RETIREMENT BENEFITS

The primary objective of the Ameren pension and postretirement benefit plans is to provide eligible employees with pension and postretirement health care and life insurance benefits. Ameren offers defined benefit pension and postretirement benefit plans covering substantially all of its employees. Ameren uses a measurement date of December 31 for its pension and postretirement benefit plans. Ameren Missouri and Ameren Illinois each participate in Ameren’s single-employer pension and other postretirement plans. Ameren’s qualified pension plan is the Ameren Retirement Plan. Ameren also has an unfunded nonqualified pension plan, the Ameren Supplemental Retirement Plan, which is available for certain management employees and retirees to provide a supplemental benefit when their qualified pension plan benefits are capped to comply with Internal Revenue Code limitations. Ameren’s other postretirement plans are the Ameren Retiree Medical Plan and the Ameren Group Life Insurance Plan. Only Ameren subsidiaries participate in the plans listed above.

In December 2013, Ameren completed the divestiture of New AER to IPH. In accordance with the transaction agreement, Ameren retained the pension obligations as of December 2, 2013, associated with the current and former employees of New AER and its subsidiaries who were included in the Ameren Retirement Plan and the Ameren Supplemental Retirement Plan. Ameren also retained the postretirement benefit obligations associated with the employees of New AER and its subsidiaries who were eligible to retire at December 2, 2013, and who were included in the Ameren Retiree Medical Plan and the Ameren Group Life Insurance Plan.

Ameren’s unfunded obligation under its pension and other postretirement benefit plans was $710 million and $461 million as of December 31, 2014, and December 31, 2013, respectively. These net liabilities are recorded in "Other current liabilities," "Pension and other postretirement benefits," and "Other assets" on Ameren's consolidated balance sheet. The primary factor contributing to the increase in the unfunded obligation during 2014 was a 75 basis point decrease in the pension and other postretirement benefit plan discount rates used to determine the present value of the obligation. The offset to the increase in the unfunded obligation was primarily an increase to "Regulatory assets" on Ameren's, Ameren Missouri's, and Ameren Illinois' consolidated balance sheet.

The following table presents the net benefit liability recorded on the balance sheets of each of the Ameren Companies as of December 31, 2014 and 2013:



	2014		2013
Ameren^(a)	$	710	$	461
Ameren Missouri	277		191
Ameren Illinois	278		159


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.

Ameren recognizes the underfunded status of its pension and postretirement plans as a liability on its consolidated balance sheet, with offsetting entries to accumulated OCI and regulatory assets, in accordance with authoritative accounting guidance. The following table presents the funded status of Ameren's pension and postretirement benefit plans as of December 31, 2014 and 2013. It also provides the amounts included in regulatory assets and accumulated OCI at December 31, 2014 and 2013, that have not been recognized in net periodic benefit costs.



	2014						2013
	Pension Benefits^(a)				Postretirement Benefits^(a)		Pension Benefits^(a)				Postretirement Benefits^(a)
Accumulated benefit obligation at end of year	$	4,176		$	(b)		$	3,698		$	(b)
Change in benefit obligation:
Net benefit obligation at beginning of year	$	3,900		$	1,096		$	4,051		$	1,157
Service cost	79				19		91				22
Interest cost	183				50		163				46
Participant contributions	—				16		—				16
Actuarial (gain) loss	462				84		(207		)		(76	)
Curtailment gain^(c)	—				—		—				(3	)
Settlement^(d)	—				—		—				(5	)
Benefits paid	(214		)		(65	)	(198		)		(64	)
Federal subsidy on benefits paid	(b)				3		(b)				3
Net benefit obligation at end of year	4,410				1,203		3,900				1,096
Change in plan assets:
Fair value of plan assets at beginning of year	3,461				1,074		3,127				938
Actual return on plan assets	448				75		376				156
Employer contributions	99				6		156				25
Federal subsidy on benefits paid	(b)				3		(b)				3
Participant contributions	—				16		—				16
Benefits paid	(214		)		(65	)	(198		)		(64	)
Fair value of plan assets at end of year	3,794				1,109		3,461				1,074
Funded status – deficiency	616				94		439				22
Accrued benefit cost at December 31	$	616		$	94		$	439		$	22
Amounts recognized in the balance sheet consist of:
Noncurrent asset^(e)	$	—		$	—		$	—		$	(9	)
Current liability^(f)	3				2		3				1
Noncurrent liability	613				92		436				30
Net liability recognized	$	616		$	94		$	439		$	22
Amounts recognized in regulatory assets consist of:
Net actuarial (gain) loss	$	452		$	(7	)	$	282		$	(71	)
Prior service cost (credit)	(6		)		(16	)	(7		)		(20	)
Amounts (pretax) recognized in accumulated OCI consist of:
Net actuarial (gain) loss	29				(5	)	17				(12	)
Prior service cost (credit)	—				(1	)	—				(1	)
Total	$	475		$	(29	)	$	292		$	(104	)


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.


(b)	Not applicable.


(c)	Effective with the divestiture of New AER on December 2, 2013, the liability for active management employees of New AER and its subsidiaries not eligible to retire were neither transferred to IPH nor retained by Ameren, which resulted in a curtailment gain. See Note 16 – Divestiture Transactions and Discontinued Operations for additional information on the divestiture.

(d)

Effective with the divestiture of New AER on December 2, 2013, the liability for active union employees of New AER and its subsidiaries not eligible to retire was transferred to IPH based on the assumption of the collective bargaining agreements in place, which resulted in a settlement. See Note 16 – Divestiture Transactions and Discontinued Operations for additional information on the divestiture.


(e)	Included in "Other assets" on Ameren's consolidated balance sheet.


(f)	Included in "Other current liabilities" on Ameren's consolidated balance sheet.

The following table presents the assumptions used to determine our benefit obligations at December 31, 2014 and 2013:



	Pension Benefits				Postretirement Benefits
	2014		2013		2014		2013
Discount rate at measurement date	4.00	%	4.75	%	4.00	%	4.75	%
Increase in future compensation	3.50		3.50		3.50		3.50
Medical cost trend rate (initial)	(a)		(a)		5.00		5.00
Medical cost trend rate (ultimate)	(a)		(a)		5.00		5.00
Years to ultimate rate	(a)		(a)		—		—


(a)	Not applicable

Ameren determines discount rate assumptions by identifying a theoretical settlement portfolio of high-quality corporate bonds sufficient to provide for a plan's projected benefit payments. The settlement portfolio of bonds is selected from a pool of more than 700 high-quality corporate bonds. A single discount rate is then determined; that rate results in a discounted value of the plan's benefit payments that equates to the market value of the selected bonds. In addition, during 2014, Ameren adopted the Society of Actuaries 2014 Mortality Tables Report and Mortality Improvement Scale. The updated mortality tables assume increasing life expectancies for our employees and retirees, which resulted in an increase to our pension and other postretirement benefit obligations.

Funding

Pension benefits are based on the employees’ years of service and compensation. Ameren’s pension plans are funded in compliance with income tax regulations and federal funding or regulatory requirements. As a result, Ameren expects to fund its pension plan at a level equal to the greater of the pension expense or the legally required minimum contribution. Considering its assumptions at December 31, 2014, its investment performance in 2014, and its pension funding policy, Ameren expects to make annual contributions of $25 million to $115 million in each of the next five years, with aggregate estimated contributions of $290 million. We expect Ameren Missouri’s and Ameren Illinois’ portion of the future funding requirements to be 41% and 40%, respectively. These amounts are estimates. They may change based on actual investment performance, changes in interest rates, changes in our assumptions, changes in government regulations, and any voluntary contributions. Our funding policy for postretirement benefits is primarily to fund the Voluntary Employee Beneficiary Association (VEBA) trusts to match the annual postretirement expense.

The following table presents the cash contributions made to our defined benefit retirement plan and to our postretirement plans during 2014, 2013, and 2012:



	Pension Benefits						Postretirement Benefits
	2014		2013		2012		2014		2013		2012
Ameren Missouri	$	41	$	60	$	52	$	3	$	10	$	9
Ameren Illinois	39		50		46		2		11		35
Other	19		46		30		1		4		1
Ameren^(a)	99		156		128		6		25		45


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.

Investment Strategy and Policies

Ameren manages plan assets in accordance with the “prudent investor” guidelines contained in ERISA. The investment committee, to the extent that authority is delegated to it by the finance committee of Ameren’s board of directors, implements investment strategy and asset allocation guidelines for the plan assets. The investment committee includes members of senior management. The investment committee’s goals are twofold: first, to ensure that sufficient funds are available to provide the benefits at the time they are payable; and second, to maximize total return on plan assets and to minimize expense volatility consistent with its tolerance for risk. Ameren delegates the task of investment management to specialists in each asset class. As appropriate, Ameren provides each investment manager with guidelines that specify allowable and prohibited investment types. The investment committee regularly monitors manager performance and compliance with investment guidelines.

The expected return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the investment portfolio. Projected rates of return for each asset class were estimated after an analysis of historical experience, future expectations, and the volatility of the various asset classes. After considering the target asset allocation for each asset class, we adjusted the overall expected rate of return for the portfolio for historical and expected experience of active portfolio management results compared with benchmark returns and for the effect of expenses paid from plan assets. Ameren will use an expected return on plan assets for its pension plan assets and postretirement plan assets of 7.25% and 7.00%, respectively, in 2015. No plan assets are expected to be returned to Ameren during 2015.

Ameren’s investment committee strives to assemble a portfolio of diversified assets that does not create a significant concentration of risks. The investment committee develops asset allocation guidelines between asset classes, and it creates diversification through investments in assets that differ by type (equity, debt, real estate, private equity), duration, market capitalization, country, style (growth or value) and industry, among other factors. The diversification of assets is displayed in the target allocation table below. The investment committee also routinely rebalances the plan assets to adhere to the diversification goals. The investment committee’s strategy reduces the concentration of investment risk; however, Ameren is still subject to overall market risk. The following table presents our target allocations for 2015 and our pension and postretirement plans’ asset categories as of December 31, 2014 and 2013:



Asset Category	Target Allocation 2015	Percentage of Plan Assets at December 31,
Asset Category	Target Allocation 2015	2014		2013
Pension Plan:
Cash and cash equivalents	0% - 5%	2	%	2	%
Equity securities:
U.S. large-capitalization	29% - 39%	34	%	36	%
U.S. small- and mid-capitalization	2% - 12%	7	%	8	%
International and emerging markets	9% - 19%	12	%	14	%
Total equity	50% - 60%	53	%	58	%
Debt securities	35% - 45%	41	%	36	%
Real estate	0% - 9%	4	%	4	%
Private equity	0% - 4%	(a)		(a)
Total		100	%	100	%
Postretirement Plans:
Cash and cash equivalents	0% - 10%	4	%	4	%
Equity securities:
U.S. large-capitalization	33% - 43%	40	%	41	%
U.S. small- and mid-capitalization	3% - 13%	7	%	8	%
International	10% - 20%	13	%	14	%
Total equity	55% - 65%	60	%	63	%
Debt securities	30% - 40%	36	%	33	%
Total		100	%	100	%


(a)	Less than 1% of plan assets.

In general, the United States large-capitalization equity investments are passively managed or indexed, whereas the international, emerging markets, United States small-capitalization, and United States mid-capitalization equity investments are actively managed by investment managers. Debt securities include a broad range of fixed income vehicles. Debt security investments in high-yield securities, emerging market securities, and non-United States dollar-denominated securities are owned by the plans, but in limited quantities to reduce risk. Most of the debt security investments are under active management by investment managers. Real estate investments include private real estate vehicles; however, Ameren does not, by policy, hold direct investments in real estate property. Ameren’s investment in private equity funds is spread among nine different limited partnerships, with invested capital ranging from $0.1 million to $5 million in each, which invest primarily in a diversified number of small United States-based companies. No further commitments may be made to private equity investments without approval by the finance committee of the board of directors. Additionally, Ameren’s investment committee allows investment managers to use derivatives, such as index futures, exchange traded funds, foreign exchange futures, and options, in certain situations, to increase or to reduce market exposure in an efficient and timely manner.

Fair Value Measurements of Plan Assets

Investments in the pension and postretirement benefit plans were stated at fair value as of December 31, 2014. The fair value of an asset is the amount that would be received upon its sale in an orderly transaction between market participants at the measurement date. Cash and cash equivalents have initial maturities of three months or less and are recorded at cost plus accrued interest. The carrying amounts of cash and cash equivalents approximate fair value because of the short-term nature of these instruments. Investments traded in active markets on national or international securities exchanges are valued at closing prices on the last business day on or before the measurement date. Securities traded in over-the-counter markets are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Derivative contracts are valued at fair value, as determined by the investment managers (or independent third parties on behalf of the investment managers), who use proprietary models and take into consideration exchange quotations on underlying instruments, dealer quotations, and other market information. The fair value of real estate is based on annual appraisal reports prepared by an independent real estate appraiser.

The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2014:



	Quoted Prices in Active Markets for Identified Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	—	$	38	$	—	$	38
Equity securities:
U.S. large-capitalization	—		1,331		—		1,331
U.S. small- and mid-capitalization	270		—		—		270
International and emerging markets	134		360		—		494
Debt securities:
Corporate bonds	—		1,026		—		1,026
Municipal bonds	—		175		—		175
U.S. treasury and agency securities	6		366		—		372
Other	—		31		—		31
Real estate	—		—		147		147
Private equity	—		—		13		13
Derivative assets	1		—		—		1
Total	$	411	$	3,327	$	160	$	3,898
Less: Medical benefit assets at December 31^(a)							(125		)
Plus: Net receivables at December 31^(b)							21
Fair value of pension plans assets at year end							$	3,794


(a)	Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code to fund a portion of the postretirement obligation.


(b)	Receivables related to pending security sales, offset by payables related to pending security purchases.

The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the pension plan assets measured at fair value as of December 31, 2013:



	Quoted Prices in Active Markets for Identified Assets or Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	5		$	39	$	—	$	44
Equity securities:
U.S. large-capitalization	107			1,162		—		1,269
U.S. small- and mid-capitalization	273			—		—		273
International and emerging markets	143			372		—		515
Debt securities:
Corporate bonds	—			860		—		860
Municipal bonds	—			149		—		149
U.S. treasury and agency securities	—			256		—		256
Other	—			27		—		27
Real estate	—			—		131		131
Private equity	—			—		15		15
Derivative assets	1			—		—		1
Derivative liabilities	(1		)	—		—		(1		)
Total	$	528		$	2,865	$	146	$	3,539
Less: Medical benefit assets at December 31^(a)								(112		)
Plus: Net receivables at December 31^(b)								34
Fair value of pension plans assets at year end								$	3,461


(a)	Medical benefit (health and welfare) component for accounts maintained in accordance with Section 401(h) of the Internal Revenue Code to fund a portion of the postretirement obligation.


(b)	Receivables related to pending security sales, offset by payables related to pending security purchases.

The following table summarizes the changes in the fair value of the pension plan assets classified as Level 3 in the fair value hierarchy for each of the years ended December 31, 2014 and 2013:



	Beginning Balance at January 1,		Actual Return on Plan Assets Related to Assets Still Held at the Reporting Date			Actual Return on Plan Assets Related to Assets Sold During the Period		Purchases, Sales, and Settlements, Net			Net Transfers into (out of) of Level 3		Ending Balance at December 31,
2014:
Real estate	$	131	$	11		$	—	$	5		$	—	$	147
Private equity	15		(9		)	10		(3		)	—		13
2013:
Real estate	$	118	$	9		$	—	$	4		$	—	$	131
Private equity	19		(9		)	11		(6		)	—		15

The following table sets forth, by level within the fair value hierarchy discussed in Note 8 – Fair Value Measurements, the postretirement benefit plans assets measured at fair value as of December 31, 2014:



	Quoted Prices in Active Markets for Identified Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	89	$	—	$	—	$	89
Equity securities:
U.S. large-capitalization	291		101		—		392
U.S. small- and mid-capitalization	70		—		—		70
International	37		94		—		131
Other	—		7				7
Debt securities:
Corporate bonds	—		105		—		105
Municipal bonds	—		111		—		111
U.S. treasury and agency securities	—		89		—		89
Other	—		44		—		44
Total	$	487	$	551	$	—	$	1,038
Plus: Medical benefit assets at December 31^(a)							125
Less: Net payables at December 31^(b)							(54		)
Fair value of postretirement benefit plans assets at year end							$	1,109


(a)	Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above.


(b)	Payables related to pending security purchases, offset by interest receivables and receivables related to pending security sales.



	Quoted Prices in Active Markets for Identified Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Cash and cash equivalents	$	77	$	—	$	—	$	77
Equity securities:
U.S. large-capitalization	297		101		—		398
U.S. small- and mid-capitalization	77		—		—		77
International	39		96		—		135
Other	—		2		—		2
Debt securities:
Corporate bonds	—		97		—		97
Municipal bonds	—		103		—		103
U.S. treasury and agency securities	—		72		—		72
Other	—		40		—		40
Total	$	490	$	511	$	—	$	1,001
Plus: Medical benefit assets at December 31^(a)							112
Less: Net payables at December 31^(b)							(39		)
Fair value of postretirement benefit plans assets at year end							$	1,074


(a)	Medical benefit (health and welfare) component for 401(h) accounts to fund a portion of the postretirement obligation. These 401(h) assets are included in the pension plan assets shown above.


(b)	Payables related to pending security purchases, offset by Medicare, interest receivables, and receivables related to pending security sales.

Net Periodic Benefit Cost

The following table presents the components of the net periodic benefit cost of our pension and postretirement benefit plans during 2014, 2013, and 2012:



	Pension Benefits Ameren^(a)			Postretirement Benefits Ameren^(a)
2014
Service cost	$	79		$	19
Interest cost	183			50
Expected return on plan assets	(229		)	(65		)
Amortization of:
Prior service credit	(1		)	(5		)
Actuarial (gain) loss	49			(7		)
Net periodic benefit cost (benefit)	$	81		$	(8	)
2013
Service cost	$	91		$	22
Interest cost	163			46
Expected return on plan assets	(218		)	(62		)
Amortization of:
Prior service credit	(2		)	(6		)
Actuarial loss	87			8
Curtailment gain	(12		)	(7		)
Net periodic benefit cost^(b)	$	109		$	1
2012
Service cost	$	81		$	22
Interest cost	166			47
Expected return on plan assets	(208		)	(56		)
Amortization of:
Transition obligation	—			2
Prior service credit	(3		)	(6		)
Actuarial loss	75			5
Net periodic benefit cost^(c)	$	111		$	14


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.

(b)

The net periodic benefit cost includes a $6 million and a $7 million net gain for pension benefits and postretirement benefits, respectively, which was included in "Income (loss) from discontinued operations, net of taxes" on Ameren's consolidated statement of income (loss). This net gain includes the curtailment gain recognized in 2013 as a result of a significant reduction in employees as of the December 2, 2013 closing date of the New AER divestiture. See Note 16 – Divestiture Transactions and Discontinued Operations for additional information on the divestiture.


(c)	The net periodic benefit cost includes $9 million and $- million in total net costs for pension benefits and postretirement benefits, respectively, which were included in "Income (loss) from discontinued operations, net of taxes" on Ameren's consolidated statement of income (loss). See Note 16 – Divestiture Transactions and Discontinued Operations for additional information on the divestiture.

The current year expected return on plan assets is determined primarily by adjusting the prior year market-related asset value for current year contributions, disbursements, and expected return, plus 25% of the actual return in excess of (or less than) expected return for the four prior years.

The estimated amounts that will be amortized from regulatory assets and accumulated OCI into net periodic benefit cost in 2015 are as follows:



	Pension Benefits Ameren^(a)			Postretirement Benefits Ameren^(a)
Regulatory assets:
Prior service credit	$	(1	)	$	(4	)
Net actuarial loss	86			15
Accumulated OCI:
Net actuarial (gain) loss	2			(2		)
Total	$	87		$	9


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.

Prior service cost is amortized on a straight-line basis over the average future service of active participants benefiting under the plan amendment. The net actuarial (gain) loss subject to amortization is amortized on a straight-line basis over 10 years.

The Ameren Companies are responsible for their share of the pension and postretirement benefit costs. The following table presents the pension costs and the postretirement benefit costs incurred and included in continuing operations for the years ended December 31, 2014, 2013, and 2012:



	Pension Costs						Postretirement Costs
	2014		2013		2012		2014			2013		2012
Ameren Missouri	$	50	$	69	$	63	$	3		$	8	$	10
Ameren Illinois	30		41		37		(9		)	—		4
Other	1		5		2		(2		)	—		—
Ameren^(a)	81		115		102		(8		)	8		14


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.

The expected pension and postretirement benefit payments from qualified trust and company funds, which reflect expected future service, as of December 31, 2014, are as follows:



	Pension Benefits				Postretirement Benefits
	Paid from Qualified Trust		Paid from Company Funds		Paid from Qualified Trust		Paid from Company Funds
2015	$	253	$	3	$	58	$	2
2016	256		3		61		2
2017	257		4		64		2
2018	260		3		68		2
2019	260		3		70		2
2020 - 2024	1,273		11		388		11

The following table presents the assumptions used to determine net periodic benefit cost for our pension and postretirement benefit plans for the years ended December 31, 2014, 2013, and 2012:



	Pension Benefits						Postretirement Benefits
	2014		2013		2012		2014		2013		2012
Discount rate at measurement date	4.75	%	4.00	%	4.50	%	4.75	%	4.00	%	4.50	%
Expected return on plan assets	7.25		7.50		7.75		7.00		7.25		7.50
Increase in future compensation	3.50		3.50		3.50		3.50		3.50		3.50
Medical cost trend rate (initial)	(a)		(a)		(a)		5.00		5.00		5.50
Medical cost trend rate (ultimate)	(a)		(a)		(a)		5.00		5.00		5.00
Years to ultimate rate	(a)		(a)		(a)		—		—		1 year


(a)	Not applicable

The table below reflects the sensitivity of Ameren’s plans to potential changes in key assumptions:



	Pension Benefits					Postretirement Benefits
	Service Cost and Interest Cost			Projected Benefit Obligation		Service Cost and Interest Cost			Postretirement Benefit Obligation
0.25% decrease in discount rate	$	(1	)	$	138	$	1		$	39
0.25% increase in salary scale	2			13		—			—
1.00% increase in annual medical trend	—			—		3			36
1.00% decrease in annual medical trend	—			—		(2		)	(33		)

Other

Ameren sponsors a 401(k) plan for eligible employees. The Ameren 401(k) plan covered all eligible employees at December 31, 2014. The plan allowed employees to contribute a portion of their compensation in accordance with specific guidelines. Ameren matched a percentage of the employee contributions up to certain limits. The following table presents the portion of the matching contribution to the Ameren 401(k) plan attributable to the continuing operations for each of the Ameren Companies for the years ended December 31, 2014, 2013, and 2012:



	2014		2013		2012
Ameren Missouri	$	16	$	16	$	16
Ameren Illinois	11		10		9
Other	1		1		1
Ameren^(a)	28		27		26


(a)	Includes amounts for Ameren registrant and nonregistrant subsidiaries.