Employee Benefit Plans

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Employee Benefit Plans

Pension and Other Postretirement Benefit Plans

We sponsor several defined benefit pension and other postretirement benefit (OPEB) plans for our employees, including non-qualified pension plans. The U.S. qualified and non-qualified defined benefit pension 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.

U.S. Plans

In June 2013, we adopted 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 participants in these plans, we were required to remeasure the benefit obligations during the second quarter of 2013. 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. 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 the increase in the discount rate assumption used to remeasure the benefit obligations.

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.

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.

U.K. Plan

In September 2013, we adopted amendments to our U.K. pension plan which freeze participation in our plan and which reduce the maximum rate of inflation indexation from 5.0 percent to 2.5 percent for pension benefits which were earned prior to April 1997. The amendment to reduce the maximum rate of inflation indexation was effective September 12, 2013, and the amendment to freeze participation will become effective June 30, 2014. Although all future service accruals will be eliminated for active participants, pension payments to participants currently employed will be based on the higher of (i) pensionable earnings at a participant's retirement age or the date a participant's employment ceases, subject to the inflation indexation provisions in the plan, or (ii) pensionable earnings as of June 30, 2014, also subject to the inflation indexation provisions. Because the amendments eliminate all future service accruals subsequent to June 30, 2014 for active participants in the plan, we were required to remeasure the benefit obligation of the plan during the third quarter of 2013. The discount rate assumption increased from 4.50 percent at December 31, 2012 to 4.60 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 changed from 6.20 percent at December 31, 2012 to 6.35 percent at the remeasurement date. The remeasurement resulted in a $2.3 million, or £1.5 million, increase in our net pension asset.

As a result of these plan amendments, during the third quarter of 2013, we recognized a curtailment gain of $3.7 million, or £2.3 million, with a corresponding decrease in the prior service credit included in accumulated other comprehensive income and associated with years of service no longer expected to be rendered. The majority of the prior service credit was related to the amendment to reduce the rate of inflation indexation.

We made required contributions to our U.K. plan of $0.9 million and $2.8 million, or approximately £0.6 million and £1.8 million, during the three and nine months ended September 30, 2013, respectively. Effective October 1, 2013, we will increase contributions to the U.K. plan from 24.8 percent to 30.0 percent of pensionable earnings for plan participants. Subsequent to June 30, 2014, we will no longer be subject to required contributions, but we may make voluntary contributions in the future as is deemed necessary. Contributions to the U.K. plan are sufficient to meet the minimum funding requirements under U.K. law.

Amortization of Actuarial Gain or Loss

In addition, because all participants in the U.S. and U.K. pension 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 for U.S. participants and 35 years for U.K. participants. The net actuarial loss was previously amortized over the average future working life of pension plan participants, or approximately 11 years.

Net Periodic Benefit Cost (Credit)

The unrecognized net actuarial loss and prior service credit included in accumulated other comprehensive income and expected to be amortized and included in net periodic benefit cost during 2013 is approximately $28.1 million before tax and $18.5 million after tax.

The components of net periodic benefit cost (credit) related to the Company's defined benefit pension and OPEB plans are as follows:

	Three Months Ended September 30
	Pension Benefits
	U.S. Plans						U.K. Plan						OPEB
	2013			2012			2013			2012			2013			2012
	(in millions of dollars)
Service Cost	$	14.8		$	12.2		$	1.0		$	1.2		$	0.2		$	0.4
Interest Cost	21.3			21.1			2.1			2.2			2.0			2.3
Expected Return on Plan Assets	(27.2		)	(22.2		)	(3.1		)	(2.8		)	(0.2		)	(0.2		)
Amortization of:
Net Actuarial Loss	2.3			11.5			0.4			0.1			—			—
Prior Service Cost (Credit)	0.1			(0.1		)	—			—			(1.2		)	(0.6		)
Curtailment Gain	—			—			(3.7		)	—			—			—
Total	$	11.3		$	22.5		$	(3.3	)	$	0.7		$	0.8		$	1.9

	Nine Months Ended September 30
	Pension Benefits
	U.S. Plans						U.K. Plan						OPEB
	2013			2012			2013			2012			2013			2012
	(in millions of dollars)
Service Cost	$	44.6		$	36.6		$	3.2		$	3.6		$	0.6		$	1.2
Interest Cost	65.0			63.3			6.3			6.4			6.0			7.1
Expected Return on Plan Assets	(78.5		)	(66.5		)	(9.1		)	(8.3		)	(0.5		)	(0.5		)
Amortization of:
Net Actuarial Loss	29.4			34.4			1.1			0.4			—			—
Prior Service Cost (Credit)	0.1			(0.4		)	—			—			(3.7		)	(1.9		)
Curtailment Loss (Gain)	0.7			—			(3.7		)	—			—			—
Total	$	61.3		$	67.4		$	(2.2	)	$	2.1		$	2.4		$	5.9

Defined Contribution Plans

We offer a 401(k) plan to all eligible U.S. employees under which a portion of employee contributions is matched. Currently, we match dollar-for-dollar up to 3.0 percent of base salary and $0.50 on the dollar for each of the next 2.0 percent of base salary for employee contributions into the 401(k) plan. Concurrent with the adoption of our U.S. pension plan amendments, we adopted an amendment to increase the benefits under our 401(k) plan, effective January 1, 2014, to match dollar-for dollar up to 5.0 percent of base salary. We will also include any 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.

We also offer a defined contribution plan to all eligible U.K. employees under which a portion of employee contributions is matched. Currently, we match pound-for-pound up to 5.0 percent of base salary for employee contributions into the defined contribution plan and make an additional non-elective contribution of 5.0 percent of base salary. Concurrent with the adoption of our U.K. pension plan amendments, we adopted an amendment to increase the benefits under our U.K. defined contribution plan. Effective July 1, 2014, we will increase benefits under the defined contribution plan wherein we will match two pounds for every one pound on the first 1.0 percentof employee contributions into the plan and will match additional employee contributions pound-for-pound up to 5.0 percent of base salary. Also effective July 1, 2014, we will increase the non-elective contribution to 6.0 percent of base salary for all eligible employees. In addition, a separate transition contribution will be made for all eligible employees through March 31, 2016.