PENSION AND OTHER BENEFITS

9 Months Ended

Sep. 30, 2011

PENSION AND OTHER BENEFITS [Abstract]

PENSION AND OTHER BENEFITS

(G)  PENSION AND OTHER BENEFITS

UI Pension Plan

The United Illuminating Company Pension Plan (the UI Pension Plan) covers the majority of employees of UIL Corporate and UI.  UI also has a non-qualified supplemental pension plan for certain employees and a non-qualified retiree-only pension plan for certain early retirement benefits.  During the nine months ended September 30, 2011, UIL Holdings contributed $48.1 million to the UI Pension Plan.  Additional contributions during the remainder of 2011 are expected to be approximately $4.1 million.

UI has established a supplemental retirement benefit trust and through this trust purchased life insurance policies on certain officers of UI to fund the future liability under the non-qualified supplemental plan.  The cash surrender value of these policies is included in “Other investments” on the Consolidated Balance Sheet.

Gas Companies

The Gas Companies have multiple qualified pension plans covering substantially all of their union and management employees.  These entities also have non-qualified supplemental pension plans for certain employees.  The qualified pension plans (Gas Company Plans) are (1) traditional defined benefit plans or (2) cash balance plans for those hired on or after specified dates.

During the nine months ended September 30, 2011, UIL Holdings contributed $18.4 million to the Gas Company Plans.  Additional contributions during the remainder of 2011 are expected to be approximately $3.0 million.

The following tables represent the components of net periodic benefit cost for pension and other postretirement benefits (OPEB) for the three and nine month periods ended September 30, 2011 and 2010:

	Three Months Ended September 30,
	Pension Benefits						Other Postretirement Benefits
	2011			2010			2011			2010
	(In Thousands)
Components of net periodic benefit cost:
Service cost	$	3,143		$	1,781		$	541		$	340
Interest cost		10,120			5,272			1,659			982
Expected return on plan assets		(10,647	)		(4,767	)		(740	)		(438	)
Amortization of:
Prior service costs		162			162			(25	)		(26	)
Transition obligation  (asset)		-			-			255			265
Actuarial (gain) loss		3,507			3,078			502			488
Net periodic benefit cost	$	6,285		$	5,526		$	2,192		$	1,611
	Nine Months Ended September 30,
	Pension Benefits						Other Postretirement Benefits
	2011			2010			2011			2010
	(In Thousands)
Components of net periodic benefit cost:
Service cost	$	9,430		$	5,342		$	1,622		$	1,020
Interest cost		30,362			15,816			4,977			2,947
Expected return on plan assets		(31,941	)		(14,300	)		(2,222	)		(1,315	)
Amortization of:
Prior service costs		483			485			(76	)		(77	)
Transition obligation  (asset)		-			-			765			794
Actuarial (gain) loss		10,523			9,232			1,506			1,463
Net periodic benefit cost	$	18,857		$	16,575		$	6,572		$	4,832

The following actuarial weighted-average assumptions were used in calculating net periodic benefit cost for the three and nine month periods ended September 30, 2011 and 2010:

	Three and Nine Months Ended September 30,
	Pension Benefits		Other Postretirement Benefits
	2011	2010	2011	2010
Discount rate	5.10%-5.35%	5.65% - 5.85%	5.15%-5.30%	5.80%
Average wage increase	3.50% -3.80%	3.80%	N/A	N/A
Return on plan assets	8.25%-8.50%	8.50%	6.83%-8.25%	8.50%
Composite health care trend rate (current year)	N/A	N/A	7.80%-8.50%	9.50%
Health care trend rate (2018 forward) (1)	N/A	N/A	4.50%-5.00%	5.00%

(1) For the period ended September 30, 2010, the health care trend rate was applicable for 2019 forward.

N/A – not applicable