicable

The overall expected rate of return on plan assets assumption remained at 8.00 percent in 2012 and 2013 in determining net periodic benefit cost due to recent returns on the Company's long-term investment portfolio. The rate of return on plan assets assumption is the average long-term rate of earnings expected on the funds currently invested and to be invested for the purpose of providing benefits specified by the Pension Plan or postretirement benefit plans. This assumption is reexamined at least annually and updated as necessary. The rate of return on plan assets assumption reflects a combination of historical return analysis, forward-looking return expectations and the plans' current and expected asset allocation.

Post-Employment Benefit Plan

Disabled employees receiving benefits from the Company's Group Long-Term Disability Plan are entitled to continue participating in the Company's Medical Plan along with their dependents. The post-employment benefit obligation represents the actuarial present value of estimated future medical benefits that are attributed to employee service rendered prior to the date as of which such information is presented. The obligation also includes future medical benefits expected to be paid to current employees participating in the Company's Group Long-Term Disability Plan and their dependents, as defined in the Company's Medical Plan.

The post-employment benefit obligation is determined by an actuary on a basis similar to the accumulated postretirement benefit obligation. The estimated future medical benefits are projected to grow with expected future medical cost trend rates and are discounted for interest at the discount rate and for the probability that the participant will discontinue receiving benefits from the Company's Group Long-Term Disability Plan due to death, recovery from disability, or eligibility for retiree medical benefits. The Company's post-employment benefit obligation was $1.6 million and $2.6 million at December 31, 2013 and 2012, respectively.

401(k) Plan

The Company provides a 401(k) Plan. Each regular full-time employee of the Company or a participating affiliate is eligible to participate in the 401(k) Plan immediately. All other employees of the Company or a participating affiliate are eligible to become participants in the 401(k) Plan after completing one year of service as defined in the 401(k) Plan. Participants may contribute each pay period any whole percentage between two percent and 19 percent of their compensation, as defined in the 401(k) Plan, for that pay period. Participants who have attained age 50 before the close of a year are allowed to make additional contributions referred to as "Catch-Up Contributions," subject to certain limitations of the Code. Participants may designate, at their discretion, all or any portion of their contributions as: (i) a before-tax contribution under Section 401(k) of the Code subject to the limitations thereof; or (ii) a contribution made on an after-tax basis. The 401(k) Plan also includes an eligible automatic contribution arrangement and provides for a qualified default investment alternative consistent with the U.S. Department of Labor regulations. Participants may elect, in accordance with the 401(k) Plan procedures, to have his or her future salary deferral rate to be automatically increased annually on a date and in an amount as specified by the participant in such election.

No Company contributions are made with respect to a participant's Catch-Up Contributions, rollover contributions, or with respect to a participant's contributions based on overtime payments, pay-in-lieu of overtime for exempt personnel, special lump-sum recognition awards and lump-sum merit awards included in compensation for determining the amount of participant contributions. Once made, the Company's contribution may be directed to any available investment option in the 401(k) Plan. The Company match contributions vest over a three-year period. After two years of service, participants become 20 percent vested in their Company contribution account and become fully vested on completing three years of service. In addition, participants fully vest when they are eligible for normal or early retirement under the Pension Plan, in the event of their termination due to death or permanent disability or upon attainment of age 65 while employed by the Company or its affiliates. The Company contributed $14.2 million, $13.4 million and $12.3 million in 2013, 2012 and 2011, respectively, to the 401(k) Plan.

Deferred Compensation Plan

The Company provides a nonqualified deferred compensation plan which is intended to be an unfunded plan. The plan's primary purpose is to provide a tax-deferred capital accumulation vehicle for a select group of management, highly compensated employees and non-employee members of the Board of Directors of the Company and to supplement such employees' 401(k) Plan contributions as well as offering this plan to be competitive in the marketplace.

Eligible employees who enroll in the plan have the following deferral options: (i) eligible employees may elect to defer up to a maximum of 70 percent of base salary and 100 percent of annual bonus awards or (ii) eligible employees may elect a deferral percentage of base salary and bonus awards based on the deferral percentage elected for a year under the 401(k) Plan with such deferrals to start when maximum deferrals to the qualified 401(k) Plan have been made because of limitations in that plan. Eligible directors who enroll in the plan may elect to defer up to a maximum of 100 percent of directors' meeting fees and annual retainers. The Company matches employee (but not non-employee director) deferrals to make up for any match lost in the 401(k) Plan because of deferrals to the deferred compensation plan, and to allow for a match that would have been made under the 401(k) Plan on that portion of either the first six percent of total compensation or the first five percent of total compensation, depending on the option the participant elected under the choice provided to eligible employees in the qualified 401(k) Plan discussed above, deferred that exceeds the limits allowed in the 401(k) Plan. Matching credits vest based on years of service, with full vesting after three years or, if earlier, on retirement, disability, death, a change in control of the Company or termination of the plan. Deferrals, plus any Company match, are credited to a recordkeeping account in the participant's name. Earnings on the deferrals are indexed to the assumed investment funds selected by the participant. In 2013, those investment options included a Company Common Stock fund, whose value was determined based on the stock price of the Company's Common Stock. The Company accounts for the contributions related to the Company's executive officers in this plan as Accrued Benefit Obligations and the Company accounts for the contributions related to the Company's directors in this plan as Other Deferred Credits and Other Liabilities in the Consolidated Balance Sheets. The investment associated with these contributions is accounted for as Other Property and Investments in the Consolidated Balance Sheets. The appreciation of these investments is accounted for as Other Income and the increase in the liability under the plan is accounted for as Other Expense in the Consolidated Statements of Income.

Supplemental Executive Retirement Plan

The Company provides a supplemental executive retirement plan in order to attract and retain lateral hires or other executives designated by the Compensation Committee of the Company's Board of Directors who may not otherwise qualify for a sufficient level of benefits under the Company's Pension Plan and Restoration of Retirement Income Plan. The supplemental executive retirement plan is intended to be an unfunded plan and not subject to the benefit limitations of the Code.