In accordance with the authoritative guidance for compensation of retirement benefits, Cleco’s measurement date is the same as its fiscal year end.

Pension Plan and Other Benefits Plan

Most employees hired before August 1, 2007, are covered by a non-contributory, defined benefit pension plan. Benefits under the plan reflect an employee’s years of service, age at retirement, and highest total average compensation for any consecutive five calendar years during the last 10 years of employment with Cleco. Cleco’s policy is to base its contributions to the employee pension plan upon actuarial computations utilizing the projected unit credit method, subject to the IRS’s full funding limitation. During 2012, Cleco made no discretionary or required contributions to the pension plan. During 2011, Cleco made $60.0 million in discretionary contributions to the pension plan, with $40.1 million designated for the 2010 plan year and the remaining $19.9 million designated for the 2011 plan year. In January 2013, Cleco Power made $34.0 million in discretionary contributions to the pension plan. The required contributions are driven by liability funding target percentages set by law which could cause the required contributions to be uneven among the years. The ultimate amount and timing of the contributions may be affected by changes in the discount rate, changes in the funding regulations, and actual returns on fund assets. Cleco Power is considered the plan sponsor, and Support Group is considered the plan administrator.

Cleco’s retirees and their dependents are eligible to receive medical, dental, vision, and life insurance benefits (other benefits). Cleco recognizes the expected cost of these other benefits during the periods in which the benefits are earned.

The employee pension plan and other benefits obligation plan assets and funded status at December 31, 2012 and 2011, are presented in the following table.



	PENSION BENEFITS						OTHER BENEFITS
(THOUSANDS)	2012			2011			2012			2011
Change in benefit obligation
Benefit obligation at beginning of year	$	361,986		$	330,342		$	42,680		$	41,444
Service cost	8,312			8,390			1,461			1,532
Interest cost	18,254			17,629			2,239			1,818
Plan participants’ contributions	—			—			1,308			1,251
Actuarial loss	58,109			19,452			2,462			141
Expenses paid	(1,511		)	(1,208		)	—			—
Medicare D	—			—			—			206
Other adjustments ⁽¹⁾	—			—			—			452
Benefits paid	(13,581		)	(12,619		)	(4,581		)	(4,164		)
Benefit obligation at end of year	431,569			361,986			45,569			42,680
Change in plan assets
Fair value of plan assets at beginning of year	312,395			242,513			—			—
Actual return on plan assets	46,738			23,709			—			—
Employer contributions	—			60,000			—			—
Expenses paid	(1,511		)	(1,208		)	—			—
Benefits paid	(13,581		)	(12,619		)	—			—
Fair value of plan assets at end of year	344,041			312,395			—			—
Unfunded status	$	(87,528	)	$	(49,591	)	$	(45,569	)	$	(42,680	)

⁽¹⁾ During 2011, Cleco received $0.5 million for the Early Retiree Reinsurance Program.

The employee pension plan accumulated benefit obligation at December 31, 2012 and 2011, is presented in the following table.



	PENSION BENEFITS
(THOUSANDS)	2012		2011
Accumulated benefit obligation	$	387,776	$	330,193

The authoritative guidelines for compensation of retirement benefits require the disclosure of the net actuarial gains/losses, transition obligations/assets, and prior period service costs included in other comprehensive income as a result of being included as a component of net periodic benefit costs. The following table presents those items for the employee pension plan and other benefits plan at December 31, 2012 and 2011.



	PENSION BENEFITS						OTHER BENEFITS
(THOUSANDS)	2012			2011			2012		2011
Net actuarial loss occurring during year	$	32,177		$	20,389		$	2,461	$	141
Net actuarial loss amortized during year	$	8,346		$	5,556		$	1,479	$	1,010
Transition obligation amortized during year	$	—		$	—		$	20	$	20
Prior service (credit) amortized during year	$	(71	)	$	(71	)	$	—	$	(206	)

The authoritative guidelines also require the disclosure of the net gains/losses, transition obligations/assets, and prior period service costs/credits in accumulated other comprehensive income that have not been recognized as components of net periodic benefit costs and the amounts expected to be recognized in 2013. The following table presents those items for the employee pension plan and other benefits plans for December 31, 2013, 2012, and 2011.



				PENSION BENEFITS									OTHER BENEFITS
(THOUSANDS)	2013			2012			2011			2013			2012		2011
Net actuarial loss	$	12,513		$	157,017		$	133,186		$	1,176	⁽¹⁾	$	13,602	$	12,620
Transition obligation	$	—		$	—		$	—		$	20		$	35	$	55
Prior service (credit)	$	(71	)	$	(559	)	$	(630	)	$	—		$	—	$	—

⁽¹⁾ In 2013, Cleco received $194 thousand in Medicare Part D subsidies for the 2012 plan year, which will reduce the net actuarial loss for 2013.

The components of net periodic pension and other benefits costs for 2012, 2011, and 2010 are as follows.



				PENSION BENEFITS								OTHER BENEFITS
(THOUSANDS)	2012			2011			2010			2012		2011			2010
Components of periodic benefit costs
Service cost	$	8,312		$	8,390		$	7,451		$	1,461	$	1,532		$	1,511
Interest cost	18,254			17,629			17,145			2,239		1,818			1,965
Expected return on plan assets	(20,806		)	(24,646		)	(20,229		)	—		—			—
Amortizations:
Transition obligation	—			—			—			20		20			20
Prior period service cost	(71		)	(71		)	(71		)	—		(206		)	(2,021		)
Net loss	8,346			5,556			3,156			1,479		1,010			972
Net periodic benefit cost	$	14,035		$	6,858		$	7,452		$	5,199	$	4,174		$	2,447

Since Cleco Power is the pension plan sponsor and the related trust holds the assets, the net unfunded status of the pension plan is reflected at Cleco Power. The liability of Cleco’s other subsidiaries is transferred with a like amount of assets to Cleco Power monthly. The expense of the pension plan related to Cleco’s other subsidiaries for the years ended December 31, 2012, 2011, and 2010 was $2.2 million, $2.1 million, and $1.9 million, respectively.

Cleco Corporation is the plan sponsor for the other benefit plans. There are no assets set aside in a trust, and the liabilities are reported on the individual subsidiaries’ financial statements. At December 31, 2012 and 2011, the current portion of the other benefits liability for Cleco was $3.1 million and $3.1 million, respectively. At December 31, 2012 and 2011, the current portion of the other benefits liability for Cleco Power was $2.9 million and $2.9 million, respectively. The expense related to other benefits reflected in Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2012, 2011, and 2010 was $4.5 million, $3.6 million, and $2.1 million, respectively. Cleco Power had no reduction of other benefits expense during 2012 and 2011 as a result of the Medicare Part D subsidy due to the PPACA eliminating the subsidies by 2013. Cleco Power’s allocated amount of the other benefit liability was $35.3 million and $33.2 million at December 31, 2012 and 2011, respectively.

In March 2010, the President signed the PPACA, a comprehensive health care law, which was upheld by the U.S. Supreme Court on June 28, 2012. While all provisions of the PPACA are not effective immediately, management does not expect the provisions to materially impact the Registrants’ retiree medical unfunded liability and related expenses. Management will continue to monitor this law and its possible impact on the Registrants.

In June 2010, the President signed into law a defined benefit pension funding relief bill. If the Registrants elect to take advantage of the funding relief, required pension contributions would be deferred for at least two years. After the deferral period, required pension contributions would sharply increase. A company electing to take the funding relief would be required to make contributions to the pension plan during the deferral period if it pays excess employee compensation, declares extraordinary dividends, or redeems company stock above certain thresholds. Currently, management does not intend to elect to take the funding relief.

In July 2012, a law was passed that changed the calculation of minimum pension funding requirements. The effect of this law will be to lower minimum funding requirements in the short-term (about two to three years). This law is not expected to impact overall minimum plan contributions over the long-term.

The measurement date used to determine the pension and other postretirement benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows.



	PENSION BENEFITS				OTHER BENEFITS
	2012		2011		2012		2011
Weighted-average assumptions used to determine the benefit obligation as of December 31:
Discount rate	4.19	%	5.08	%	3.54	%	4.51	%
Rate of compensation increase	3.334	%	3.415	%	N/A		N/A



			PENSION BENEFITS						OTHER BENEFITS
	2012		2011		2010		2012		2011		2010
Weighted-average assumptions used to determine the net benefit cost (income) for the year ended December 31:
Discount rate	5.08	%	5.43	%	5.91	%	4.51	%	4.61	%	5.29	%
Expected return on plan assets	6.61	%	7.80	%	7.80	%	N/A		N/A		N/A
Rate of compensation increase	3.373	%	4.119	%	4.265	%	N/A		N/A		N/A

The expected return on plan assets was determined by examining the risk profile of each target category as compared to the expected return on that risk, within the parameters determined by the retirement committee. The result was also compared to the expected rate of return of other comparable plans. In assessing the risk as compared to return profile, historical returns as compared to risk was considered. The historical risk compared to returns was adjusted for the expected future long-term relationship between risk and return. The adjustment for the future risk compared to returns was, in part, subjective and not based on any measurable or observable events. For the calculation of the 2013 periodic expense, Cleco raised the expected long-term return on plan assets to 6.78%. This increase was caused by a slight shift to the upper target of international equity investments as allowed by the investment policy statement. The increase is expected to decrease expense by $0.6 million.

Employee pension plan assets may be invested in publicly traded domestic common stocks, including Cleco Corporation common stock; U.S. Government, federal agency and corporate obligations; an international equity fund, commercial real estate funds; a hedge fund-of-funds; and pooled temporary investments. Investments in securities (obligations of U.S. Government and U.S. Government Agencies, corporate debt, common/collective trust funds, mutual funds, common stocks, and preferred stock) traded on a national securities exchange are valued at the last reported sales price on the last business day of the year.

Real estate funds and the pooled separate accounts are stated at estimated market value based on appraisal reports prepared annually by independent real estate appraisers (members of the American Institute of Real Estate Appraisers). The estimated market value of recently acquired properties is assumed to approximate cost.

The hedge fund-of-funds is stated at fair value based upon financial statements and other financial information reported by the management of the underlying funds. In January 2009, the relationship with the hedge fund-of-funds manager was restructured to redemption status only.

Fair Value Disclosures

The authoritative guidance for fair value measurements and disclosures requires entities to classify assets and liabilities measured at their fair value according to three different levels, depending on the inputs used in determining fair value.


•	Level 1 – unadjusted quoted prices in active, liquid markets for the identical asset or liability,


•	Level 2 – quoted prices for similar assets and liabilities in active markets or other inputs that are observable for the asset or liability, including inputs that can be corroborated by observable market data, observable interest rate yield curves and volatilities, and


•	Level 3 – unobservable inputs based upon the entities own assumptions.

There have been no changes in the methodologies for determining fair value at December 31, 2012 and December 31, 2011. At December 31, 2012, the investments in common and preferred stock were transferred from Level 2 to Level 1 in the fair value hierarchy. The following tables disclose the pension plan’s fair value of financial assets measured on a recurring basis and within the scope of the authoritative guidance for fair value measurements and disclosures.



(THOUSANDS)		AT DEC. 31, 2012		QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Cash and cash equivalents		$	6,336	$	—	$	6,336	$	—
Common stock		16,319		16,319		—		—
Preferred stock		379		379		—		—
Obligations of U.S. Government and U.S. Government Agencies		32,734		—		32,734		—
Mutual funds		25,042		25,042		—		—
Common/collective trust fund
Domestic equity		54,198		—		54,198		—
International equity		39,943		—		39,943		—
Real estate funds		17,341		—		—		17,341
Hedge fund-of-funds		2,587		—		—		2,587
Corporate debt		147,013		—		147,013		—
Total		$	341,892	$	41,740	$	280,224	$	19,928

	Interest accrual	2,149
	Total net assets	$	344,041



(THOUSANDS)		AT DEC. 31, 2011			QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)		SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2)		SIGNIFICANT UNOBSERVABLE INPUTS (LEVEL 3)
Asset Description
Cash and cash equivalents		$	7,775		$	—	$	7,775	$	—
Common stock		15,242			—		15,242		—
Preferred stock		291			—		291		—
Obligations of U.S. Government and U.S. Government Agencies		28,501			—		28,501		—
Mutual funds		9,144			9,144		—		—
Common/collective trust fund
Domestic equity		63,864			—		63,864		—
International equity		30,813			—		30,813		—
Real estate funds		16,349			—		—		16,349
Hedge fund-of-funds		2,892			—		—		2,892
Corporate debt		135,326			—		135,326		—
Total		$	310,197		$	9,144	$	281,812	$	19,241

	Interest accrual	2,198		—
	Total net assets	$	312,395

Level 3 valuations are derived from other valuation methodologies including pricing models, discounted cash flow models, and similar techniques. Level 3 valuations incorporate subjective judgments and consider assumptions including capitalization rates, discounts rates, cash flows, and other factors that are not observable in the market.

The following is a reconciliation of the beginning and ending balances of the pension plan’s real estate funds and hedge fund-of-funds measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the years ended December 31, 2012 and 2011.



(THOUSANDS)	REAL ESTATE FUNDS		HEDGE FUND OF FUNDS			TOTAL
December 31, 2010	$	14,568	$	3,271		$	17,839
Realized gain	—		17			17
Unrealized gain	1,454		77			1,531
Purchases	327					327
Sales	—		(473		)	(473		)
December 31, 2011	$	16,349	$	2,892		$	19,241
Realized gain	—		2			2
Unrealized gain	734		130			864
Purchases	258		—			258
Sales	—		(437		)	(437		)
December 31, 2012	$	17,341	$	2,587		$	19,928

The market-related value of plan assets differs from the fair value of plan assets by the amount of deferred asset gains or losses. Actual asset returns that differ from the expected return on plan assets are deferred and recognized in the market-related value of assets on a straight-line basis over a five-year period. For 2012, the return on plan assets was 15.2% compared to an expected long-term return of 6.6%. The 2011 return on pension plan assets was 8.7% compared to an expected long-term return of 7.8%.

As of December 31, 2012, the pension plan held no shares of Cleco Corporation common stock. None of the plan participants’ future annual benefits is covered by insurance contracts. In December 2008, Cleco became aware that, through its hedge fund-of-funds manager, a portion of its pension plan assets were invested in the Madoff feeder fund investment, Ascot Fund Limited. In January 2009, Cleco Power elected to liquidate the holdings of the hedge fund-of-funds manager. At December 31, 2012, the fund had $2.6 million remaining to be liquidated. Proceeds from the hedge fund-of-funds manager will be reallocated to the plan’s other investment managers.

Pension Plan Investment Objectives

Cleco Corporation’s retirement committee has established investment performance objectives of the pension plan assets. Over a three- to five-year period, the objectives are for the pension plan’s annualized total return to:


•	Exceed the assumed rate of return on plan assets, and

•

Exceed the annualized total return of a customized index consisting of a mixture of Standard & Poor’s 500 Index; Russell 2500 Index, Morgan Stanley Capital International Europe, Australia, Far East Index; Morgan Stanley Capital International Emerging Markets Index, Barclays Capital Long Credit Index, Barclays Capital Long Government/Credit Index, National Council of Real Estate Investment Fiduciaries Index, and U.S. Treasury Bills plus 5%.

In order to meet the objectives and to control risk, the retirement committee has established guidelines that the investment managers must follow.

Domestic Equity Portfolios


•	Equity holdings of a single company must not exceed 10% of the manager’s portfolio.


•	A minimum of 25 stocks should be owned.


•	Equity holdings in a single sector should not exceed the lesser of three times the sector’s weighting in the Standard & Poor’s 500 Index or 35% of the portfolio.


•	Equity holdings should represent at least 90% of the portfolio.


•	Marketable common stocks, preferred stocks convertible into common stocks, and fixed income securities convertible into common stocks are the only permissible equity investments.


•	Securities in foreign entities denominated in U.S. dollars are limited to 10%. Securities denominated in currencies other than U.S. dollars are not permitted.


•	The purchase of securities on margin and short sales is prohibited.

International Equity Portfolios

Developed Markets


•	Equity holdings of a single company should not exceed 5% of the manager’s portfolio.


•	A minimum of 30 stocks should be owned.


•	Equity holdings in a single sector should not exceed 35%.


•	A minimum of 50% of the countries within the MSCI EAFE Index should be represented within the portfolio. The allocation to an individual country should not exceed the lesser of 30% or 5 times the country’s weighting within the MSCI EAFE Index.


•	Currency hedging decisions are at the discretion of the investment manager.

Emerging Markets


•	Equity holdings in any single company should not exceed 10% of the manager’s portfolio.


•	A minimum of 30 individual stocks should be owned.


•	Equity holdings of a single industry should not exceed 25%.


•	Equity investments must represent at least 75% of the manager’s portfolio.


•	A minimum of three countries should be represented within the manager’s portfolio.


•	Illiquid securities which are not readily marketable may represent no more than 10% of the manager’s portfolio.


•	Currency hedging decisions are at the discretion of the investment manager.

Fixed Income Portfolio - Long Government/Credit


•	Only U.S. Dollar denominated assets permitted, including U.S. government and agency securities, corporate securities, structured securities, other interest bearing securities, and short-term investments.


•	At least 85% of the debt securities should be investment grade securities (BBB- by Standard & Poor’s or Baa3 by Moody’s) or higher.


•	Debt holdings of a single issue or issuer must not exceed 5% of the manager’s portfolio.


•	Aggregate net notional exposure of futures, options, and swaps must not exceed 30% of the manager’s portfolio. Manager will only execute swaps with counterparties whose credit rating is A2/A or better.


•	Margin purchases or leverage is prohibited.

Fixed Income Portfolio - Long Credit


•	Permitted assets include U.S. government and agency securities, corporate securities, mortgage-backed securities, investment-grade private placements, surplus notes, trust preferred, e-caps, and hybrids, money-market securities, and senior and subordinated debt.


•	At least 90% of securities must be U.S. Dollar denominated.


•	At least 70% of the securities must be investment-grade credit.


•	Maximum position size of 5% or A rated securities and 3% for BBB rated securities.

Real Estate Portfolios


•	Real estate funds should be invested primarily in direct equity positions, with debt and other investments representing less than 25% of the fund.


•	Leverage should be no more than 70% of the market value of the fund.


•	Investments should be focused on existing income-producing properties, with land and development properties representing less than 40% of the fund.

Hedge Fund-of-Funds


•	The fund should be invested in a minimum of 20 individual partnerships.


•	No individual partnership should exceed 10% of the fund-of-funds.


•	The fund should be diversified across several different “styles” of partnerships, including event-driven strategies, fixed income arbitrage and trading, and other arbitrage strategies. The fund generally should not be invested in emerging markets, short-term only, traditional Commodity Trading Advisor’s or derivative-only strategies.

The use of futures and options positions which leverage portfolio positions through borrowing, short sales, or other encumbrances of the Plan’s assets is prohibited:


•	Debt portfolios and hedge fund-of-funds are exempt from the prohibition on derivative use.


•	Execution of target allocation rebalancing may be implemented through short to intermediate-term use of derivatives overlay strategies.


•	The notional value of derivative positions shall not exceed 20% of the total pension fund’s value at any given time.

During 2011, the retirement committee changed the pension plan’s investment policy to create a liability hedging portfolio based on the plan’s funded ratio. The following chart shows the resulting dynamic asset allocation based on the funded ratio at December 31, 2012:



	PERCENT OF TOTAL PLAN ASSETS*
	MINIMUM		TARGET		MAXIMUM
Return-seeking
Domestic equity			21	%
International equity			18	%
Real estate			8	%
Hedge fund-of-funds			2	%
Total return-seeking	43	%	49	%	53	%
Liability hedging
Fixed income- long government/credit			17	%
Fixed income - long credit			36	%
Total liability hedging	47	%	53	%	57	%
*Minimums and maximums within subcategories not intended to equal total for category.

The estimated impact of future Medicare subsidies did not reduce the January 1, 2012 accumulated postretirement benefit obligation. The estimated impact of future Medicare subsidies reduced the January 1, 2011 accumulated postretirement benefit obligation by $0.4 million. The reduction in other benefit costs for the years ended December 31, 2012 and 2011, are presented in the following table.



	AT DECEMBER 31,
(THOUSANDS)	2012			2011
Components of other benefit costs:
(Increase) reduction in interest cost	$	(8	)	$	(24	)
Reduction in net loss amortization	199			195
Reduction in prior period service cost amortization	—			50
Reduction in net other benefit cost	$	191		$	221

The assumed health care cost trend rates used to measure the expected cost of other benefits was 8.0% in 2013. For 2012 and 2011, the rate used was 9.0%. The rate declines to 5.0% by 2031 and remains at 5.0% thereafter. Assumed health care cost trend rates have a significant effect on the amount reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects on other benefits.



	ONE-PERCENTAGE POINT
(THOUSANDS)	INCREASE		DECREASE
Effect on total of service and interest cost components	$	14	$	(34	)
Effect on postretirement benefit obligation	$	318	$	(670	)

The projected benefit payments and projected receipts pursuant to Medicare Part D subsidy, the employee pension plan, and other benefits obligation plan for each year through 2017 and the next five years thereafter are listed in the following table.



(THOUSANDS)	PENSION BENEFITS		OTHER BENEFITS, GROSS		MEDICARE D, RECEIPTS
2013	$	14,905	$	3,060	$	194
2014	$	15,742	$	3,279	$	—
2015	$	16,570	$	3,496	$	—
2016	$	17,562	$	3,680	$	—
2017	$	18,695	$	3,821	$	—
Next five years	$	112,906	$	19,863	$	—

SERP

Certain Cleco executive officers are covered by the SERP. The SERP is a non-qualified, non-contributory, defined benefit pension plan. Benefits under the plan reflect an employee’s years of service, age at retirement, and the sum of the highest base salary paid out of the last five calendar years and the average of the three highest bonuses paid during the 60 months prior to retirement, reduced by benefits received from any other defined benefit pension plan, SERP Plan or Cleco contributions under the enhanced 401(k) Plan to the extent such contributions exceed the limits of the 401(k) Plan. Cleco does not fund the SERP liability, but instead pays for current benefits out of the general funds available. Cleco Power has formed a Rabbi Trust designated as the beneficiary for life insurance policies issued on the SERP participants. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ life insurance benefits, as well as future SERP payments. However, since SERP is a non-qualified plan, the assets of the trust could be used to satisfy general creditors of Cleco Power in the event of insolvency. All SERP benefits are paid out of the general cash available of the respective companies from which the officer retired. No contributions to the SERP were made during the three-year period ended December 31, 2012. Cleco Power is considered the plan sponsor, and Support Group is considered the plan administrator.

The SERP’s funded status at December 31, 2012 and 2011, is presented in the following table.



	SERP BENEFITS
(THOUSANDS)	2012			2011
Change in benefit obligation
Benefit obligation at beginning of year	$	46,264		$	42,160
Service cost	1,487			1,566
Interest cost	2,526			2,105
Actuarial loss	11,651			2,529
Benefits paid	(2,506		)	(2,096		)
Benefit obligation at end of year	$	59,422		$	46,264

The SERP’s accumulated benefit obligation at December 31, 2012 and 2011, is presented in the following table.



	SERP BENEFITS
(THOUSANDS)	2012		2011
Accumulated benefit obligation	$	53,350	$	42,410

The authoritative guidelines on compensation for retirement benefits require the disclosure of the net actuarial gains/losses, transition obligations/assets, and prior period service costs included in other comprehensive income as a result of being amortized as a component of net periodic benefit costs. The following table presents those items for the SERP at December 31, 2012 and 2011.



	SERP BENEFITS
(THOUSANDS)	2012		2011
Net actuarial loss occurring during year	$	11,651	$	2,529
Net actuarial loss amortized during year	$	1,764	$	940
Prior service cost amortized during year	$	54	$	54

The authoritative guidelines on compensation for retirement benefits also require the disclosure of the net gains/losses, transition obligations/assets, and prior period service costs/credit in accumulated other comprehensive income that have not been recognized as components of net periodic benefit costs and the amounts expected to be recognized in 2013. The following table presents those items for SERP for December 31, 2013, 2012, and 2011.



			SERP BENEFITS
(THOUSANDS)	2013		2012		2011
Net actuarial loss	$	2,155	$	25,444	$	15,588
Prior service cost	$	54	$	280	$	334

The components of the net SERP cost for 2012, 2011, and 2010 are as follows.



			SERP BENEFITS
(THOUSANDS)	2012		2011		2010
Components of periodic benefit costs:
Service cost	$	1,487	$	1,566	$	1,531
Interest cost	2,526		2,105		2,122
Amortizations:
Prior period service cost	54		54		54
Net loss	1,764		940		924
Net periodic benefit cost	$	5,831	$	4,665	$	4,631

The measurement date used to determine the SERP benefits is December 31. The assumptions used to determine the benefit obligation and the periodic costs are as follows.



	SERP
	2012		2011
Weighted-average assumptions used to determine the benefit obligation as of December 31:
Discount rate	4.17	%	4.99	%
Rate of compensation increase	5.00	%	5.00	%



			SERP
	2012		2011		2010
Weighted-average assumptions used to determine the net benefit cost (income) for the year ended December 31:
Discount rate	4.99	%	5.26	%	5.78	%
Rate of compensation increase	5.00	%	5.00	%	5.00	%

Liabilities relating to the SERP are reported on the individual subsidiaries’ financial statements. At December 31, 2012 and 2011, the current portion of the SERP liability for Cleco was $2.5 million and $2.2 million, respectively. At December 31, 2012 and 2011, the current portion of the SERP liability for Cleco Power was $0.8 million and $0.8 million, respectively. The expense related to the SERP reflected on Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2012, 2011, and 2010 was $1.5 million, $1.1 million, and $1.2 million, respectively. Cleco Power’s allocated amount of the SERP liability was $18.4 million and $15.0 million at December 31, 2012 and 2011, respectively.

The projected benefit payments for the SERP for each year through 2017 and the next five years thereafter are shown in the following table.



(THOUSANDS)	2013		2014		2015		2016		2017		NEXT FIVE YEARS
SERP	$	2,503	$	2,531	$	2,774	$	2,997	$	3,078	$	18,279

401(k)

Most employees are eligible to participate in the 401(k) Plan. Under the 401(k) Plan, Cleco makes matching contributions and funds dividend reinvestments with cash. Cleco’s 401(k) Plan expense for the years ended December 31, 2012, 2011, and 2010 is as follows:



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2012		2011		2010
401(k) Plan expense	$	4,375	$	3,917	$	3,709

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco Corporation’s other subsidiaries was $1.0 million, $0.9 million, and $0.8 million for the years ended December 31, 2012, 2011, and 2010, respectively.