Pension, Savings, And Other Employee Benefits

6 Months Ended

Jun. 30, 2016

Pension, Savings, And Other Employee Benefits [Abstract]

Pension, Savings, And Other Employee Benefits

Note 11 – Pension, Savings, and Other Employee Benefits

Pension plan. FHN sponsors a noncontributory, qualified defined benefit pension plan to employees hired or re-hired on or before September 1, 2007. Pension benefits are based on years of service, average compensation near retirement or other termination, and estimated social security benefits at age 65. Benefits under the plan are “frozen” so that years of service and compensation changes after 2012 do not affect the benefit owed. Minimum contributions are based upon actuarially determined amounts necessary to fund the benefit obligation. FHN did not make any contributions to the qualified pension plan in 2015 or in the first half of 2016. Decisions to contribute to the plan are based upon pension funding requirements under the Pension Protection Act, the maximum amount deductible under the Internal Revenue Code, the actual performance of plan assets, and trends in the regulatory environment. FHN expects to contribute approximately $165 million to the qualified pension plan in third quarter 2016.

FHN also maintains non-qualified plans including a supplemental retirement plan that covers certain employees whose benefits under the qualified pension plan have been limited by tax rules. These other non-qualified plans are unfunded, and contributions to these plans cover all benefits paid under the non-qualified plans. Payments made under the non-qualified plans were $4.9 million for 2015. FHN anticipates making benefit payments under the non-qualified plans of $5.2 million in 2016.

Savings plan. FHN provides all qualifying full-time employees with the opportunity to participate in the FHN tax qualified 401(k) savings plan. The qualified plan allows employees to defer receipt of earned salary, up to tax law limits, on a tax-advantaged basis. Accounts, which are held in trust, may be invested in a wide range of mutual funds and in FHN common stock. Up to tax law limits, FHN provides a 100 percent match for the first 6 percent of salary deferred, with company matching contributions invested according to a participant’s current investment elections. Through a non-qualified savings restoration plan, FHN provides a restorative benefit to certain highly-compensated employees who participate in the savings plan and whose contribution elections are capped by tax limitations.

Other employee benefits. FHN provides postretirement life insurance benefits to certain employees and also provides postretirement medical insurance benefits to retirement-eligible employees. The postretirement medical plan is contributory with FHN contributing a fixed amount for certain participants. FHN’s postretirement benefits include certain prescription drug benefits.


The components of net periodic benefit cost for the three months ended June 30 are as follows:

		Pension Benefits				Other Benefits
(Dollars in thousands)		2016		2015		2016		2015
Components of net periodic benefit cost
Service cost		$	10	$	10	$	27	$	38
Interest cost			7,882		9,020		317		360
Expected return on plan assets			(9,772)		(9,391)		(229)		(242)
Amortization of unrecognized:
	Prior service cost/(credit)		50		83		42		(291)
	Actuarial (gain)/loss		2,067		2,395		(232)		(244)
Net periodic benefit cost		$	237	$	2,117	$	(75)	$	(379)

The components of net periodic benefit cost for the six months ended June 30 are as follows:

		Pension Benefits				Other Benefits
(Dollars in thousands)		2016		2015		2016		2015
Components of net periodic benefit cost
Service cost		$	20	$	20	$	55	$	75
Interest cost			15,764		18,040		634		720
Expected return on plan assets			(19,545)		(18,783)		(458)		(483)
Amortization of unrecognized:
	Prior service cost/(credit)		99		166		85		(582)
	Actuarial (gain)/loss		4,135		4,791		(465)		(488)
Net periodic benefit cost		$	473	$	4,234	$	(149)	$	(758)

In 2016, FHN changed its methodology for the calculation of interest cost for its applicable employee benefit plans. Prior to 2016 FHN utilized a weighted average discount rate to determine interest cost, which is the same discount rate used to calculate the projected benefit obligation. Starting in 2016, FHN has adopted a spot rate approach which applies duration-specific rates from the full yield curve to estimated future benefit payments for the determination of interest cost. This change in accounting estimate is expected to reduce annual interest cost across all plans by $5.8 million in 2016.