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Retirement Benefits
 3 Months Ended
Mar. 31, 2014
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.  Beginning January 1, 2014, all new UA employees and those new non-represented employees who elect to accumulate the Company contribution in the Cash Balance pension, will receive annual pay credits of 4% each year. They will also receive interest credits like other participants in the Cash Balance pension, which are at least 1% per quarter. When a newly-hired employee with a vested Cash Balance benefit leaves PSE, he or she will have annuity and lump sum options for distribution, with annuities calculated according to the Pension Protection Act. Those who select the lump sum option will receive their current cash balance amount. Participation by continuing employees in the Cash Balance pension plan is not affected.
In addition to providing pension benefits, PSE provides group health care and life insurance benefits for certain retired employees.  PSE also maintains a non-qualified Supplemental Executive Retirement Plan (SERP) for its key senior management 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 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 re-measurement 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, 2014 and 2013:
Puget Energy
Qualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
 
Three Months Ended March 31,
(Dollars in Thousands)
2014
2013
2014
2013
2014
2013
Components of net periodic benefit cost:
 
 
 
 
 
 
Service cost
$
4,512

$
4,709

$
261

$
375

$
29

$
34

Interest cost
7,055

6,194

577

511

183

176

Expected return on plan assets
(10,721
)
(9,851
)
—

—

(133
)
(108
)
Amortization of prior service
cost
(495
)
(495
)
11

(4
)
—

—

Amortization of net loss
(gain)
—

650

228

365

(66
)
17

Net periodic benefit cost
$
351

$
1,207

$
1,077

$
1,247

$
13

$
119

 
 
 
 

Puget Sound Energy
Qualified
SERP
Other
Pension Benefits
Pension Benefits
Benefits
 
Three Months Ended March 31,
(Dollars in Thousands)
2014
2013
2014
2013
2014
2013
Components of net periodic benefit cost:
 

 

 

 

 

 

Service cost
$
4,512

$
4,709

$
261

$
375

$
29

$
34

Interest cost
7,055

6,194

577

511

183

176

Expected return on plan assets
(10,919
)
(10,249
)
—

—

(133
)
(108
)
Amortization of prior service
cost
(393
)
(393
)
11

(4
)
1

8

Amortization of net loss
(gain)
3,239

5,085

365

548

(143
)
(34
)
Net periodic benefit cost
$
3,494

$
5,346

$
1,214

$
1,430

$
(63
)
$
76






The following table summarizes the Company’s change in benefit obligation for the periods ended March 31, 2014 and December 31, 2013:

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,
2014
December 31,
2013
March 31,
2014
December 31,
2013
March 31,
2014
December 31,
2013
Change in benefit obligation:






Benefit obligation at beginning of period
$
573,317

$
616,290

$
47,279

$
51,795

$
14,939

$
17,672

Service cost
4,512

19,285

261

1,498

29

134

Interest cost
7,055

24,754

577

2,045

183

664

Amendment
—

—

—

478

—

—

Actuarial loss/(gain)
—

(48,559
)
—

(1,687
)
—

(2,240
)
Benefits paid
(10,001
)
(38,453
)
(460
)
(6,850
)
(391
)
(1,536
)
Medicare part D subsidiary
received
—

—

—

—

42

245

Benefit obligation at end of period
$
574,883

$
573,317

$
47,657

$
47,279

$
14,802

$
14,939



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, 2014 are expected to be at least $12.0 million, $4.0 million and $0.4 million, respectively. During the three months ended March 31, 2014, the Company contributed $3.0 million, $0.5 million, and $0.2 million to fund the qualified pension plan, SERP and the other postretirement plan, respectively.