Postretirement Health-Care and Life-Insurance Plans

The company provides health-care and life-insurance benefits to certain retired employees and their covered dependents and beneficiaries. Generally, employees who have attained age 55 and have rendered 10 or more years of service are eligible for these postretirement benefits. Certain retirees are required to contribute to plans in order to maintain coverage.

Measurement Date and Assumptions

A fiscal year end measurement date is utilized to value plan assets and obligations for the company's postretirement health-care and life-insurance plans pursuant to the accounting rules.

The weighted average actuarial assumptions used in measuring the net periodic benefit cost (income) and plan obligations for the three years ending June 28, 2014 were:



	2014		2013		2012
Net periodic benefit cost (income)
Discount rate	4.4	%	3.9	%	5.3	%
Plan obligations
Discount rate	3.9		4.4		3.8
Health-care cost trend assumed for the next year	7.0		7.5		7.5
Rate to which the cost trend is assumed to decline	5.0		5.0		5.0
Year that rate reaches the ultimate trend rate	2018		2018		2017

The discount rate is determined by utilizing a yield curve based on high-quality fixed-income investments that have a AA bond rating to discount the expected future benefit payments to plan participants. Assumed health-care trend rates are based on historical experience and management's expectations of future cost increases. A one-percentage-point change in assumed health-care cost trend rates would have the following effects:



In millions	One Percentage Point Increase		One Percentage Point Decrease
Effect on total service and interest components	$	1	$	(1	)
Effect on postretirement benefit obligation	8		(7		)

Net Periodic Benefit Cost and Funded Status

The components of the net periodic benefit income associated with continuing operations were as follows:



In millions	2014			2013			2012
Components of defined benefit net periodic cost (income)
Service cost	$	2		$	2		$	2
Interest cost	4			4			3
Net amortization and deferral	(7		)	(9		)	(8		)
Curtailment gain	$	(1	)	$	—		$	—
Net periodic benefit income	$	(2	)	$	(3	)	$	(3	)

The amount of the prior service credits and net actuarial loss that is expected to be amortized from accumulated other comprehensive income and reported as a component of net periodic benefit cost during 2015 is $5 million of income and $1 million of expense, respectively.

The funded status of postretirement health-care and life-insurance plans related to continuing operations at the respective year-ends were:



In millions	2014			2013
Accumulated postretirement benefit obligation
Beginning of year	$	90		$	101
Service cost	2			3
Interest cost	4			4
Net benefits paid	(6		)	(5		)
Plan participant contributions	1			1
Curtailment gain	(1		)	—
Actuarial gain	(1		)	(14		)
End of year	89			90
Fair value of plan assets	—			1
Funded status	$	(89	)	$	(89	)
Amounts recognized on the consolidated balance sheets
Accrued liabilities	$	(6	)	$	(6	)
Other liabilities	(83		)	(83		)
Total liability recognized	$	(89	)	$	(89	)
Amounts recognized in accumulated other comprehensive loss
Unamortized prior service credit	$	(12	)	$	(20	)
Unamortized net actuarial loss	8			10
Total	$	(4	)	$	(10	)

Expected Benefit Payments and Funding

Substantially all postretirement health-care and life-insurance benefit payments are made by the company. Using expected future service, it is anticipated that the future benefit payments that will be funded by the company will be as follows: $6 million per year in 2015 through 2017, $7 million per year in 2018 and 2019, and $35 million from 2020 to 2024.

The Medicare Part D subsidy received by the company was less than $1 million in 2014 and $1 million in 2013 and 2012.