We recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur. These gains and losses are generally only measured annually as of December 31 and, accordingly, are recorded during the fourth quarter of each year. In the fourth quarter of 2014, we recognized a pre-tax charge of $56.5 million related to the actuarial losses during the year. We recognized a pre-tax benefit of $44.0 million and charge of $42.0 million in the fourth quarter of 2013 and 2012, respectively.

All U.S. qualified defined benefit pension plans are frozen, no longer accrue benefits and are closed to new participants. We have foreign pension plans that accrue benefits. The plans generally provide benefit payments using a formula that is based upon employee compensation and length of service.

We sponsor several unfunded defined benefit post-retirement plans that provide subsidized health care and life insurance benefits to a certain closed group of retirees. In 2009, we adopted changes to our U.S. post-retirement healthcare plan whereby, effective January 1, 2010, the plan, for certain eligible retirees, was discontinued, and benefits were phased out through December 31, 2012. When this plan change was recognized in 2009, prior service cost amortization was calculated to fully amortize the prior service cost by the end of 2012, consistent with the period of continued benefits.

The following tables present the change in benefit obligation, change in plan assets and components of funded status for defined benefit pension and post-retirement health care benefit plans. Actuarial assumptions that were used are also included.



	Pension Benefits						Health Care Benefits
(In millions)	2014			2013			2014			2013
Change in benefit obligation:
Projected benefit obligation — beginning of year	$	537.0		$	597.2		$	16.4		$	18.9
Service cost	1.6			1.7			—			—
Interest cost	24.9			23.9			0.7			0.6
Actuarial loss (gain)	70.9			(35.5		)	1.3			(1.0		)
Benefits paid	(54.8		)	(51.5		)	(1.7		)	(2.0		)
Other	(2.8		)	1.2			(0.1		)	(0.1		)
Projected benefit obligation — end of year	$	576.8		$	537.0		$	16.6		$	16.4
Projected salary increases	(3.5		)	(2.8		)	—			—
Accumulated benefit obligation	$	573.3		$	534.2		$	16.6		$	16.4
Change in plan assets:
Plan assets — beginning of year	$	472.2		$	410.4		$	—		$	—
Actual return on plan assets	47.8			44.9			—			—
Company contributions	20.1			68.0			1.5			1.8
Plan participants’ contributions	—			—			0.2			0.2
Benefits paid	(54.8		)	(51.5		)	(1.7		)	(2.0		)
Other	(1.3		)	0.4			—			—
Plan assets — end of year	$	484.0		$	472.2		$	—		$	—
Unfunded status at end of year	$	(92.8	)	$	(64.8	)	$	(16.6	)	$	(16.4	)

Amounts included in the accompanying Consolidated Balance Sheets are as follows:



	Pension Benefits				Health Care Benefits
(In millions)	2014		2013		2014		2013
Non-current assets	$	—	$	1.8	$	—	$	—
Accrued expenses and other liabilities	4.1		4.0		1.6		1.7
Other non-current liabilities	88.7		62.6		15.0		14.7

As of December 31, 2014 and 2013, we had plans with total projected and accumulated benefit obligations in excess of the related plan assets as follows:



	Pension Benefits				Health Care Benefits
(In millions)	2014		2013		2014		2013
Projected benefit obligation	$	566.3	$	528.5	$	16.6	$	16.4
Accumulated benefit obligation	562.8		525.6		16.6		16.4
Fair value of plan assets	473.5		461.9		—		—

Weighted-average assumptions used to determine benefit obligations at December 31:



	Pension Benefits				Health Care Benefits
	2014		2013		2014		2013
Discount rate	3.88	%	4.83	%	3.75	%	4.38	%
Assumed health care cost trend rates at December 31:
Health care cost trend rate assumed for next year	N/A		N/A		6.88	%	7.02	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	N/A		N/A		4.50	%	4.50	%
Year that the rate reaches the ultimate trend rate	N/A		N/A		2027		2027

Assumed health care cost trend rates have an effect on the amounts reported for the health care plans. A one percentage point change in assumed health care cost trend rates would have the following impact:



(In millions)	One Percentage Point Increase		One Percentage Point Decrease
Effect on total of service and interest cost	$	—	$	—
Effect on post-retirement benefit obligation	1.1		(1.0		)

The following table summarizes the components of net period benefit cost or gain that was recognized during each of the years in the three-year period ended December 31, 2014. Actuarial assumptions that were used are also included.



	Pension Benefits									Health Care Benefits
(In millions)	2014			2013			2012			2014		2013			2012
Components of net periodic benefit costs (gains):
Service cost	$	1.6		$	1.7		$	1.5		$	—	$	—		$	—
Interest cost	24.9			23.9			27.2			0.7		0.6			0.8
Expected return on plan assets	(32.2		)	(37.4		)	(27.6		)	—		—			—
Amortization of prior service cost	—			—			—			—		—			(17.4		)
Mark-to-market actuarial net losses (gains)	55.2			(43.0		)	44.0			1.3		(1.0		)	(2.0		)
Net periodic benefit cost (gain)	$	49.5		$	(54.8	)	$	45.1		$	2.0	$	(0.4	)	$	(18.6	)

In 2014, we recognized a $56.5 million mark-to-market charge that was primarily a result of the decrease in year end discount rates, as shown in the tables above, and updated mortality assumptions. During 2014, we adopted the RP-2014 mortality table which was issued by the Society of Actuaries in October 2014.

Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:



	Pension Benefits						Health Care Benefits
	2014		2013		2012		2014		2013		2012
Discount rate*	4.83	%	4.12	%	5.11	%	4.38	%	3.71	%	4.66	%
Expected long-term return on plan assets*	6.86	%	8.41	%	8.43	%	—	%	—	%	—	%
Assumed health care cost trend rates at December 31:
Health care cost trend rate assumed for next year	N/A		N/A		N/A		7.02	%	7.39	%	8.35	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	N/A		N/A		N/A		4.50	%	4.63	%	5.00	%
Year that the rate reaches the ultimate trend rate	N/A		N/A		N/A		2027		2025		2019

*The mark-to-market component of net periodic costs is determined based on discount rates as of year end and actual asset returns during the year.

The expected long-term rate of return on pension assets was determined after considering the historical and forward looking long-term asset returns by asset category and the expected investment portfolio mix.

Our pension investment strategy is to diversify the portfolio among asset categories to enhance the portfolio’s risk-adjusted return as well as insulate it from exposure to changes in interest rates. Our asset mix considers the duration of plan liabilities, historical and expected returns of the investments, and the funded status of the plan. The pension asset allocation is reviewed and actively managed based on the funded status of the plan. As the funded status of the plan increases, the asset allocation is adjusted to increase the mix of fixed income investments and match the duration of those investments with the duration of the plan liabilities. Based on the current funded status of the plan, our pension asset investment allocation guidelines are to invest 60% to 70% in fixed income securities, 30% to 40% in equity securities and 0% to 10% in alternative investments and cash. These alternative investments may include funds of multiple asset investment strategies and funds of hedge funds.

The fair values of pension plan assets at December 31, 2014 and 2013, by asset category, are as follows:



	Fair Value of Plan Assets at December 31, 2014
(In millions)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Asset category
Cash	$	6.7	$	—	$	—	$	6.7
Small-cap equity	19.2		—		—		19.2
Registered investment companies:
Non-U.S. equity	44.3		—		—		44.3
Floating rate income	35.7		—		—		35.7
Common collective funds:
Short-term investments	—		18.8		—		18.8
United States equity	—		62.6		—		62.6
Fixed income	—		77.0		—		77.0
United States treasuries	74.6		—		—		74.6
Fixed income securities	124.7		5.2		—		129.9
Other	—		—		15.2		15.2
Totals	$	305.2	$	163.6	$	15.2	$	484.0



	Fair Value of Plan Assets at December 31, 2013
(In millions)	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Asset category
Cash	$	6.6	$	—	$	—	$	6.6
Equity securities:
Large-cap equity	28.4		—		—		28.4
Small-cap equity	22.0		—		—		22.0
International equity	14.4		—		—		14.4
Registered investment companies:
Fixed income	107.7		—		—		107.7
Non-U.S. equity	45.2		—		—		45.2
Floating rate income	35.3		—		—		35.3
Common collective funds:
Short-term investments	—		14.8		—		14.8
United States equity	—		30.0		—		30.0
United States treasuries	42.8		—		—		42.8
Fixed income securities	125.0		—		—		125.0
Totals	$	427.4	$	44.8	$	—	$	472.2

Large-cap equities represent U.S. publicly-traded equity securities of companies with a market capitalization typically in excess of $10 billion with a focus on growth or value. Small-cap equities represent U.S. publicly-traded equity securities of companies with a market capitalization typically less than $2 billion with a focus on growth or value. International equities primarily represent publicly-traded equity securities of developed international countries and emerging markets with a focus on growth or value. The registered investment company fixed income funds invest primarily in investment grade fixed income securities. The registered investment company non-US equity funds invest in underlying securities that are actively traded in public, non-US markets. The registered investment company floating rate income fund strategy is to invest primarily in a diversified portfolio of first and second lien high-yield senior floating rate loans and other floating rate debt securities. Common collective funds are valued at the net value of units held by the fund at year end. The unit value is determined by the total value of fund assets divided by the total number of units of the fund owned. Short-term investments in common collective funds represent cash and other short-term investments. The equity investments in common collective funds are predominately in equity or investment grade fixed income securities actively traded in public markets based upon readily measurable prices. The United States treasuries and fixed income securities consist of publicly traded United States and non-United States fixed interest obligations (principally corporate and government bonds and debentures). Other assets are primarily insurance contracts for international plans.

Level 1 assets are valued based on quoted market prices. Level 2 investments included within the respective common collective trust funds are valued using a net asset value per share that is based on quoted market prices and/or other market data for the same or comparable instruments and transactions of the underlying equity or fixed income investments. The insurance contracts included in the other asset category are valued at the transacted price.

The estimated future benefit payments for our pension and health care plans are as follows:



(In millions)	Pension Benefits		Health Care Benefits
2015	$	50.0	$	1.6
2016	39.5		1.6
2017	39.0		1.5
2018	39.1		1.5
2019	38.6		1.4
2020 through 2024	186.3		6.0

We currently estimate that 2015 employer contributions will be $24.5 million to all qualified and non-qualified pension plans and $1.6 million to all healthcare benefit plans.

PolyOne sponsors various voluntary retirement savings plans (RSP). Under the provisions of the plans, eligible employees receive defined Company contributions and are eligible for Company matching contributions based on their eligible earnings contributed to the plan. In addition, we may make discretionary contributions to the plans for eligible employees based on a specific percentage of each employee’s compensation.

Following are our contributions to the RSP:



(In millions)	2014		2013		2012
Retirement savings match	$	9.7	$	9.8	$	7.6
Retirement benefit contribution	4.0		4.0		3.8
Total contributions	$	13.7	$	13.8	$	11.4