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Nonpension Postretirement Benefits
 12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Nonpension Postretirement Benefits
Nonpension Postretirement Benefits

We provide certain retiree health care and life insurance benefits covering our U.S. and Canadian salaried employees hired before January 1, 2004 and a majority of our union hourly employees (excluding employees hired at Shreveport after 2008 and at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Effective January 1, 2013, we ended our existing healthcare benefit for salaried retirees age 65 and older and instead provide a Retiree Health Reimbursement Arrangement (RHRA) that supports retirees in purchasing a Medicare plan that meets their needs. Also effective January 1, 2013, we reduced the maximum life insurance benefit for salaried retirees to $10,000. Benefits for most hourly retirees are determined by collective bargaining. The U.S. nonpension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey (excluding those mentioned above). The non-U.S. nonpension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

Effect on Operations

The provision for our nonpension postretirement benefit expense consists of the following:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Service cost (benefits earned during the period)
 
$
1,190

 
$
1,470

 
$
1,359

 
$
2

 
$
2

 
$
2

 
$
1,192

 
$
1,472

 
$
1,361

Interest cost on projected benefit obligation
 
2,622

 
3,426

 
3,632

 
110

 
104

 
122

 
2,732

 
3,530

 
3,754

Amortization of unrecognized:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior service cost
 
140

 
422

 
422

 
—

 
—

 
—

 
140

 
422

 
422

Loss (gain)
 
857

 
916

 
1,107

 
—

 
(1
)
 
(17
)
 
857

 
915

 
1,090

Nonpension postretirement benefit expense
 
$
4,809

 
$
6,234

 
$
6,520

 
$
112

 
$
105

 
$
107

 
$
4,921

 
$
6,339

 
$
6,627



Actuarial Assumptions

The discount rate used to determine the accumulated postretirement benefit obligation was:
 
U.S. Plans
 
Non-U.S. Plans
 
2013
 
2012
 
2013
 
2012
Discount rate
4.74
%
 
3.85
%
 
4.36
%
 
3.71
%

The discount rate used to determine net postretirement benefit cost was:
 
U.S. Plans
 
Non-U.S. Plans
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
Discount rate
3.85
%
 
4.91
%
 
5.34
%
 
3.71
%
 
3.97
%
 
4.86
%


The weighted average assumed health care cost trend rates at December 31 were as follows:
 
U.S. Plans
 
Non-U.S. Plans
 
2013
 
2012
 
2013
 
2012
Initial health care trend
7.50
%
 
7.00
%
 
7.50
%
 
7.00
%
Ultimate health care trend
5.00
%
 
5.00
%
 
5.00
%
 
5.00
%
Years to reach ultimate trend rate
10

 
8

 
10

 
8



We use various actuarial assumptions, including the discount rate and the expected trend in health care costs, to estimate the costs and benefit obligations for our retiree health plan. The discount rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical benefits at our December 31 measurement date to establish the discount rate. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year.

The health care cost trend rate represents our expected annual rates of change in the cost of health care benefits. The trend rate noted above represents a forward projection of health care costs as of the measurement date.

Sensitivity to changes in key assumptions is as follows:

•
A 1.0 percent change in the health care trend rate would not have a material impact upon the nonpension postretirement expense.

•A 1.0 percent change in the discount rate would change the nonpension postretirement expense by $0.3 million.

Accumulated Postretirement Benefit Obligation
The components of our nonpension postretirement benefit obligation are as follows:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Change in accumulated nonpension postretirement benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation, beginning of year
 
$
73,523

 
$
70,541

 
$
2,684

 
$
2,676

 
$
76,207

 
$
73,217

Service Cost
 
1,190

 
1,470

 
2

 
2

 
1,192

 
1,472

Interest cost
 
2,622

 
3,426

 
110

 
104

 
2,732

 
3,530

Plan participants' contributions
 
810

 
1,307

 
—

 
—

 
810

 
1,307

ERRP to be used to reduce retiree contribution
 
—

 
76

 
—

 
—

 
—

 
76

Plan amendments
 
—

 
(2,672
)
 
—

 
—

 
—

 
(2,672
)
Actuarial (gain) loss
 
(11,477
)
 
3,682

 
238

 
(28
)
 
(11,239
)
 
3,654

Exchange rate fluctuations
 
—

 
—

 
(188
)
 
61

 
(188
)
 
61

Benefits paid
 
(5,551
)
 
(4,307
)
 
(140
)
 
(131
)
 
(5,691
)
 
(4,438
)
Benefit obligation, end of year
 
$
61,117

 
$
73,523

 
$
2,706

 
$
2,684

 
$
63,823

 
$
76,207

 
 
 
 
 
 
 
 
 
 
 
 
 
Funded status and accrued benefit cost
 
$
(61,117
)
 
$
(73,523
)
 
$
(2,706
)
 
$
(2,684
)
 
$
(63,823
)
 
$
(76,207
)


The net accrued postretirement benefit liability at December 31 of the respective year-ends were included in the Consolidated Balance Sheets as follows:
December 31,
(dollars in thousands)
 
2013
 
2012
Current liability
 
$
4,758

 
$
4,739

Long-term liability
 
59,065

 
71,468

Total accrued postretirement benefit liability
 
$
63,823

 
$
76,207



The pre-tax amounts recognized in accumulated other comprehensive loss as of December 31, 2013 and 2012, are as follows:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Net actuarial loss (gain)
 
$
7,760

 
$
20,087

 
$
(62
)
 
$
(316
)
 
$
7,698

 
$
19,771

Prior service cost
 
(1,044
)
 
(904
)
 
—

 
—

 
(1,044
)
 
(904
)
Total cost (credit)
 
$
6,716

 
$
19,183

 
$
(62
)
 
$
(316
)
 
$
6,654

 
$
18,867



The pre-tax amounts in accumulated other comprehensive loss at December 31, 2013, that are expected to be recognized as components of net periodic benefit cost during 2014 are as follows:
Year ended December 31,
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
Net actuarial loss
 
$
267

 
$
—

 
$
267

Prior service cost
 
140

 
—

 
140

Total cost
 
$
407

 
$
—

 
$
407



Nonpension postretirement benefit payments net of estimated future Medicare Part D subsidy payments and future retiree contributions, are anticipated to be paid as follows:
Fiscal Year
(dollars in thousands)
 
U.S. Plans
 
Non-U.S. Plans
 
Total
2014
 
$
4,468

 
$
290

 
$
4,758

2015
 
$
4,600

 
$
288

 
$
4,888

2016
 
$
4,794

 
$
286

 
$
5,080

2017
 
$
5,110

 
$
277

 
$
5,387

2018
 
$
5,326

 
$
269

 
$
5,595

2019-2023
 
$
24,259

 
$
1,039

 
$
25,298