Retirement Benefits

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Retirement Benefits

We sponsor several defined benefit pension and other postretirement benefit (OPEB) plans for our employees, including non-qualified pension plans. The U.S. plans comprise the majority of our total benefit obligation and benefit cost. We maintain a separate defined benefit plan for eligible employees in our U.K. operation. The U.K. defined benefit pension plan was closed to new entrants on December 31, 2002.

In June 2013, we announced plan amendments which freeze participation and benefit accruals in our U.S. qualified and non-qualified defined benefit pension plans, effective December 31, 2013. Because the amendments eliminate all future service accruals subsequent to December 31, 2013 for active employees in these plans, we were required to remeasure the benefit obligations of our U.S. plans during the second quarter of 2013. The remeasurement resulted in a decrease in our net pension liability of $327.4 million during the second quarter of 2013, with a corresponding increase in other comprehensive income, less applicable income tax of $114.6 million. The decrease in the net pension liability resulted primarily from the curtailment of benefits under the plan amendments as well as an increase in the discount rate assumption used to remeasure the benefit obligations. The discount rate assumption increased from 4.50 percent at December 31, 2012 to 5.00 percent at the remeasurement date, reflecting the change in market interest rates during that period. The expected long-term rate of return on plan assets of 7.50 percent remained unchanged from December 31, 2012. As a result of these plan amendments, during the second quarter of 2013 we recognized a $0.7 million curtailment loss, with a corresponding reduction in the prior service cost included in accumulated other comprehensive income and associated with years of service no longer expected to be rendered. In addition, because all participants in the U.S. plans are considered inactive as a result of these amendments, we are required to amortize the net actuarial loss for these plans over the average remaining life expectancy of the plan participants, which is approximately 30 years. The net actuarial loss was previously amortized over the average future working life of pension plan participants, or approximately 11 years.

In June 2013, we also communicated plans to amend the defined benefit pension plan for employees in our U.K. operation to freeze participation and benefit accruals effective December 31, 2013. Consistent with U.K. regulatory requirements, this communication initiated a formal 60 day consultation process with U.K. plan participants. If approved, we will remeasure the benefit obligation for our U.K. operation's plan and will record the effect of the remeasurement in the third quarter of 2013.

The unrecognized net actuarial loss and prior service cost included in accumulated other comprehensive income and expected to be amortized and included in net periodic pension cost during 2013 is approximately $33.3 million before tax and $21.9 million after tax. These amounts may change if the benefit obligation for our U.K. operation's plan is remeasured during the third quarter of 2013.

Concurrent with our announcements concerning our defined benefit pension plan amendments, we announced an amendment to increase the benefits under our 401(k) plan effective January 1, 2014.  Currently, we match dollar-for-dollar up to 3 percent of base salary and $0.50 on the dollar for each of the next 2 percent of base salary for employee contributions into the 401(k) Plan. Effective January 1, 2014, we will increase benefits under the 401(k) plan to match dollar-for dollar up to 5 percent of base salary and will include performance-based incentive compensation as part of the definition of earnings for purposes of contributions. Also effective January 1, 2014, we will establish a new component of the 401(k) plan wherein we will make an additional non-elective contribution of 4.5 percent of earnings for all eligible employees. In addition, a separate transition contribution will be made for eligible employees who meet certain age and years of service criteria. The 401(k) plan will continue to qualify for a “safe harbor” from annual discrimination testing.  These changes are in compliance with Employee Retirement Income Security Act (ERISA) guidelines.

The components of net periodic benefit cost related to the Company sponsored defined benefit pension and OPEB plans for our employees are as follows:

	Three Months Ended June 30
	Pension Benefits
	U.S. Plans						Non U.S. Plans						OPEB
	2013			2012			2013			2012			2013			2012
	(in millions of dollars)
Service Cost	$	14.9		$	12.2		$	1.1		$	1.2		$	0.2		$	0.4
Interest Cost	21.8			21.1			2.1			2.1			2.0			2.4
Expected Return on Plan Assets	(25.8		)	(22.1		)	(3.0		)	(2.8		)	(0.1		)	(0.1		)
Amortization of:
Net Actuarial Loss	12.5			11.4			0.4			0.2			—			—
Prior Service Credit	—			(0.2		)	—			—			(1.3		)	(0.7		)
Curtailment Loss	0.7			—			—			—			—			—
Total	$	24.1		$	22.4		$	0.6		$	0.7		$	0.8		$	2.0

	Six Months Ended June 30
	Pension Benefits
	U.S. Plans						Non U.S. Plans						OPEB
	2013			2012			2013			2012			2013			2012
	(in millions of dollars)
Service Cost	$	29.8		$	24.4		$	2.2		$	2.4		$	0.4		$	0.8
Interest Cost	43.7			42.2			4.2			4.2			4.0			4.8
Expected Return on Plan Assets	(51.3		)	(44.3		)	(6.0		)	(5.5		)	(0.3		)	(0.3		)
Amortization of:
Net Actuarial Loss	27.1			22.9			0.7			0.3			—			—
Prior Service Credit	—			(0.3		)	—			—			(2.5		)	(1.3		)
Curtailment Loss	0.7			—			—			—			—			—
Total	$	50.0		$	44.9		$	1.1		$	1.4		$	1.6		$	4.0

We have no regulatory contribution requirements for our U.S. qualified defined benefit plan in 2013; however, we elected to make a voluntary contribution of $50.0 million to this plan during the second quarter of 2013. For our U.K. plan, we made required contributions of $0.9 million and $1.9 million, or approximately £0.6 million and £1.2 million, during the three and six months ended June 30, 2013.