Note 9 - Employee Benefit Plans

Defined Benefit 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.S. defined benefit pension plans were closed to new entrants on December 31, 2013, and the U.K. plan was closed to new entrants on December 31, 2002.

Amendments to U.S. Pension Plans

In 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 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 at the remeasurement date, 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, we recognized a before-tax curtailment loss of $0.7 million in earnings during 2013, 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.

Amendments to U.K. Pension Plan

In 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 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 at the remeasurement date.

As a result of these plan amendments, we recognized a before-tax curtailment gain of $3.7 million, or £2.3 million, in earnings during 2013, 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.

Amendments to OPEB Plan

We discontinued offering retiree life insurance to future retirees effective December 31, 2012 but continue to provide this benefit to employees who retired prior to that date. As a result of this plan amendment, we recognized a curtailment gain of $4.2 million and a prior service credit of $5.0 million in accumulated other comprehensive income during 2012.

Amortization Period of Actuarial Gain or Loss

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. The net actuarial loss was previously amortized over the average future working life of pension plan participants, or approximately 11 years, for both U.S. and U.K. participants up to the dates of remeasurement. As of December 31, 2013, the estimate of the average remaining life expectancy of plan participants is approximately 33 years for U.S. participants and 34 years for U.K. participants.

The following tables provide the changes in the benefit obligation and fair value of plan assets and statements of the funded status of the plans.



	Pension Benefits
	U.S. Plans						Non U.S. Plans						OPEB
	2013			2012			2013			2012			2013			2012
	(in millions of dollars)
Change in Benefit Obligation
Benefit Obligation at Beginning of Year	$	1,967.9		$	1,579.8		$	197.4		$	170.4		$	198.8		$	190.9
Service Cost	59.4			48.8			4.3			4.2			0.7			1.6
Interest Cost	86.3			84.4			8.6			8.5			8.0			9.6
Plan Participant Contributions	—			—			—			—			3.9			3.5
Actuarial (Gain) Loss	(225.9		)	291.4			2.6			9.4			(30.2		)	19.1
Benefits and Expenses Paid	(42.2		)	(36.5		)	(4.1		)	(3.9		)	(15.9		)	(16.7		)
Plan Amendment	—			—			—			—			—			(5.0		)
Curtailment	(126.8		)	—			(3.7		)	—			—			(4.2		)
Change in Foreign Exchange Rates	—			—			3.6			8.8			—			—
Benefit Obligation at End of Year	$	1,718.7		$	1,967.9		$	208.7		$	197.4		$	165.3		$	198.8

Accumulated Benefit Obligation at December 31	$	1,718.7		$	1,822.3		$	197.7		$	187.3		N/A			N/A

Change in Fair Value of Plan Assets
Fair Value of Plan Assets at Beginning of Year	$	1,353.6		$	1,170.8		$	205.6		$	188.0		$	11.5		$	11.7
Actual Return on Plan Assets	224.6			161.8			15.6			8.6			0.2			0.3
Employer Contributions	54.7			57.5			4.0			4.1			11.7			12.7
Plan Participant Contributions	—			—			—			—			3.9			3.5
Benefits and Expenses Paid	(42.2		)	(36.5		)	(4.1		)	(3.9		)	(15.9		)	(16.7		)
Change in Foreign Exchange Rates	—			—			4.6			8.8			—			—
Fair Value of Plan Assets at End of Year	$	1,590.7		$	1,353.6		$	225.7		$	205.6		$	11.4		$	11.5

Underfunded (Overfunded) Status	$	128.0		$	614.3		$	(17.0	)	$	(8.2	)	$	153.9		$	187.3

The amounts recognized in our consolidated balance sheets for our pension and OPEB plans at December 31, 2013 and 2012 are as follows. Certain prior year amounts have been reclassified to conform to current year reporting.



	Pension Benefits
	U.S. Plans						Non U.S. Plans						OPEB
	2013			2012			2013			2012			2013		2012
	(in millions of dollars)
Current Liability	$	5.2		$	4.6		$	—		$	—		$	14.6	$	15.6
Noncurrent Liability	136.2			609.7			—			—			139.3		171.7
Noncurrent Asset	(13.4		)	—			(17.0		)	(8.2		)	—		—
Underfunded (Overfunded) Status	$	128.0		$	614.3		$	(17.0	)	$	(8.2	)	$	153.9	$	187.3

Unrecognized Pension and Postretirement Benefit Costs
Net Actuarial Gain (Loss)	$	(342.1	)	$	(845.4	)	$	(36.9	)	$	(37.9	)	$	10.3	$	(19.3	)
Prior Service Credit (Cost)	—			(0.6		)	—			(0.2		)	2.4		7.3
	(342.1		)	(846.0		)	(36.9		)	(38.1		)	12.7		(12.0		)
Deferred Income Tax Asset	119.7			296.1			10.9			11.1			5.8		14.4
Total Included in Accumulated Other Comprehensive Income (Loss)	$	(222.4	)	$	(549.9	)	$	(26.0	)	$	(27.0	)	$	18.5	$	2.4

The following table provides the changes recognized in other comprehensive income for the years ended December 31, 2013 and 2012.



	Pension Benefits
	U.S. Plans						Non U.S. Plans						OPEB
	2013			2012			2013			2012			2013			2012
	(in millions of dollars)
Accumulated Other Comprehensive Income (Loss) at Beginning of Year	$	(549.9	)	$	(437.6	)	$	(27.0	)	$	(17.2	)	$	2.4		$	10.7
Net Actuarial Gain (Loss)
Amortization	31.7			45.9			1.2			0.5			—			—
Curtailment	126.8			—			—			—			—			4.2
All Other Changes	344.8			(218.2		)	(0.2		)	(13.4		)	29.6			(19.4		)
Prior Service Credit (Cost)
Amortization	(0.1		)	(0.4		)	—			—			(4.9		)	(2.6		)
Curtailment	0.7			—			(3.7		)	—			—			—
Plan Amendment	—			—			3.9			—			—			5.0
Change in Deferred Income Tax Asset	(176.4		)	60.4			(0.2		)	3.1			(8.6		)	4.5
Accumulated Other Comprehensive Income (Loss) at End of Year	$	(222.4	)	$	(549.9	)	$	(26.0	)	$	(27.0	)	$	18.5		$	2.4

Plan Assets

The objective of our U.S. pension and OPEB plans is to maximize long-term return, within acceptable risk levels, in a manner that is consistent with the fiduciary standards of the Employee Retirement Income Security Act (ERISA), while maintaining sufficient liquidity to pay current benefits and expenses.

Assets for our U.S. pension plans include a diversified blend of domestic and international large cap, mid cap, and small cap equity securities, U.S. government and agency fixed income securities, corporate fixed income securities, private equity direct investments, private equity funds of funds, hedge funds of funds, and cash equivalents. The large cap and mid cap equity securities are comprised of equity index funds that are designed to track the Standard & Poor's (S&P) 500 and S&P 400 Mid Cap indices, respectively. Small cap equity securities consist of individual equity securities that track the Russell 2000 index. International equity investments consist of equity funds that are benchmarked against either the Morgan Stanley Capital International (MSCI) Europe Australasia Far East Index or the MSCI All Country World Index Excluding U.S. These international funds may allocate a certain percentage of their assets to forward currency contracts. Emerging market equity investments consist of funds that are benchmarked against the MSCI Emerging Markets Index. U.S. government and agency fixed income securities are comprised of treasury bonds and U.S. agency asset-backed securities. Corporate fixed income securities consist of investment-grade and below-investment-grade corporate bonds as well as certain asset-backed securities. Alternative investments, which include private equity direct investments, private equity funds of funds, and hedge funds of funds, utilize proprietary strategies that are intended to have a low correlation to the U.S. stock market. The target allocations for invested assets are 60 percent equity securities, 30 percent fixed income securities, and 10 percent alternative investments. Prohibited investments include, but are not limited to, unlisted securities, futures contracts, options, short sales, and investments in securities issued by the Company or its affiliates.

Assets for our U.K. pension plan are primarily invested in a pooled diversified growth fund. This fund invests in assets such as global equities, hedge funds, commodities, below-investment-grade fixed income securities, and currencies. The objectives of the fund are to generate capital appreciation over the course of a complete economic and market cycle and to deliver equity-like returns in the medium-to-long term while maintaining approximately two thirds of the volatility of equity markets. Performance of this fund is measured against the U.K. inflation rate plus four percent. The remaining assets in the U.K. plan are invested in leveraged interest rate and inflation swap funds of varying durations designed to broadly match the interest rate and inflation sensitivities of the plan's liabilities. The current target allocation for the assets is 75 percent diversified growth assets and 25 percent interest rate and inflation swap funds. There are no categories of investments that are specifically prohibited by the U.K. plan, but there are general guidelines that ensure prudent investment action is taken. Such guidelines include the prevention of the plan from using derivatives for speculative purposes and limiting the concentration of risk in any one type of investment.

Assets for life insurance benefits payable to certain former retirees covered under the OPEB plan are invested in life insurance contracts issued by one of our insurance subsidiaries. The terms of these contracts are consistent in all material respects with those the subsidiary offers to unaffiliated parties that are similarly situated. There are no categories of investments specifically prohibited by the OPEB plan.

We believe our investment portfolios are well diversified by asset class and sector, with no potential risk concentrations in any one category.

The categorization of fair value measurements by input level for the invested assets in our U.S. pension plans is as follows:



	December 31, 2013
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Invested Assets
Equity Securities:
U.S. Large Cap	$	—	$	343.9	$	—	$	343.9
U.S. Mid Cap	—		139.6		—		139.6
U.S. Small Cap	231.9		—		—		231.9
International	134.5		131.7		—		266.2
Emerging Markets	—		76.3		—		76.3
Fixed Income Securities:
U.S. Government and Agencies	105.7		7.4		—		113.1
Corporate	97.8		172.6		—		270.4
State and Municipal Securities	—		12.9		—		12.9
Alternative Investments:
Private Equity Direct Investments	—		—		7.2		7.2
Private Equity Funds of Funds	—		—		29.6		29.6
Hedge Funds of Funds	—		—		66.9		66.9
Cash Equivalents	28.4		—		—		28.4
Total	$	598.3	$	884.4	$	103.7	$	1,586.4



	December 31, 2012
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Invested Assets
Equity Securities:
U.S. Large Cap	$	—	$	269.2	$	—	$	269.2
U.S. Mid Cap	—		111.6		—		111.6
U.S. Small Cap	83.9		120.1		—		204.0
International	106.4		102.9		—		209.3
Emerging Markets	—		73.9		—		73.9
Fixed Income Securities:
U.S. Government and Agencies	138.0		8.6		—		146.6
Corporate	84.1		141.7		—		225.8
State and Municipal Securities	—		12.7		—		12.7
Alternative Investments:
Private Equity Funds of Funds	—		—		28.7		28.7
Hedge Funds of Funds	—		—		56.1		56.1
Cash Equivalents	13.1		—		—		13.1
Total	$	425.5	$	840.7	$	84.8	$	1,351.0

Level 1 equity and fixed income securities consist of individual holdings and funds that are valued based on unadjusted quoted prices from active markets for identical securities. Level 2 equity securities consist of funds that are valued based on the net asset value (NAV) of the underlying holdings. These investments have no unfunded commitments and no specific redemption restrictions. Level 2 fixed income securities are valued using observable inputs through market corroborated pricing.

Alternative investments, which include private equity direct investments, hedge funds of funds, and private equity funds of funds, are valued based on the NAV of the underlying holdings in a period ranging from one month to one quarter in arrears. We evaluate the need for adjustments to the NAV based on market conditions and discussions with fund managers in the period subsequent to the valuation date and prior to issuance of the financial statements. We made no adjustments to the NAV for 2013 or 2012. Redemptions on the hedge funds of funds can be made on either a quarterly or bi-annual basis, depending on the fund, with prior notice of at least 90 calendar days. Because of these redemption restrictions, we have classified the hedge funds of funds as Level 3 because we do not have the unrestricted ability to redeem our investment at NAV at any given time. The private equity funds of funds cannot be redeemed by investors, and distributions are received following the maturity of the underlying assets. It is estimated that these underlying assets will begin to mature between five and eight years from the date of initial investment. Accordingly, we have assigned a Level 3 classification to the private equity funds of funds due to the redemption restrictions.

Changes in our U.S. pension plans' assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2013 and 2012 are as follows:



	Year Ended December 31, 2013
	Beginning of Year		Actual Return on Plan Assets				Purchases		Sales			Level 3 Transfers				End of Year
	Beginning of Year		Held at Year End		Sold During the Year		Purchases		Sales			Into		Out of		End of Year
	(in millions of dollars)
Private Equity Direct Investments	$	—	$	0.3	$	—	$	8.4	$	(1.5	)	$	—	$	—	$	7.2
Private Equity Funds of Funds	28.7		0.9		1.1		2.1		(3.2		)	—		—		29.6
Hedge Funds of Funds	56.1		6.3		—		4.9		(0.4		)	—		—		66.9
Total	$	84.8	$	7.5	$	1.1	$	15.4	$	(5.1	)	$	—	$	—	$	103.7



	Year Ended December 31, 2012
	Beginning of Year		Actual Return on Plan Assets				Purchases		Sales			Level 3 Transfers				End of Year
	Beginning of Year		Held at Year End		Sold During the Year		Purchases		Sales			Into		Out of		End of Year
	(in millions of dollars)
Private Equity Funds of Funds	$	23.7	$	0.5	$	1.0	$	6.0	$	(2.5	)	$	—	$	—	$	28.7
Hedge Funds of Funds	44.3		3.8		—		11.8		(3.8		)	—		—		56.1
Total	$	68.0	$	4.3	$	1.0	$	17.8	$	(6.3	)	$	—	$	—	$	84.8

The categorization of fair value measurements by input level for the assets in our U.K. pension plan is as follows. Certain prior year amounts have been reclassified to conform to current year reporting.



	December 31, 2013
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Plan Assets
Diversified Growth Assets	$	—	$	172.0	$	—	$	172.0
Fixed Interest and Index-linked Securities	52.6		0.4		—		53.0
Cash Equivalents	0.7		—		—		0.7
Total Plan Assets	$	53.3	$	172.4	$	—	$	225.7



	December 31, 2012
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Plan Assets
Diversified Growth Assets	$	—	$	154.7	$	—	$	154.7
Fixed Interest and Index-linked Securities	42.6		0.9		—		43.5
Cash Equivalents	7.4		—		—		7.4
Total Plan Assets	$	50.0	$	155.6	$	—	$	205.6

Level 1 fixed interest and index-linked securities consist of individual funds that are valued based on unadjusted quoted prices from active markets for identical securities. Level 2 assets consist of funds that are valued based on the NAV of the underlying holdings. These investments have no unfunded commitments and no specific redemption restrictions.

The categorization of fair value measurements by input level for the assets in our OPEB plan is as follows:



	December 31, 2013
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Assets
Life Insurance Contracts	$	—	$	—	$	11.4	$	11.4



	December 31, 2012
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions of dollars)
Assets
Life Insurance Contracts	$	—	$	—	$	11.5	$	11.5

The fair value is represented by the actuarial present value of future cash flows of the contracts.

Changes in our OPEB plan assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2013 and 2012 are as follows:



	Year Ended December 31, 2013
	Beginning of Year		Actual Return on Plan Assets		Contributions		Net Benefits and Expenses Paid			End of Year
	Beginning of Year		Actual Return on Plan Assets		Contributions		Net Benefits and Expenses Paid			End of Year
	(in millions of dollars)
Life Insurance Contracts	$	11.5	$	0.2	$	15.6	$	(15.9	)	$	11.4



	Year Ended December 31, 2012
	Beginning of Year		Actual Return on Plan Assets		Contributions		Net Benefits and Expenses Paid			End of Year
	Beginning of Year		Actual Return on Plan Assets		Contributions		Net Benefits and Expenses Paid			End of Year
	(in millions of dollars)
Life Insurance Contracts	$	11.7	$	0.3	$	16.2	$	(16.7	)	$	11.5

For the years end December 31, 2013 and 2012, the actual return on plan assets relates solely to investments still held at the reporting date. There were no transfers into or out of Level 3 during 2013 or 2012.

Measurement Assumptions

We use a December 31 measurement date for each of our plans. The weighted average assumptions used in the measurement of our benefit obligations as of December 31 and our net periodic benefit costs for the years ended December 31 are as follows:



	Pension Benefits
	U.S. Plans				Non U.S. Plans				OPEB
	2013		2012		2013		2012		2013		2012
Benefit Obligations
Discount Rate	5.30	%	4.50	%	4.40	%	4.50	%	5.00	%	4.20	%
Rate of Compensation Increase	4.00	%	4.00	%	3.90	%	3.75	%	—	%	—	%

Net Periodic Benefit Cost
Discount Rate	4.50% / 5.00%*		5.40	%	4.50% / 4.60%**		4.90	%	4.20	%	5.20	%
Expected Return on Plan Assets	7.50	%	7.50	%	6.20% / 6.35%**		5.80	%	5.75	%	5.75	%
Rate of Compensation Increase	4.00	%	4.00	%	3.75	%	3.85	%	—	%	—	%

*In conjunction with the remeasurement due to the amendment of the plans, a discount rate of 4.50% was used for the period January 1, 2013 through the date of remeasurement, and a discount rate of 5.00% was used for the period subsequent to the date of remeasurement through December 31, 2013.

**In conjunction with the remeasurement due to the amendment of the plan, a discount rate of 4.50% and expected return on plan assets of 6.20% were used for the period January 1, 2013 through the date of remeasurement, and a discount rate of 4.60% and expected return on plan assets of 6.35% were used for the period subsequent to the date of remeasurement through December 31, 2013.

We set the discount rate assumption annually for each of our retirement-related benefit plans at the measurement date to reflect the yield on a portfolio of high quality fixed income corporate debt instruments matched against the projected cash flows for future benefits.

Our long-term rate of return on plan assets assumption is an estimate, based on statistical analysis, of the average annual assumed return that will be produced from the plan assets until current benefits are paid. The market-related value equals the fair value of assets, determined as of the measurement date. Our expectations for the future investment returns of the asset categories were based on a combination of historical market performance and evaluations of investment forecasts obtained from external consultants and economists.

The methodology underlying the return assumption included the various elements of the expected return for each asset class such as long-term rates of return, volatility of returns, and the correlation of returns between various asset classes. The expected return for the total portfolio was calculated based on the plan's strategic asset allocation. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. Risk tolerance is established through consideration of plan liabilities, plan funded status, and corporate financial condition.

The expected return assumption for the life insurance reserve for our OPEB plan at December 31, 2013 and 2012 was 5.75 percent, which was based on full investment in fixed income securities with an average book yield of 5.58 percent and 5.77 percent in 2013 and 2012, respectively.

Our rate of compensation increase assumption is generally based on periodic studies of compensation trends.

For measurement purposes at December 31, 2013 and 2012, the annual rate of increase in the per capita cost of covered postretirement health care benefits assumed for the next calendar year was 7.50 percent and 8.00 percent, respectively, for benefits payable to both retirees prior to Medicare eligibility as well as Medicare eligible retirees. The rate was assumed to change gradually to 5.00 percent by 2019 and remain at that level thereafter.

The medical and dental premium used to determine the per retiree employer subsidy are capped. If the cap is not reached by the year 2015, the caps are then set equal to the year 2015 premium. Certain of the current retirees and all future retirees are subject to the cap.

Net Periodic Benefit Cost

The following table provides the components of the net periodic benefit cost for the plans described above for the years ended December 31.



	Pension Benefits
	U.S. Plans									Non U.S. Plans									OPEB
	2013			2012			2011			2013			2012			2011			2013			2012			2011
	(in millions of dollars)
Service Cost	$	59.4		$	48.8		$	42.7		$	4.3		$	4.2		$	4.8		$	0.7		$	1.6		$	1.9
Interest Cost	86.3			84.4			77.6			8.6			8.5			8.8			8.0			9.6			10.0
Expected Return on Plan Assets	(105.5		)	(88.8		)	(87.6		)	(12.5		)	(11.1		)	(12.2		)	(0.6		)	(0.7		)	(0.7		)
Amortization of:
Net Actuarial Loss	31.7			45.9			31.9			1.2			0.5			—			—			—			—
Prior Service Credit	(0.1		)	(0.4		)	(0.5		)	—			—			—			(4.9		)	(2.6		)	(2.6		)
Curtailment	0.7			—			—			(3.7		)	—			—			—			—			—
Total	$	72.5		$	89.9		$	64.1		$	(2.1	)	$	2.1		$	1.4		$	3.2		$	7.9		$	8.6

A one percent increase or decrease in the assumed health care cost trend rate at December 31, 2013 would have increased (decreased) the service cost and interest cost by $0.2 million and $(0.1) million, respectively, and the postretirement benefit obligation by $2.4 million and $(1.7) million, respectively.

Our OPEB plan currently receives a subsidy from the federal government under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Medicare Act). This act allows an employer to choose whether to coordinate prescription drug benefits under a retiree medical plan with the Medicare prescription drug benefit or to keep the company plan design as it is and receive a subsidy from the federal government. When the Medicare Act became effective in 2006, we initially elected to receive the subsidy from the federal government with plans to defer our coordination with the new prescription drug benefit until a later date. This anticipated change was reflected in the net periodic benefit cost. In 2009, we amended the plan design to stop the deferral of coordination of benefits and elected to continue receiving the existing subsidy from the federal government. This election resulted in a $4.4 million prior service credit that began amortization in 2010. We received subsidy payments of $1.2 million, $1.3 million, and $1.3 million in 2013, 2012, and 2011, respectively. Our expected benefit payments in future years have been reduced by the amount of subsidy payments we expect to receive.

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 pension cost for our pension plans during 2014 is $5.6 million before tax and $3.7 million after tax. The prior service credit expected to be amortized and included as a reduction to net periodic cost for our OPEB plan during 2014 is $1.7 million before tax and $1.1 million after tax.

Benefit Payments

The following table provides expected benefit payments, which reflect expected future service, as appropriate.



	Pension Benefits
	U.S. Plans		Non U.S. Plans		OPEB
	(in millions of dollars)
Year					Gross		Subsidy Payments		Net
2014	$	45.1	$	5.4	$	16.4	$	1.8	$	14.6
2015	49.3		5.8		16.4		1.9		14.5
2016	54.6		6.1		16.2		2.1		14.1
2017	59.4		6.4		15.9		2.2		13.7
2018	64.7		6.7		15.6		2.4		13.2
2019-2023	421.9		38.9		70.3		14.2		56.1

Pension Plans' Funding Policy

The funding policy for our U.S. qualified defined benefit plan is to contribute annually an amount at least equal to the minimum annual contribution required under ERISA and other applicable laws, but generally not greater than the maximum amount that can be deducted for federal income tax purposes. We had no regulatory contribution requirements for our U.S. qualified defined benefit plan in 2013. We elected to make a voluntary contribution of $50.0 million to this plan during 2013 but do not expect to make any contributions during 2014. The funding policy for our U.S. non-qualified defined benefit pension plan is to contribute the amount of the benefit payments made during the year. Our expected return on plan assets and discount rate will not affect the cash contributions we are required to make to our U.S. pension and OPEB plans because we have met all minimum funding requirements required under ERISA.

We made required contributions to our U.K. plan of $4.0 million, or approximately £2.5 million, during December 31, 2013. Effective October 1, 2013, we increased contributions to the U.K. plan from 24.8 percent to 30.0 percent of pensionable earnings for plan participants. We expect to make contributions of approximately $2.3 million, or £1.4 million, during 2014. Subsequent to June 30, 2014, we may make voluntary contributions in the future as is deemed necessary. We contribute to our U.K. pension plan sufficient to meet the minimum funding requirements under U.K. legislation.

Our OPEB plan represents a non-vested, non-guaranteed obligation, and current regulations do not require specific funding levels for these benefits, which are comprised of retiree life, medical, and dental benefits. It is our practice to use general assets to pay medical and dental claims as they come due in lieu of utilizing plan assets for the medical and dental benefit portions of our OPEB plan.

Defined Contribution Plans

We offer a 401(k) plan to all eligible U.S. employees under which a portion of employee contributions is matched. 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 previously matched 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. Also effective January 1, 2014, we will include any performance-based incentive compensation as part of the definition of earnings for purposes of contributions. We will also 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, and a separate transition contribution will be made for eligible employees who meet certain age and years of service criteria. These changes are in compliance with ERISA guidelines, and the 401(k) plan will continue to qualify for a “safe harbor” from annual discrimination testing.

We also offer a defined contribution plan to all eligible U.K. employees under which a portion of employee contributions is matched. 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 percent of employee contributions into the plan and will match additional employee contributions pound-for-pound up to 5.0 percent of base salary. We previously matched pound-for-pound up to 5.0 percent of base salary for employee contributions into the defined contribution plan and made an additional non-elective contribution of 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, and a separate transition contribution will be made for all eligible employees through March 31, 2016.

During the years ended December 31, 2013, 2012, and 2011, we contributed $18.8 million, $18.9 million, and $18.8 million, respectively, to our U.S. defined contribution plan, and $2.9 million, $2.9 million, and $2.6 million, or £1.9 million, £1.8 million, and £1.6 million, respectively, to our U.K. defined contribution plan.