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. As previously stated, the Company made the decision to terminate the Cash Balance Plan effective December 31, 2013. On May 12, 2014 Cowen received a favorable determination letter from the IRS approving the termination of the Ramius LLC Cash Balance Plan. Subsequently, steps were taken to process the distributions based on participant distribution elections by December 15, 2014 and the Company is filing a final Form 5500 for the Plan Year 2014.

The Plan blended the features of a traditional defined benefit plan with the features of a defined contribution plan. In this plan, hypothetical individual accounts periodically received a contribution credit and an interest credit. The contribution credits were a flat dollar amount that vary with age. Investment policies and strategies of the Cash Balance Plan were set by the Retirement Plan Committee and approved by the plan trustees. The plan trustee oversaw the actual investment of plan assets into permitted asset classes to achieve targeted plan returns. Hypothetical participant balances were vested at all times. The method of payment for Cash Balance Plan was an annuity unless the participant elects an alternate choice of payment. The Cash Balance Plan was developed to meet the requirements of Section 401(a) and Section 501(a) of the Internal Revenue Code.

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 amounts contained in the following table relate to the Company's defined benefit plan(s) for the years ended December 31, 2014, 2013, and 2012:



	As of December 31,
	2014			2013
	(dollars in thousands)
Projected benefit obligation
Benefit obligation at beginning of year	$	3,592		$	4,436
Service cost	—			—
Interest cost	84			207
Actuarial loss (gain)	(2		)	(93		)
Benefits paid	(3,791		)	(48		)
Curtailments	—			—
Lump sum settlement	117			(910		)
Effect of change in currency conversion	—			—
Benefit obligation at end of year	$	—		$	3,592
Change in plan assets
Fair value of plan assets at beginning of year	$	4,389		$	5,230
Actual return on plan assets	306			153
Employer contributions	—			1
Benefits paid	(3,791		)	(956		)
Transfer to qualified replacement plan	(874		)	—
Expenses paid from the plan	(30		)	(39		)
Fair value of plan assets at the end of year	$	—		$	4,389
Funded balance at end of year	$	—		$	797
Amounts recognized in the consolidated statement of financial condition
Asset	$	—		$	797
Accumulated benefit obligation	$	—		$	3,592



	Year Ended December 31,
	2014			2013			2012
	(dollars in thousands)
Components of net periodic benefit cost included in employee compensation and benefits
Service cost	$	—		$	—		$	53
Interest cost	84			207			216
Expected return on plan assets	(299		)	(251		)	(235		)
Amortization of loss / (gain)	(205		)	—			—
Amortization of prior service cost	—			21			20
Effect of settlement	—			(95		)	(95		)
Net periodic benefit cost	$	(420	)	$	(118	)	$	(41	)
Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Net loss (gain)	$	344		$	137		$	(557	)
Effect of curtailment	—			(360		)	59
Effect of settlement	—			—			98
Amortization of loss / (gain)	—			—			—
Amortization of prior service cost	—			(23		)	(23		)
Total recognized in other comprehensive income (loss)	$	344		$	(246	)	$	(423	)
Total recognized in net periodic benefit cost and other comprehensive loss	$	(76	)	$	(364	)	$	(464	)
Amounts recognized in accumulated other comprehensive loss
Net gain (loss)	$	—		$	344		$	479
Prior service cost	—			—			(381		)
Effect of change in currency conversion	—			—			—
Total recognized in accumulated other comprehensive income (loss)	$	—		$	344		$	98
Estimated amounts to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year
Prior service cost	$	—		$	—		$	19
Net gain (loss)	$	—		$	—		$	—

The assumed long term rate of return on the Cash Balance Plan assets was 6% as of December 31, 2013 and 2012. 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.

All assets in the Cash Balance Plan as of December 31, 2014 were distributed or transferred out. The composition of plan assets by asset category for the Cash Balance Plan as of December 31, 2013 are as follows:



	As of December 31,
		2013
	(dollars in thousands)
Ramius Multi-Strategy Fund Ltd(a)		$	390
Ramius Merger Fund Ltd		2,279
Orchard Square Partners Credit Fund Ltd(b)		1,640
External Mutual Funds—Total return(c)		7
External Mutual Funds—Real Return(d)		34
External Mutual Funds—Conservative(e)		39
		$	4,389


(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 was 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 had 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 were categorized in level 2 of the fair value hierarchy. Investment risk was measured and monitored on an ongoing basis through semi-annual retirement committee meetings and annual liability measurements.