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Defined Benefit Plans
12 Months Ended
Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]  
Defined Benefit Plans
Defined Benefit Plan
On December 1, 2005, the Company adopted a defined benefit plan ("Cash Balance Plan") to provide retirement income to all eligible employees of the Company and its subsidiaries in accordance with the terms and conditions in the plan document. The Plan blends the features of a traditional defined benefit plan with the features of a defined contribution plan.  In this plan, hypothetical individual accounts periodically receive a contribution credit and an interest credit.  The contribution credits are a flat dollar amount that vary with age. Investment policies and strategies of the Cash Balance Plan are set by the Retirement Plan Committee and approved by the plan  trustees. The plan trustee will oversee the actual investment of plan assets into permitted asset classes to achieve targeted plan returns. There were net assets of $4.4 million and $5.2 million in the Cash Balance Plan as of December 31, 2013 and 2012, respectively. Hypothetical participant balances are vested at all times. The method of payment for Cash Balance Plan is an annuity unless the participant elects an alternate choice of payment.  The Cash Balance Plan is developed to meet the requirements of Section 401(a) and Section 501(a) of the Internal Revenue Code.
During the fourth quarter of 2013, the Company made the decision to terminate the Cash Balance Plan, effective December 31, 2013.  To ensure all qualified requirements have been met at the time of the plan termination, the Company has requested a “favorable determination letter” from the IRS.  As a result, the Company anticipates that this process could take twelve to eighteen months to complete. Once all of the necessary approvals are received, the Cash Balance Plan will start making distributions to the participants either in the form of annuities or contributions to other retirement plans elected by the participants.
    
In addition, Ramius Japan Ltd. also established a defined benefit plan (the "Retirement Allowance Plan") covering its employees. There are no plan assets associated with this plan and the benefits were based on years of credited service and a percentage of the employees' compensation. This plan was liquidated during the fourth quarter of 2012.
The estimated future benefits for the above plans are an actuarial estimate of the benefits that the Company will be required to pay. A measurement date of December 31 was used for each of the actuarial calculations.
The amounts contained in the following table relate to the Company's defined benefit plan(s) for the years ended December 31, 2013, 2012, and 2011:
 
As of December 31,
 
2013
 
2012
 
(dollars in thousands)
Projected benefit obligation
 
 
 
Benefit obligation at beginning of year
$
4,436

 
$
5,591

Service cost

 
53

Interest cost
207

 
216

Actuarial loss (gain)
(93
)
 
(50
)
Benefits paid
(48
)
 

Curtailments

 
(98
)
Lump sum settlement
(910
)
 
(1,269
)
Effect of change in currency conversion

 
(7
)
Benefit obligation at end of year
$
3,592

 
$
4,436

Change in plan assets
 
 
 
Fair value of plan assets at beginning of year
$
5,230

 
$
5,639

Actual return on plan assets
153

 
676

Employer contributions
1

 

Benefits paid
(956
)
 
(1,085
)
Expenses paid from the plan
(39
)
 

Fair value of plan assets at the end of year
$
4,389

 
$
5,230

Funded balance at end of year
$
797

 
$
794

Amounts recognized in the consolidated statement of financial condition
 
 
 
Asset
$
797

 
$
794

Accumulated benefit obligation
$
3,592

 
$
4,436


 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(dollars in thousands)
Components of net periodic benefit cost included in employee compensation and benefits
 
 
 
 
 
Service cost
$

 
$
53

 
$
50

Interest cost
207

 
216

 
264

Expected return on plan assets
(251
)
 
(235
)
 
(276
)
Amortization of (loss) / gain

 

 

Amortization of prior service cost
21

 
20

 
21

Effect of curtailment
360

 
(59
)
 

Effect of special termination benefits

 
6

 

Effect of settlement
(95
)
 
(95
)
 
(29
)
Net periodic benefit cost
$
242

 
$
(94
)
 
$
30

Other changes in plan assets and benefit obligations recognized in other comprehensive loss
 
 
 
 
 
Net loss (gain)
$
137

 
$
(557
)
 
$
(33
)
Effect of curtailment
(360
)
 
59

 

Effect of settlement

 
98

 
31

Amortization of loss / (gain)

 

 

Amortization of prior service cost
(23
)
 
(23
)
 
(23
)
Total recognized in other comprehensive income (loss)
$
(246
)
 
$
(423
)
 
$
(25
)
Total recognized in net periodic benefit cost and other comprehensive loss
$
(4
)
 
$
(517
)
 
$
5

Amounts recognized in accumulated other comprehensive loss
 
 
 
 
 
Net gain (loss)
$
344

 
$
479

 
$
116

Prior service cost

 
(381
)
 
(441
)
Effect of change in currency conversion

 

 

Total recognized in accumulated other comprehensive income (loss)
$
344

 
$
98

 
$
(325
)
Estimated amounts to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
 
 
 
 
 
Prior service cost
$

 
$
19

 
$
19

Net gain (loss)
$

 
$

 
$


The assumed long term rate of return on the Cash Balance Plan assets was 6% as of December 31, 2013, 2012 and 2011. The Company's approach in determining the long-term rate of return for plan assets is based upon historical financial market relationships that have existed over time with the presumption that this trend will generally remain constant in the future.
The composition of plan assets by asset category for the Cash Balance Plan are set forth below:
 
As of December 31,
 
2013
 
2012
 
(dollars in thousands)
Ramius Multi-Strategy Fund Ltd(a)
$
390

 
$
513

Ramius Merger Fund Ltd
2,279

 

Orchard Square Partners Credit Fund Ltd(b)
1,640

 
1,304

External Mutual Funds—Total return(c)
7

 
1,358

External Mutual Funds—Real Return(d)
34

 
1,019

External Mutual Funds—Conservative(e)
39

 
1,036

 
$
4,389

 
$
5,230


(a)
Ramius Multi-Strategy Fund Ltd invests substantially all of its capital through a "master feeder" structure in Ramius Intermediate Fund, L.P. which invests in funds that employ a variety of diversified, non-directional investment strategies that seek to achieve, over the long term, a target return with low volatility.
(b)
Orchard Square Partners Credit Fund Ltd invests substantially all of its capital through a "master-feeder" structure in Orchard Square Partners Credit Intermediate Fund, LP which invests in a fund whose objective is to seek to achieve superior returns.
(c)
External Mutual Funds—Total Return's main objective is to achieve maximum total return by investing assets in a diversified portfolio of fixed income instruments of varying maturities which may be represented by derivatives.
(d)
External Mutual Funds—Real Return's main objective is to seek to achieve maximum total return after inflation consistent with preservation of real capital and prudent investment management.
(e)
External Mutual Funds—Conservative's main objective is to seek to achieve a high level of current income with some consideration given to the growth of capital by investing in fixed-income securities.
The investment approach of the Cash Balance Plan is to generate a return equal to or greater than the 30-year treasury rate with relatively low risk by investing in a variety of vehicles. The Company has valued the assets in the Cash Balance Plan at fair value in accordance with the Company's investment policies (see Note 3e). The assets in the Cash Balance Plan are categorized in level 2 of the fair value hierarchy. Investment risk is measured and monitored on an ongoing basis through semi-annual retirement committee meetings and annual liability measurements.
Estimated future benefits payments
Benefit payments, which reflect future service, as appropriate, of $3.7 million are expected to be paid in full during 2014.