

Note 8 — Pension Plan and Employee Benefits

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

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 ten 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. Cleco did not make any required or discretionary contributions to the pension plan in 2014. During 2013, Cleco made $34.0 million in discretionary contributions to the pension plan designated for the 2012 plan year. 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 may be 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, 2014 and 2013, are presented in the following table:



	PENSION BENEFITS						OTHER BENEFITS
(THOUSANDS)	2014			2013			2014			2013
Change in benefit obligation
Benefit obligation at beginning of year	$	392,488		$	431,569		$	43,840		$	45,569
Service cost	8,050			9,889			1,542			1,656
Interest cost	19,851			17,940			1,809			1,568
Plan participants’ contributions	—			—			872			1,241
Actuarial loss (gain)	95,576			(50,133		)	1,228			(1,768		)
Expenses paid	(1,671		)	(1,916		)	—			—
Medicare D	—			—			132			194
Other adjustments	—			—			(551		)	601
Benefits paid	(15,922		)	(14,861		)	(4,220		)	(5,221		)
Benefit obligation at end of year	498,372			392,488			44,652			43,840
Change in plan assets
Fair value of plan assets at beginning of year	384,555			344,041			—			—
Actual return on plan assets	45,841			23,291			—			—
Employer contributions	—			34,000			—			—
Expenses paid	(1,671		)	(1,916		)	—			—
Benefits paid	(15,922		)	(14,861		)	—			—
Fair value of plan assets at end of year	412,803			384,555			—			—
Unfunded status	$	(85,569	)	$	(7,933	)	$	(44,652	)	$	(43,840	)

The employee pension plan accumulated benefit obligation at December 31, 2014 and 2013, is presented in the following table:



	PENSION BENEFITS
(THOUSANDS)	2014		2013
Accumulated benefit obligation	$	452,991	$	358,128

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, 2014 and 2013:



	PENSION BENEFITS						OTHER BENEFITS
(THOUSANDS)	2014			2013			2014		2013
Net actuarial loss (gain) occurring during year	$	74,242		$	(49,978	)	$	1,228	$	(1,768	)
Prior service cost occurring during year	$	—		$	—		$	—	$	601
Net actuarial loss amortized during year	$	6,743		$	13,218		$	670	$	1,131
Transition obligation amortized during year	$	—		$	—		$	16	$	20
Prior service (credit) cost amortized during year	$	(71	)	$	(71	)	$	119	$	—

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 for other benefits and in regulatory assets for pension that have not been recognized as components of net periodic benefit costs and the amounts expected to be recognized in 2015. The following table presents those items for the employee pension plan and other benefits plans for December 31, 2015, 2014, and 2013:



				PENSION BENEFITS								OTHER BENEFITS
(THOUSANDS)	2015			2014			2013			2015		2014		2013
Net actuarial loss	$	13,491		$	161,320		$	93,821		$	865	$	10,710	$	10,703
Transition obligation	$	—		$	—		$	—		$	—	$	—	$	16
Prior service (credit) cost	$	(71	)	$	(417	)	$	(488	)	$	119	$	482	$	601

The components of net periodic pension and other benefits costs for 2014, 2013, and 2012 are as follows:



				PENSION BENEFITS								OTHER BENEFITS
(THOUSANDS)	2014			2013			2012			2014		2013		2012
Components of periodic benefit costs
Service cost	$	8,050		$	9,889		$	8,312		$	1,542	$	1,656	$	1,461
Interest cost	19,851			17,940			18,254			1,809		1,568		2,239
Expected return on plan assets	(24,507		)	(23,446		)	(20,806		)	—		—		—
Amortizations:
Transition obligation	—			—			—			16		20		20
Prior period service (credit) cost	(71		)	(71		)	(71		)	119		—		—
Net loss	6,743			13,218			8,346			670		1,131		1,479
Net periodic benefit cost	$	10,066		$	17,530		$	14,035		$	4,156	$	4,375	$	5,199

Because 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, 2014, 2013, and 2012 was $1.7 million, $2.5 million, and $2.2 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, 2014 and 2013, the current portion of the other benefits liability for Cleco was $3.5 million and $3.5 million, respectively. At December 31, 2014 and 2013, the current portion of the other benefits liability for Cleco Power was $3.2 million and $3.2 million, respectively. At December 31, 2014 and 2013, the non-current portion of the other benefits liability for Cleco was $41.2 million and $40.4 million, respectively. At December 31, 2014 and 2013, the non-current portion of the other benefits liability for Cleco Power was $31.2 million and $30.7 million, respectively. The expense related to other benefits reflected in Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2014, 2013, and 2012 was $3.6 million, $3.8 million, and $4.5 million, respectively.

In March 2010, the President signed the PPACA, a comprehensive health care law. 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.

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
	2014		2013		2014		2013
Weighted-average assumptions used to determine the benefit obligation as of December 31:
Discount rate	4.21	%	5.14	%	3.76	%	4.46	%
Rate of compensation increase	3.17	%	3.26	%	N/A		N/A



			PENSION BENEFITS						OTHER BENEFITS
	2014		2013		2012		2014		2013		2012
Weighted-average assumptions used to determine the net benefit cost for the year ended December 31:
Discount rate	5.14	%	4.19	%	5.08	%	4.46	%	3.54	%	4.51	%
Expected return on plan assets	6.76	%	6.78	%	6.61	%	N/A		N/A		N/A
Rate of compensation increase	3.17	%	3.26	%	3.37	%	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 were 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 2015 periodic expense, Cleco decreased the expected long-term return on plan assets to 6.15%.

Employee pension plan assets may be invested in publicly traded domestic common stocks, including Cleco Corporation common stock; United States 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 United States Government and United States 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, 2014 and December 31, 2013. 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, 2014		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		$	5,180	$	—	$	5,180	$	—
Common stock		13,967		13,967		—		—
Preferred stock		968		968		—		—
Obligations of United States Government and United States Government Agencies		49,942		—		49,942		—
Mutual funds
Domestic		55,005		55,005		—		—
International		25,096		25,096		—		—
Common/collective trust fund		37,542		—		37,542		—
Real estate funds		18,792		—		—		18,792
Hedge fund of funds		1,228		—		—		1,228
Corporate debt		202,253		—		202,253		—
Total		$	409,973	$	95,036	$	294,917	$	20,020

	Interest accrual	2,830
	Total net assets	$	412,803



(THOUSANDS)		AT DEC. 31, 2013		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		$	5,942	$	—	$	5,942	$	—
Common stock		17,918		17,918		—		—
Preferred stock		939		939		—		—
Obligations of United States Government and United States Government Agencies		41,413		—		41,413		—
Mutual funds
Domestic		54,609		54,609		—		—
International		26,254		26,254		—		—
Common/collective trust fund		42,078		—		42,078		—
Real estate funds		17,928		—		—		17,928
Hedge fund of funds		1,740		—		—		1,740
Corporate debt		172,950		—		172,950		—
Total		$	381,771	$	99,720	$	262,383	$	19,668

	Interest accrual	2,784
	Total net assets	$	384,555

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. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

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, 2014 and 2013:



(THOUSANDS)	REAL ESTATE FUNDS		HEDGE FUND OF FUNDS			TOTAL
December 31, 2012	$	17,341	$	2,587		$	19,928
Realized gain	—		12			12
Unrealized gain	128		71			199
Purchases	459		—			459
Sales	—		(930		)	(930		)
December 31, 2013	$	17,928	$	1,740		$	19,668
Realized gain	—		7			7
Unrealized gain	570		46			616
Purchases	294		—			294
Sales	—		(565		)	(565		)
December 31, 2014	$	18,792	$	1,228		$	20,020

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 2014, the return on plan assets was 11.7% compared to an expected long-term return of 6.76%. The 2013 return on pension plan assets was 5.7% compared to an expected long-term return of 6.78%.

As of December 31, 2014, 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, 2014, the fund had $1.2 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 S&P 500 Index, Russell 2500 Index, MSCI EAFE 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 United States Treasury Bills plus 5%.

In order to meet the objectives and to control risk, the retirement committee has established the following 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 S&P 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 United States dollars are limited to 10%. Securities denominated in currencies other than United States 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 United States dollar denominated assets permitted, including United States 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 S&P 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.


•	The average weighted duration of portfolio security holdings, including derivative exposure, is expected to range within +/- 20% of the Barclays Long Gov/Credit Index duration.

Fixed Income Portfolio - Long Credit


•	Permitted assets include United States 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 United States dollar denominated.


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


•	Securities must have a maximum position size of 5% for A rated securities and 3% for BBB rated securities.


•	The duration of the portfolio must be within +/- 1 year of benchmark.

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.

The following chart shows the dynamic asset allocation based on the funded ratio at December 31, 2014:



	PERCENT OF TOTAL PLAN ASSETS*
	MINIMUM		TARGET		MAXIMUM
Return-seeking
Domestic equity			16	%
International equity			16	%
Real estate			7	%
Hedge fund of funds			1	%
Total return-seeking	35	%	40	%	45	%
Liability hedging
Fixed income- long government/credit			20	%
Fixed income - long credit			40	%
Total liability hedging	55	%	60	%	64	%
*Minimums and maximums within subcategories not intended to equal total for category.

The assumed health care cost trend rates used to measure the expected cost of other benefits is 5.0% for 2015 and remains at 5.0% thereafter. The rate used for 2014 was also 5.0%. 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	$	24	$	(28	)
Effect on postretirement benefit obligation	$	272	$	(305	)

The projected benefit payments for the employee pension plan and other benefits obligation plan for each year through 2019 and the next five years thereafter are listed in the following table:



(THOUSANDS)	PENSION BENEFITS		OTHER BENEFITS, GROSS
2015	$	17,343	$	3,534
2016	$	18,249	$	3,627
2017	$	19,408	$	3,687
2018	$	20,510	$	3,763
2019	$	21,741	$	3,858
Next five years	$	129,225	$	19,171

SERP

Certain Cleco officers are covered by SERP. 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 cash bonuses paid during the 60 months prior to retirement, reduced by benefits received from any other defined benefit pension plan, supplemental executive retirement 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 SERP participants. Proceeds from the life insurance policies are expected to be used to pay the SERP participants’ death benefits, as well as future SERP payments. However, because 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. Cleco Power is considered the plan sponsor, and Support Group is considered the plan administrator. On July 24, 2014, the Board of Directors of Cleco voted to close SERP to new participants. With regard to current SERP participants, including former employees or their beneficiaries, all terms of SERP will continue. In accordance with the Merger Agreement, executives are entitled to enhancement of benefits and accelerated vesting upon terminations of employment that may occur in connection with or following the Merger. Management will look at current market trends as it evaluates Cleco’s future compensation strategy.

SERP’s funded status at December 31, 2014 and 2013, is presented in the following table:



	SERP BENEFITS
(THOUSANDS)	2014			2013
Change in benefit obligation
Benefit obligation at beginning of year	$	57,865		$	59,422
Service cost	2,278			2,055
Interest cost	3,028			2,578
Actuarial loss (gain)	13,436			(3,477		)
Benefits paid	(2,705		)	(2,713		)
Benefit obligation at end of year	$	73,902		$	57,865

SERP’s accumulated benefit obligation at December 31, 2014 and 2013, is presented in the following table:



	SERP BENEFITS
(THOUSANDS)	2014		2013
Accumulated benefit obligation	$	67,126	$	53,046

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, 2014 and 2013:



	SERP BENEFITS
(THOUSANDS)	2014		2013
Net actuarial loss (gain) occurring during year	$	13,436	$	(3,477	)
Net actuarial loss amortized during year	$	1,876	$	2,305
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 2015. The following table presents those items for SERP for December 31, 2015, 2014, and 2013:



			SERP BENEFITS
(THOUSANDS)	2015		2014		2013
Net actuarial loss	$	2,919	$	31,224	$	19,663
Prior service cost	$	54	$	173	$	227

The components of the net SERP costs for 2014, 2013, and 2012 are as follows:



			SERP BENEFITS
(THOUSANDS)	2014		2013		2012
Components of periodic benefit costs:
Service cost	$	2,278	$	2,055	$	1,487
Interest cost	3,028		2,578		2,526
Amortizations:
Prior period service cost	54		54		54
Net loss	1,875		2,305		1,764
Net periodic benefit cost	$	7,235	$	6,992	$	5,831

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
	2014		2013
Weighted-average assumptions used to determine the benefit obligation as of December 31:
Discount rate	4.20	%	5.09	%
Rate of compensation increase	5.00	%	5.00	%



			SERP
	2014		2013		2012
Weighted-average assumptions used to determine the net benefit cost for the year ended December 31:
Discount rate	5.09	%	4.17	%	4.99	%
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, 2014 and 2013, the current portion of the SERP liability for Cleco was $3.0 million and $2.7 million, respectively. At December 31, 2014 and 2013, the current portion of the SERP liability for Cleco Power was $0.8 million and $0.7 million, respectively. At December 31, 2014 and 2013, the non-current portion of the SERP liability for Cleco was $70.9 million and $55.2 million, respectively. At December 31, 2014 and 2013, the non-current portion of the SERP liability for Cleco Power was $19.0 million and $14.3 million, respectively. The expense related to the SERP reflected on Cleco Power’s Consolidated Statements of Income for the years ended December 31, 2014, 2013, and 2012, was $1.7 million, $1.5 million, and $1.5 million, respectively.

The projected benefit payments for the SERP for each year through 2019 and the next five years thereafter are shown in the following table:



(THOUSANDS)	2015		2016		2017		2018		2019		NEXT FIVE YEARS
SERP	$	3,094	$	3,324	$	3,375	$	3,567	$	3,735	$	22,206

401(k)

Cleco’s 401(k) Plan is intended to provide active, eligible employees with voluntary, long-term savings and investment opportunities. The Plan is a defined contribution plan and is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974. In accordance with the Plan, employer contributions can be in the form of Cleco Corporation stock or cash. Cash contributions are invested in proportion to the participant’s voluntary contribution investment choices. Plan participants are allowed to choose whether to have dividends on Cleco Corporation common stock distributed in cash or reinvested in additional shares of Cleco Corporation common stock. Participation in the Plan is voluntary and active Cleco employees are eligible to participate. Cleco’s 401(k) Plan expense for the years ended December 31, 2014, 2013, and 2012 is as follows:



	FOR THE YEAR ENDED DEC. 31,
(THOUSANDS)	2014		2013		2012
401(k) Plan expense	$	4,730	$	4,422	$	4,375

Cleco Power is the plan sponsor for the 401(k) Plan. The expense of the 401(k) Plan related to Cleco’s other subsidiaries was $0.9 million, $1.0 million, and $1.0 million for the years ended December 31, 2014, 2013, and 2012, respectively.