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Retirement Benefits
 3 Months Ended
Mar. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Retirement Benefits
Retirement Benefits

PSE has a defined benefit pension plan covering substantially all PSE employees.  Pension benefits earned are a function of age, salary, years of service and, in the case of employees in the cash balance formula plan, the applicable annual interest crediting rates.  PSE also maintains a non-qualified Supplemental Executive Retirement Plan (SERP) for its key senior management employees.  In addition to providing pension benefits, PSE provides group health care and life insurance benefits for certain retired employees.  These benefits are provided principally through an insurance company.  The insurance premiums, paid primarily by retirees, are based on the benefits provided during the year.
The February 6, 2009 merger of Puget Energy with Puget Holdings triggered a new basis of accounting for PSE’s retirement benefit plans in the Puget Energy consolidated financial statements.  Such purchase accounting adjustments associated with the remeasurement of the retirement plans are recorded at Puget Energy.
The following tables summarize the Company’s net periodic benefit cost for the three months ended March 31, 2013 and 2012:
Puget Energy
 
 
 
Three Months Ended
March 31,
Qualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
(Dollars in Thousands)
2013
2012
2013
2012
2013
2012
Components of net periodic benefit cost:
 
 
 
 
 
 
Service cost
$
4,709

$
4,235

$
375

$
268

$
34

$
38

Interest cost
6,194

6,442

511

538

176

187

Expected return on plan assets
(9,851
)
(9,001
)
—

—

(108
)
(108
)
Amortization of prior service
cost
(495
)
(495
)
(4
)
—

—

—

Amortization of net loss
(gain)
650

149

365

176

17

9

Net periodic benefit cost
$
1,207

$
1,330

$
1,247

$
982

$
119

$
126



Puget Sound Energy
 
 
 
Three Months Ended
March 31,
Qualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
(Dollars in Thousands)
2013
2012
2013
2012
2013
2012
Components of net periodic benefit cost:
 
 
 
 
 
 
Service cost
$
4,709

$
4,235

$
375

$
268

$
34

$
38

Interest cost
6,194

6,442

511

538

176

187

Expected return on plan assets
(10,249
)
(10,333
)
—

—

(108
)
(108
)
Amortization of prior service
cost
(393
)
(393
)
(4
)
73

8

9

Amortization of net loss
(gain)
5,085

3,717

548

358

(34
)
(60
)
Amortization of transition
obligation
—

—

—

—

—

12

Net periodic benefit cost
$
5,346

$
3,668

$
1,430

$
1,237

$
76

$
78




The following table summarizes the Company’s change in benefit obligation for the periods ended March 31, 2013 and December 31, 2012:

Puget Energy and
Puget Sound Energy
Qualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
 
Three Months Ended
Year
Ended
Three Months Ended
Year
Ended
Three Months Ended
Year
Ended
(Dollars in Thousands)
March 31,
2013
December 31,
2012
March 31,
2013
December 31,
2012
March 31,
2013
December 31,
2012
Change in benefit obligation:






Benefit obligation at beginning of period
$
616,290

$
565,997

$
51,795

$
48,370

$
17,672

$
16,436

Service cost
4,709

16,926

375

1,073

34

139

Interest cost
6,194

25,986

511

2,152

177

751

Amendment
—

—

—

(122
)
—

—

Actuarial loss/(gain)
—

40,914

—

5,483

—

1,199

Benefits paid
(9,625
)
(33,533
)
(444
)
(5,161
)
(420
)
(1,523
)
Medicare part D subsidiary
received
—

—

—

—

—

670

Benefit obligation at end of period
$
617,568

$
616,290

$
52,237

$
51,795

$
17,463

$
17,672



The fair value of the Company’s qualified pension plan assets was $558.4 million and $531.2 million at March 31, 2013 and December 31, 2012, respectively.
The aggregate expected contributions by the Company to fund the qualified pension plan, SERP and the other postretirement plans for the year ending December 31, 2013 are expected to be at least $20.4 million, $5.0 million and $0.8 million, respectively. During the three months ended March 31, 2013, the Company contributed $5.1 million, $0.4 million and $0.4 million to fund the qualified pension plan, SERP and the other postretirement plan, respectively.