Pension Plan and Postretirement Benefits Other Than Pension

9 Months Ended

Sep. 30, 2014

Pension Plan and Postretirement Benefits Other Than Pension

Pension Plan and Postretirement Benefits Other Than Pension

8. Pension Plan and Postretirement Benefits Other Than Pension

We provide a non-contributory retirement plan that covers substantially all employees and certain vested employees of our former parent company (the “Pension Plan”).  Benefits payable under the Pension Plan are based on employees’ years of service and compensation during the final 10 years of employment.  We also sponsor an unfunded defined benefit postretirement medical plan that covers substantially all employees, as well as Waddell & Reed advisors who are independent contractors, through the age of 65.  The medical plan is contributory with participant contributions adjusted annually.  The medical plan does not provide for post age 65 benefits with the exception of a small group of employees that were grandfathered when such plan was established.

The components of net periodic pension and other postretirement costs related to these plans were as follows:

	Pension Benefits					Other Postretirement Benefits			Pension Benefits				Other Postretirement Benefits
	Three months ended September 30,					Three months ended September 30,			Nine months ended September 30,				Nine months ended September 30,
	2014			2013		2014		2013	2014		2013		2014		2013
	(in thousands)								(in thousands)
Components of net periodic benefit cost:
Service cost	$	2,521		2,753		180		197	7,563		8,259		540		591
Interest cost	2,099			1,928		99		90	6,297		5,783		297		270
Expected return on plan assets	(3,504		)	(2,796	)	—		—	(10,512	)	(8,389	)	—		—
Actuarial (gain) loss amortization	373			1,142		(4	)	—	1,121		3,426		(12	)	—
Prior service cost amortization	117			138		14		14	351		416		42		42
Transition obligation amortization	1			1		—		—	3		3		—		—
Total(1)	$	1,607		3,166		289		301	4,823		9,498		867		903

(1) Approximately 60% of net periodic pension and other postretirement benefit costs are included in compensation and related costs on the consolidated statements of income, while the remainder is included in underwriting and distribution expense.

During the first nine months of 2014, we contributed $20.0 million to the Pension Plan.