Note 10. Postretirement Benefits

The liabilities for the postretirement plans described in this note are presented in total for all employees of the Erie Insurance Group. The gross liability for postretirement benefits is presented in the Consolidated Statements of Financial Position as part of other liabilities. A portion of annual expenses related to our postretirement benefit plans is allocated to related entities within the Erie Insurance Group.

We offer a noncontributory defined benefit pension plan that covers substantially all employees. This is the largest postretirement benefit plan we offer. We also offer an unfunded supplemental employee retirement plan (“SERP”) for certain members of executive and senior management of the Erie Insurance Group. The cost of our pension plans are as follows:



	Erie Insurance Group
(in millions)	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Service cost for benefits earned	$	7		$	5		$	20		$	16
Interest cost on benefits obligation	6			6			19			18
Expected return on plan assets	(8		)	(6		)	(23		)	(20		)
Prior service cost amortization	0			1			1			1
Net actuarial loss amortization	4			2			11			8
Pension plan cost	$	9		$	8		$	28		$	23

Prior to 2003, the employee pension plan purchased annuities from EFL for certain plan participants that were receiving benefit payments under the pension plan. These are nonparticipating annuity contracts under which EFL has unconditionally contracted to provide specified benefits to beneficiaries; however, the pension plan remains the primary obligor to the beneficiaries and a contingent liability, $27 million at September 30, 2013, exists in the event EFL does not honor the annuity contracts.