XML 20 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
Employee Retirement Benefits
 9 Months Ended
Sep. 30, 2013
Compensation and Retirement Disclosure [Abstract]  
Employee Retirement Benefits
Employee Retirement Benefits
The following table sets forth the net periodic pension and postretirement (including health care, life insurance and auto) expense (in millions of dollars):
 
Pension Benefits
 
Postretirement
Benefits (U.S.)
 
U.S.
 
Non-U.S.
 
 
Three Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Components of Net Periodic
 
 
 
 
 
 
 
 
 
 
 
Benefit Cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
6.7

 
$
5.2

 
$
0.7

 
$
0.3

 
$
0.1

 
$
—

Interest cost
7.2

 
7.4

 
2.3

 
2.2

 
0.2

 
0.2

Expected return on plan assets
(7.9
)
 
(8.3
)
 
(3.3
)
 
(3.0
)
 
—

 
—

Net amortizations
3.5

 
2.8

 
0.1

 
—

 
—

 
—

Net pension /
 
 
 
 
 
 
 
 
 
 
 
postretirement expense
$
9.5

 
$
7.1

 
$
(0.2
)
 
$
(0.5
)
 
$
0.3

 
$
0.2

 
Pension Benefits
 
Postretirement
Benefits (U.S.)
 
U.S.
 
Non-U.S.
 
 
Nine Months Ended September 30,
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Components of Net Periodic
 
 
 
 
 
 
 
 
 
 
 
Benefit Cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost
$
21.1

 
$
18.5

 
$
2.0

 
$
0.9

 
$
0.2

 
$
0.2

Interest cost
20.8

 
21.3

 
6.9

 
6.8

 
0.5

 
0.6

Expected return on plan assets
(22.9
)
 
(23.6
)
 
(9.6
)
 
(9.0
)
 
—

 
—

Net amortizations
11.8

 
8.8

 
(0.1
)
 
(0.1
)
 
0.1

 
—

Net pension /
 
 
 
 
 
 
 
 
 
 
 
postretirement expense
$
30.8

 
$
25.0

 
$
(0.8
)
 
$
(1.4
)
 
$
0.8

 
$
0.8


Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations and union agreements. From time to time we make contributions beyond those legally required. For the three and nine months ended September 30, 2013, we contributed $6.9 million and $17.5 million, respectively, to our worldwide pension plans. For the three and nine months ended September 30, 2012, we contributed $14.5 million and $46.7 million, respectively, to our worldwide pension plans. We expect to contribute between $5 million and $10 million to our U.S. plan during the remainder of 2013. The level of future contributions will vary, and is dependent on a number of factors including investment returns, interest rate fluctuations, plan demographics, funding regulations and the results of the final actuarial valuation.
We also sponsor postretirement health care and life insurance benefits for a limited number of employees with hire dates prior to January 1, 1990. The postretirement health care plan is contributory with participants' contributions adjusted annually. An unfunded liability is recorded. We also have a key officer postretirement car benefit plan that provides the use of a vehicle from our fleet and insurance for the participants' benefit for retired Executive Vice Presidents and above who have a minimum of 20 years of service and who retire at age 58 or above. The assigned car benefit is available for 15 years postretirement or until the participant reaches the age of 80, whichever occurs last.
We participate in various "multiemployer" pension plans. In the event that we withdraw from participation in one of these plans, then applicable law could require us to make an additional lump-sum contribution to the plan, and we would have to reflect that as an expense in our consolidated statement of operations and as a liability on our condensed consolidated balance sheet. Our withdrawal liability for any multiemployer plan would depend on the extent of the plan's funding of vested benefits. Our multiemployer plans could have significant underfunded liabilities. Such underfunding may increase in the event other employers become insolvent or withdraw from the applicable plan or upon the inability or failure of withdrawing employers to pay their withdrawal liability. In addition, such underfunding may increase as a result of lower than expected returns on pension fund assets or other funding deficiencies. The occurrence of any of these events could have a material adverse effect on our consolidated financial position, results of operations or cash flows.
During 2012, Hertz completely withdrew employees from an existing multi-employer pension plan with the Central States Pension Fund, or the "Pension Fund," and entered into a new agreement with the Pension Fund. In connection with the complete withdrawal from the Pension Fund, Hertz was subject to a withdrawal liability of approximately $24.1 million, substantially all of which was paid in December 2012.
Effective January 1, 2014, The Hertz Corporation Account Balance Defined Benefit Pension Plan will be amended to provide a maximum annual compensation credit equal to 5.0% of eligible compensation paid to all plan members who are hired or rehired before January 1, 2014, unless as of December 31, 2013 the member has at least 120 months of continuous service, in which case the member continues with an annual credit of 6.5%. All Hertz employees who are hired on or after January 1, 2014 and Dollar Thrifty employees who become plan members on or after January 1, 2014 are eligible for a flat 3.0% annual compensation credit, regardless of the member's number of months of continuous service. This plan change is expected to have a favorable impact on the amount of pension expense recorded in 2013 of $2.8 million.