The majority of PPL's subsidiaries domestic employees are eligible for pension benefits under non-contributory defined benefit pension plans with benefits based on length of service and final average pay, as defined by the plans. Effective January 1, 2012, PPL's domestic qualified pension plans were closed to newly hired salaried employees. Newly hired bargaining unit employees continue to be eligible under the plans based on their collective bargaining agreements. Salaried employees hired on or after January 1, 2012 are eligible to participate in the PPL Retirement Savings Plan, a 401(k) savings plan with enhanced employer matching.

The majority of PPL Montana employees are eligible for pension benefits under a cash balance pension plan. Effective January 1, 2012, that plan was closed to newly hired salaried employees. Eligibility of newly hired bargaining unit employees under the plan is based on their collective bargaining agreements. Salaried employees hired on or after January 1, 2012 are eligible to participate in the PPL Retirement Savings Plan.

The defined benefit pension plans of LKE and its subsidiaries were closed to new salaried and bargaining unit employees hired after December 31, 2005. Employees hired after December 31, 2005 receive additional company contributions above the standard matching contributions to their savings plans.

Employees of certain of PPL Energy Supply's mechanical contracting companies are eligible for benefits under multiemployer plans sponsored by various unions.

Effective April 1, 2010, PPL WW's principal defined benefit pension plan was closed to most new employees, except for those meeting specific grandfathered participation rights. WPD Midlands was acquired by PPL WEM on April 1, 2011. WPD Midlands' defined benefit plan had been closed to new members, except for those meeting specific grandfathered participation rights, prior to acquisition. New employees not eligible to participate in the plans are offered benefits under a defined contribution plan.

PPL and certain of its subsidiaries also provide supplemental retirement benefits to executives and other key management employees through unfunded nonqualified retirement plans.

The majority of employees of PPL's domestic subsidiaries are eligible for certain health care and life insurance benefits upon retirement through contributory plans. Effective January 1, 2014, the PPL Postretirement Medical Plan was closed to newly hired salaried employees. Postretirement health benefits may be paid from 401(h) accounts established as part of the PPL Retirement Plan and the LG&E and KU Retirement Plan within the PPL Services Corporation Master Trust, funded VEBA trusts and company funds. Postretirement benefits under the PPL Montana Retiree Health Plan are paid from company assets. WPD does not sponsor any postretirement benefit plans other than pensions.

The following table provides the components of net periodic defined benefit costs for PPL's domestic (U.S.) and WPD (U.K.) pension and other postretirement benefit plans for the years ended December 31.

			Pension Benefits
			U.S.						U.K.						Other Postretirement Benefits
			2013		2012		2011		2013		2012		2011		2013		2012		2011
Net periodic defined benefit costs
	(credits):
Service cost			$	126	$	103	$	95	$	69	$	54	$	44	$	14	$	12	$	12
Interest cost				213		220		217		320		340		282		29		31		33
Expected return on plan assets				(293)		(259)		(245)		(465)		(458)		(338)		(25)		(23)		(23)
Amortization of:
		Transition (asset) obligation																2		2
		Prior service cost (credit)		22		24		24		1		4		4				1
		Actuarial (gain) loss		80		42		30		150		79		57		6		4		6
Net periodic defined benefit costs
	(credits) prior to settlement
	charges and termination benefits			148		130		121		75		19		49		24		27		30
Settlement charges						11
Termination benefits (a)										3		2		50
Net periodic defined benefit costs
	(credits)		$	148	$	141	$	121	$	78	$	21	$	99	$	24	$	27	$	30

Other Changes in Plan Assets
	and Benefit Obligations
	Recognized in OCI and
	Regulatory Assets/Liabilities -
	Gross:
Settlements					$	(11)
Net (gain) loss			$	(319)		372	$	117	$	76	$	1,073	$	152	$	(68)	$	13	$	(9)
Prior service cost
	(credit)							8								(3)		(1)		10
Amortization of:
		Transition asset (obligation)																(2)		(2)
		Prior service (cost) credit		(22)		(24)		(24)		(1)		(4)		(4)				(1)
		Actuarial gain (loss)		(80)		(42)		(30)		(150)		(79)		(57)		(6)		(4)		(6)
Total recognized in OCI and
	regulatory assets/liabilities (b)			(421)		295		71		(75)		990		91		(77)		5		(7)

Total recognized in net periodic
	defined benefit costs, OCI and
	regulatory assets/liabilities (b)		$	(273)	$	436	$	192	$	3	$	1,011	$	190	$	(53)	$	32	$	23

(b) WPD is not subject to accounting for the effects of certain types of regulation as prescribed by GAAP. As a result, WPD does not record regulatory assets/liabilities.

For PPL's U.S. pension benefits and for other postretirement benefits, the amounts recognized in OCI and regulatory assets/liabilities for the years ended December 31 were as follows:

The estimated amounts to be amortized from AOCI and regulatory assets/liabilities into net periodic defined benefit costs in 2014 are as follows:

The following table provides the components of net periodic defined benefit costs for PPL Energy Supply's pension and other postretirement benefit plans for the years ended December 31.

			Pension Benefits						Other Postretirement Benefits
			2013		2012		2011		2013		2012		2011
Net periodic defined benefit costs
(credits):
Service cost			$	7	$	6	$	5	$	1	$	1	$	1
Interest cost				8		7		7				1		1
Expected return on plan assets				(10)		(9)		(9)
Amortization of:
		Actuarial (gain) loss		3		2		2
Net periodic defined benefit costs
	(credits)		$	8	$	6	$	5	$	1	$	2	$	2

Other Changes in Plan Assets
	and Benefit Obligations
	Recognized in OCI:
Net (gain) loss			$	(15)	$	16	$	7	$	(1)			$	(2)
Prior service cost (credit)										(3)	$	(1)
Amortization of:
		Actuarial gain (loss)		(3)		(2)		(2)
Total recognized in OCI				(18)		14		5		(4)		(1)		(2)

Total recognized in net periodic
	defined benefit costs and OCI		$	(10)	$	20	$	10	$	(3)	$	1	$

Actuarial loss of $2 million related to PPL Energy Supply's pension plan is expected to be amortized from AOCI into net periodic defined benefit costs in 2014.

The following table provides the components of net periodic defined benefit costs for LKE's pension and other postretirement benefit plans for the years ended December 31.


			Pension Benefits						Other Postretirement Benefits
			2013		2012		2011		2013		2012		2011
Net periodic defined benefit costs
	(credits):
Service cost			$	26	$	22	$	24	$	5	$	4	$	4
Interest cost				62		64		67		8		9		10
Expected return on plan assets				(82)		(70)		(64)		(5)		(4)		(3)
Amortization of:
		Transition (asset) obligation										2		2
		Prior service cost (credit)		5		5		5		3		3		2
		Actuarial (gain) loss		33		22		24				(1)
Net periodic defined benefit costs (credits)			$	44	$	43	$	56	$	11	$	13	$	15

Other Changes in Plan Assets
	and Benefit Obligations
	Recognized in OCI and
	Regulatory Assets/Liabilities -
	Gross:
Net (gain) loss			$	(116)	$	96	$	29	$	(14)	$	(11)	$	(3)
Prior service cost (credit)								8						11
Amortization of:
		Transition (asset) obligation										(2)		(2)
		Prior service (cost) credit		(5)		(5)		(5)		(3)		(3)		(2)
		Actuarial gain (loss)		(33)		(22)		(24)				1
Total recognized in OCI and
	regulatory assets/liabilities			(154)		69		8		(17)		(15)		4

Total recognized in net periodic
	defined benefit costs, OCI and regulatory
	assets/liabilities		$	(110)	$	112	$	64	$	(6)	$	(2)	$	19

For LKE's pension and other postretirement benefits, the amounts recognized in OCI and regulatory assets/liabilities for the years ended December 31 were as follows:

The estimated amounts to be amortized from regulatory assets/liabilities into net periodic defined benefit costs for LKE in 2014 are as follows.

The following table provides the components of net periodic defined benefit costs for LG&E's pension benefit plan for the years ended December 31.

			Pension Benefits
			2013		2012		2011
Net periodic defined benefit costs (credits):
Service cost			$	2	$	2	$	2
Interest cost				14		14		14
Expected return on plan assets				(20)		(19)		(18)
Amortization of:
		Prior service cost (credit)		2		3		2
		Actuarial (gain) loss		14		11		11
Net periodic defined benefit costs (credits)			$	12	$	11	$	11

Other Changes in Plan Assets and Benefit Obligations
	Recognized in Regulatory Assets - Gross:
Net (gain) loss			$	(20)	$	18	$	15
Prior service cost (credit)								9
Amortization of:
		Prior service (cost) credit		(2)		(2)		(2)
		Actuarial gain (loss)		(14)		(11)		(11)
Total recognized in regulatory assets/liabilities				(36)		5		11

Total recognized in net periodic defined benefit costs and regulatory assets			$	(24)	$	16	$	22

The estimated amounts to be amortized from regulatory assets into net periodic defined benefit costs for LG&E in 2014 are as follows.

The following net periodic defined benefit costs (credits) were charged to operating expense, excluding amounts charged to construction and other non-expense accounts. The U.K. pension benefits apply to PPL only.

(a) PPL Electric and KU do not directly sponsor any defined benefit plans. PPL Electric and KU were allocated these costs of defined benefit plans sponsored by PPL Services (for PPL Electric) and by LKE (for KU), based on their participation in those plans, which management believes are reasonable.

In the table above, for PPL Energy Supply and LG&E, amounts include costs for the specific plans each sponsors and the following allocated costs of defined benefit plans sponsored by PPL Services (for PPL Energy Supply) and by LKE (for LG&E), based on their participation in those plans, which management believes are reasonable:

The following weighted-average assumptions were used in the valuation of the benefit obligations at December 31. The U.K. pension benefits apply to PPL only.

The following weighted-average assumptions were used to determine the net periodic defined benefit costs for the years ended December 31. The U.K. pension benefits apply to PPL only.

		Pension Benefits
		U.S.						U.K.						Other Postretirement Benefits
		2013		2012		2011		2013		2012		2011		2013		2012		2011
PPL
	Discount rate		4.22%		5.06%		5.42%		4.27%		5.24%		5.59%		4.00%		4.80%		5.14%
	Rate of compensation increase		3.98%		4.02%		4.88%		4.00%		4.00%		3.75%		3.97%		4.00%		4.90%
	Expected return on plan assets (a)		7.03%		7.07%		7.25%		7.16%		7.17%		7.04%		5.94%		5.99%		6.57%

PPL Energy Supply
	Discount rate		4.25%		5.12%		5.47%								3.77%		4.60%		4.95%
	Rate of compensation increase		3.95%		4.00%		4.75%								3.95%		4.00%		4.75%
	Expected return on plan assets (a)		7.00%		7.00%		7.25%								N/A		N/A		N/A

			2013		2012		2011
PPL and PPL Energy Supply
	Health care cost trend rate assumed for next year
		- obligations		7.6%		8.0%		8.5%
		- cost		8.0%		8.5%		9.0%
	Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
		- obligations		5.0%		5.5%		5.5%
		- cost		5.5%		5.5%		5.5%
	Year that the rate reaches the ultimate trend rate
		- obligations		2020		2019		2019
		- cost		2019		2019		2019

A one percentage point change in the assumed health care costs trend rate assumption would have had the following effects on the other postretirement benefit plans in 2013:

The effects on PPL Energy Supply's other postretirement benefit plan would not have been significant.

			Pension Benefits
			U.S.				U.K.				Other Postretirement Benefits
			2013		2012		2013		2012		2013		2012
Change in Benefit Obligation
Benefit Obligation, beginning of period			$	5,046	$	4,381	$	7,888	$	6,638	$	722	$	687
		Service cost		126		103		69		54		14		12
		Interest cost		213		220		320		340		29		31
		Participant contributions						15		15		12		6
		Plan amendments										(4)		(1)
		Actuarial (gain) loss		(540)		546		46		1,081		(54)		31
		Settlements				(25)
		Termination benefits						3		2
		Net transfer in (out)								12
		Actual expenses paid				(3)
		Gross benefits paid (a)		(254)		(176)		(375)		(397)		(57)		(46)
		Federal subsidy												2
		Currency conversion						177		143
Benefit Obligation, end of period				4,591		5,046		8,143		7,888		662		722

Change in Plan Assets
Plan assets at fair value, beginning of period				3,939		3,471		6,911		6,351		421		391
		Actual return on plan assets		72		432		438		476		37		42
		Employer contributions		399		239		134		341		30		27
		Participant contributions						15		15		12		5
		Settlements				(25)
		Actual expenses paid				(2)
		Gross benefits paid (a)		(254)		(176)		(375)		(397)		(54)		(44)
		Currency conversion						161		125
Plan assets at fair value, end of period				4,156		3,939		7,284		6,911		446		421

Funded Status, end of period			$	(435)	$	(1,107)	$	(859)	$	(977)	$	(216)	$	(301)

Amounts recognized in the Balance
	Sheets consist of:
		Current liability	$	(8)	$	(8)					$	(1)	$	(1)
		Noncurrent liability		(427)		(1,099)	$	(859)	$	(977)		(215)		(300)
Net amount recognized, end of period			$	(435)	$	(1,107)	$	(859)	$	(977)	$	(216)	$	(301)

Amounts recognized in AOCI and
	regulatory assets/liabilities (pre-tax)
	consist of:
Prior service cost (credit)			$	69	$	91			$	1	$	(11)	$	(7)
Net actuarial (gain) loss				842		1,241	$	2,112		2,184		33		106
Total (b)			$	911	$	1,332	$	2,112	$	2,185	$	22	$	99

Total accumulated benefit obligation
	for defined benefit pension plans		$	4,191	$	4,569	$	7,542	$	7,259

(a) Certain U.S. pension plans offered a limited-time program in 2013 during which terminated vested participants could elect to receive their accrued pension benefit as a one-time lump sum payment. The increase in gross benefits paid is primarily the result of $64 million of lump-sum cash payments made to terminated vested participants in 2013 in connection with these offerings.

(b) WPD is not subject to accounting for the effects of certain types of regulation as prescribed by GAAP. As a result, WPD does not record regulatory assets/liabilities.

For PPL's U.S. pension and other postretirement benefit plans, the amounts recognized in AOCI and regulatory assets/liabilities at December 31 were as follows:

The following tables provide information on pension plans where the projected benefit obligation (PBO) or accumulated benefit obligation (ABO) exceed the fair value of plan assets:

	U.S.				U.K.
	PBO in excess of plan assets				PBO in excess of plan assets
		2013		2012		2013		2012

Projected benefit obligation	$	4,591	$	5,046	$	8,143	$	7,888
Fair value of plan assets		4,156		3,939		7,284		6,911

	U.S.				U.K.
	ABO in excess of plan assets				ABO in excess of plan assets
		2013		2012		2013		2012

Accumulated benefit obligation	$	572	$	4,569	$	3,441	$	3,349
Fair value of plan assets		431		3,939		3,131		2,812

(PPL Energy Supply)

The funded status of PPL Energy Supply's plans at December 31 was as follows:

			Pension Benefits
			U.S.				Other Postretirement Benefits
			2013		2012		2013		2012
Change in Benefit Obligation
Benefit Obligation, beginning of period			$	176	$	143	$	17	$	17
		Service cost		7		6		1		1
		Interest cost		8		7				1
		Plan amendments						(4)		(1)
		Actuarial (gain) loss		(23)		23		(1)
		Gross benefits paid		(5)		(3)		(1)		(1)
Benefit Obligation, end of period				163		176		12		17

Change in Plan Assets
Plan assets at fair value, beginning of
	period			149		132
		Actual return on plan assets		3		16
		Employer contributions				4		1
		Gross benefits paid		(5)		(3)		(1)
Plan assets at fair value, end of period				147		149

Funded Status, end of period			$	(16)	$	(27)	$	(12)	$	(17)

Amounts recognized in the Balance
	Sheets consist of:
		Current liability					$	(1)	$	(1)
		Noncurrent liability	$	(16)	$	(27)		(11)		(16)
Net amount recognized, end of period			$	(16)	$	(27)	$	(12)	$	(17)

Amounts recognized in AOCI
	(pre-tax) consist of:
Prior service cost (credit)							$	(5)	$	(1)
Net actuarial (gain) loss			$	34	$	52		1		2
Total			$	34	$	52	$	(4)	$	1

Total accumulated benefit obligation
	for defined benefit pension plans		$	163	$	176

PPL Energy Supply's pension plan had projected and accumulated benefit obligations in excess of the fair value of plan assets at December 31, 2013 and 2012.

In addition to the plans it sponsors, PPL Energy Supply and its subsidiaries are allocated a portion of the funded status and costs of the defined benefit plans sponsored by PPL Services based on their participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to PPL Energy Supply resulted in liabilities at December 31 as follows:

			Pension Benefits				Other Postretirement Benefits
			2013		2012		2013		2012
Change in Benefit Obligation
Benefit Obligation, beginning of period			$	1,487	$	1,306	$	209	$	214
		Service cost		26		22		5		4
		Interest cost		62		63		8		9
		Participant contributions						7		8
		Actuarial (gain) loss		(177)		144		(18)		(8)
		Gross benefits paid (a)		(70)		(48)		(18)		(19)
		Federal subsidy								1
Benefit Obligation, end of period				1,328		1,487		193		209

Change in Plan Assets
Plan assets at fair value, beginning of period				1,070		944		68		58
		Actual return on plan assets		21		117		1		8
		Employer contributions		152		57		16		13
		Participant contributions						7		8
		Gross benefits paid (a)		(70)		(48)		(18)		(19)
Plan assets at fair value, end of period				1,173		1,070		74		68

Funded Status, end of period			$	(155)	$	(417)	$	(119)	$	(141)

Amounts recognized in the Balance
	Sheets consist of:
		Current liability	$	(3)	$	(3)
		Noncurrent liability		(152)		(414)	$	(119)	$	(141)
Net amount recognized, end of period			$	(155)	$	(417)	$	(119)	$	(141)

Amounts recognized in AOCI and
	regulatory assets/liabilities (pre-tax)
	consist of:
Prior service cost (credit)			$	24	$	28	$	8	$	11
Net actuarial (gain) loss				205		355		(30)		(17)
Total			$	229	$	383	$	(22)	$	(6)

Total accumulated benefit obligation
	for defined benefit pension plans		$	1,176	$	1,319

(a) Certain LKE pension plans offered a limited-time program in 2013 during which terminated vested participants could elect to receive their accrued pension benefit as a one-time lump-sum payment. The increase in gross benefits paid is primarily the result of $21 million of lump-sum cash payments made to terminated vested participants in 2013 in connection with these offerings.

The amounts recognized in AOCI and regulatory assets/liabilities at December 31 were as follows:

The following tables provide information on pension plans where the projected benefit obligation (PBO) or accumulated benefit obligation (ABO) exceed the fair value of plan assets:

			Pension Benefits
			2013		2012
Change in Benefit Obligation
Benefit Obligation, beginning of period			$	331	$	298
		Service cost		2		1
		Interest cost		14		14
		Actuarial (gain) loss		(35)		32
		Gross benefits paid (a)		(21)		(14)
Benefit Obligation, end of period				291		331

Change in Plan Assets
Plan assets at fair value, beginning of period				287		256
		Actual return on plan assets		4		32
		Employer contributions		11		13
		Gross benefits paid (a)		(21)		(14)
Plan assets at fair value, end of period				281		287

Funded Status, end of period			$	(10)	$	(44)

Amounts recognized in the Balance Sheets consist of:
		Noncurrent liability	$	(10)	$	(44)
Net amount recognized, end of period			$	(10)	$	(44)

Amounts recognized in regulatory assets (pre-tax)
	consist of:
Prior service cost (credit)			$	15	$	17
Net actuarial (gain) loss				90		123
Total			$	105	$	140

Total accumulated benefit obligation for defined benefit pension plan			$	288	$	328

(a) LG&E's pension plan offered a limited-time program in 2013 during which terminated vested participants could elect to receive their accrued pension benefit as a one-time lump-sum payment. The increase in gross benefits paid is primarily the result of $7 million of lump-sum cash payments made to terminated vested participants in 2013 in connection with this offering.

LG&E's pension plan had projected and accumulated benefit obligations in excess of plan assets at December 31, 2013 and 2012.

In addition to the plan it sponsors, LG&E is allocated a portion of the funded status and costs of certain defined benefit plans sponsored by LKE based on its participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees and retired employees are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to LG&E resulted in liabilities at December 31 as follows:

PPL Energy Supply's mechanical contracting subsidiaries make contributions to over 70 multiemployer pension plans, based on the bargaining units from which labor is procured. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

 Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

 If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

 If PPL Energy Supply's mechanical contracting subsidiaries choose to stop participating in some of their multiemployer plans, they may be required to pay those plans an amount based on the unfunded status of the plan, referred to as a withdrawal liability.

PPL Energy Supply identified the Steamfitters Local Union No. 420 Pension Plan, EIN/Plan Number 23-2004424/001 as the only significant plan to which contributions are made. Contributions to this plan by PPL Energy Supply's mechanical contracting companies were $5 million for 2013, 2012 and 2011. At the date the financial statements were issued, the Form 5500 was not available for the plan year ending in 2013. Therefore, the following disclosures specific to this plan are being made based on the Form 5500s filed for the plan years ended December 31, 2012 and 2011. PPL Energy Supply's mechanical contracting subsidiaries were not identified individually as greater than 5% contributors on the Form 5500s. However, the combined contributions of the three subsidiaries contributing to the plan had exceeded 5%. The plan had a Pension Protection Act zone status of red and yellow, without utilizing an extended amortization period, as of December 31, 2012 and 2011. In addition, the plan is subject to a rehabilitation plan and surcharges have been applied to participating employer contributions. The expiration date of the collective-bargaining agreement related to those employees participating in this plan is April 30, 2014. There were no other plans deemed individually significant based on a multifaceted assessment of each plan. This assessment included review of the funded/zone status of each plan and PPL Energy Supply's potential obligations under the plan and the number of participating employers contributing to the plan.

PPL Energy Supply's mechanical contracting subsidiaries also participate in multiemployer other postretirement plans that provide for retiree life insurance and health benefits.

The table below details total contributions to all multiemployer pension and other postretirement plans, including the plan identified as significant above. The contribution amounts fluctuate each year based on the volume of work and type of projects undertaken from year to year.

Although PPL Electric does not directly sponsor any defined benefit plans, it is allocated a portion of the funded status and costs of plans sponsored by PPL Services based on its participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to PPL Electric resulted in liabilities at December 31 as follows.

Although KU does not directly sponsor any defined benefit plans, it is allocated a portion of the funded status and costs of plans sponsored by LKE based on its participation in those plans, which management believes are reasonable. The actuarially determined obligations of current active employees and retired employees of KU are used as a basis to allocate total plan activity, including active and retiree costs and obligations. Allocations to KU resulted in liabilities at December 31 as follows.

PPL's primary legacy pension plan, the pension plans sponsored by LKE and the pension plan in which employees of PPL Montana participate are invested in the PPL Services Corporation Master Trust (the Master Trust) that also includes 401(h) accounts that are restricted for certain other postretirement benefit obligations of PPL and LKE. The investment strategy for the Master Trust is to achieve a risk-adjusted return on a mix of assets that, in combination with PPL's funding policy, will ensure that sufficient assets are available to provide long-term growth and liquidity for benefit payments, while also managing the duration of the assets to complement the duration of the liabilities. The Master Trust benefits from a wide diversification of asset types, investment fund strategies and external investment fund managers, and therefore has no significant concentration of risk.

The investment policy of the Master Trust outlines investment objectives and defines the responsibilities of the EBPB, external investment managers, investment advisor and trustee and custodian. The investment policy is reviewed annually by PPL's Board of Directors.

The EBPB created a risk management framework around the trust assets and pension liabilities. This framework considers the trust assets as being composed of three sub-portfolios: growth, immunizing and liquidity portfolios. The growth portfolio is comprised of investments that generate a return at a reasonable risk, including equity securities, certain debt securities and alternative investments. The immunizing portfolio consists of debt securities, generally with long durations, and derivative positions. The immunizing portfolio is designed to offset a portion of the change in the pension liabilities due to changes in interest rates. The liquidity portfolio consists primarily of cash and cash equivalents.

Target allocation ranges have been developed for each portfolio on a plan basis based on input from external consultants with a goal of limiting funded status volatility. The EBPB monitors the investments in each portfolio on a plan basis, and seeks to obtain a target portfolio that emphasizes reduction of risk of loss from market volatility. In pursuing that goal, the EBPB establishes revised guidelines from time to time. EBPB investment guidelines on a plan basis, as well as the weighted average of such guidelines, as of the end of 2013 are presented below.

The asset allocation for the trusts and the target allocation by portfolio, at December 31, are as follows:

					2013 Target Asset Allocation (a)
		Percentage of trust assets				Weighted
			2013 (a)	2012		Average	PPL Plans	LKE Plans

Growth Portfolio			59%	58%		55%	55%	55%
	Equity securities		30%	31%
	Debt securities (b)		17%	18%
	Alternative investments		12%	9%
Immunizing Portfolio			39%	41%		43%	43%	43%
	Debt securities (b)		40%	40%
	Derivatives		(1%)	1%
Liquidity Portfolio			2%	1%		2%	2%	2%
Total			100%	100%		100%	100%	100%

(a) Allocations exclude consideration of cash for the WKE Bargaining Employees' Retirement Plan and a guaranteed annuity contract held by the LG&E and KU Retirement Plan.

(b) Includes commingled debt funds, which PPL treats as debt securities for asset allocation purposes.

PPL Montana, a subsidiary of PPL Energy Supply, has a pension plan whose assets are invested solely in the PPL Services Corporation Master Trust, which is fully disclosed below. The fair value of this plan's assets of $147 million and $149 million at December 31, 2013 and 2012 represents an interest of approximately 3% and 4% in the Master Trust.

LKE has pension plans, including LG&E's plan, whose assets are invested solely in the PPL Services Corporation Master Trust, which is fully disclosed below. The fair value of these plans' assets of $1.2 billion and $1.1 billion at December 31, 2013 and 2012 represents an interest of approximately 29% and 26% in the Master Trust.

LG&E has a pension plan whose assets are invested solely in the PPL Services Corporation Master Trust, which is fully disclosed below. The fair value of this plan's assets of $281 million and $287 million at December 31, 2013 and 2012 represents an interest of approximately 7% in the Master Trust for both years.

The fair value of net assets in the U.S. pension plan trusts by asset class and level within the fair value hierarchy was:

				December 31, 2013								December 31, 2012
						Fair Value Measurements Using								Fair Value Measurements Using
				Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
PPL Services Corporation Master Trust
Cash and cash equivalents				$	120	$	120					$	84	$	84
Equity securities:
		U.S.:
			Large-cap		480		134	$	346				558		206	$	352
			Small-cap		137		137						124		124
			Commingled debt		749		13		736				676		56		620
		International			630		163		467				557		184		373
Debt securities:
		U.S. Treasury and U.S. government sponsored
			agency		617		563		54				704		634		70
		Residential/commercial backed securities			12				11	$	1		12				11	$	1
		Corporate			963				940		23		874				847		27
		Other			24				24				24				23		1
		International			7				7				7				7
Alternative investments:
		Commodities			108				108				59				59
		Real estate			134				134				93				93
		Private equity			80						80		75						75
		Hedge funds			210				210				125				125
Derivatives:
		Interest rate swaps and swaptions			(49)				(49)				36				36
		Other			12				12				2				2
Insurance contracts					37						37		42						42
PPL Services Corporation Master Trust assets, at
	fair value				4,271	$	1,130	$	3,000	$	141		4,052	$	1,288	$	2,618	$	146
Receivables and payables, net (a)													(11)
401(h) account restricted for other
	postretirement benefit obligations				(115)								(102)
Total PPL Services Corporation Master Trust
	pension assets			$	4,156							$	3,939

(a) Receivables and payables represent amounts for investments sold/purchased but not yet settled along with interest and dividends earned but not yet received.

A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2013 is as follows:

				Residential/
				commercial
				backed		Corporate		Private		Insurance		Other
				securities		debt		equity		contracts		debt		Total

Balance at beginning of period				$	1	$	27	$	75	$	42	$	1	$	146
	Actual return on plan assets
		Relating to assets still held
			at the reporting date						3		2				5
		Relating to assets sold during the period					5								5
	Purchases, sales and settlements						(9)		2		(7)				(14)
	Transfers from level 3 to level 2												(1)		(1)
Balance at end of period				$	1	$	23	$	80	$	37	$		$	141

A reconciliation of U.S. pension trust assets classified as Level 3 at December 31, 2012 is as follows:

				Residential/
				commercial
				backed		Corporate		Private		Insurance		Other
				securities		debt		equity		contracts		debt		Total

Balance at beginning of period						$	7	$	45	$	46			$	98
	Actual return on plan assets
		Relating to assets still held
			at the reporting date				1		10		3				14
		Relating to assets sold during the period					2								2
	Purchases, sales and settlements			$	1		21		20		(7)				35
	Transfers from level 2 to level 3											$	1		1
	Transfers from level 3 to level 2						(4)								(4)
Balance at end of period				$	1	$	27	$	75	$	42	$	1	$	146

The fair value measurements of cash and cash equivalents are based on the amounts on deposit.

The market approach is used to measure fair value of equity securities. The fair value measurements of equity securities (excluding commingled funds), which are generally classified as Level 1, are based on quoted prices in active markets. These securities represent actively and passively managed investments that are managed against various equity indices.

Investments in commingled equity and debt funds are categorized as equity securities. These investments are classified as Level 2, except for exchange-traded funds, which are classified as Level 1 based on quoted prices in active markets. The fair value measurements for Level 2 investments are based on firm quotes of net asset values per share, which are not considered obtained from a quoted price in an active market. Investments in commingled equity funds include funds that invest in U.S. and international equity securities. Investments in commingled debt funds include funds that invest in a diversified portfolio of emerging market debt obligations, as well as funds that invest in investment grade long-duration fixed-income securities.

The fair value measurements of debt securities are generally based on evaluated prices that reflect observable market information, such as actual trade information for identical securities or for similar securities, adjusted for observable differences. The fair value of debt securities is generally measured using a market approach, including the use of pricing models which incorporate observable inputs. Common inputs include benchmark yields, reported trades, broker/dealer bid/ask prices, benchmark securities and credit valuation adjustments. When necessary, the fair value of debt securities is measured using the income approach, which incorporates similar observable inputs as well as monthly payment data, future predicted cash flows, collateral performance and new issue data. For the PPL Services Corporation Master Trust, these securities represent investments in securities issued by U.S. Treasury and U.S. government sponsored agencies; investments securitized by residential mortgages, auto loans, credit cards and other pooled loans; investments in investment grade and non-investment grade bonds issued by U.S. companies across several industries; investments in debt securities issued by foreign governments and corporations; and exchange traded funds.

Investments in commodities represent ownership of units of a commingled fund that is invested as a long-only, unleveraged portfolio of exchange-traded futures and forward contracts in tangible commodities to obtain broad exposure to all principal groups in the global commodity markets, including energies, agriculture and metals (both precious and industrial) using proprietary commodity trading strategies. The fund has daily liquidity with a specified notification period. The fund's fair value is based upon a unit value as calculated by the fund's trustee.

Investments in real estate represent an investment in a partnership whose purpose is to manage investments in core U.S. real estate properties diversified geographically and across major property types (e.g., office, industrial, retail, etc.). The manager is focused on properties with high occupancy rates with quality tenants. This results in a focus on high income and stable cash flows with appreciation being a secondary factor. Core real estate generally has a lower degree of leverage when compared with more speculative real estate investing strategies. The partnership has limitations on the amounts that may be redeemed based on available cash to fund redemptions. Additionally, the general partner may decline to accept redemptions when necessary to avoid adverse consequences for the partnership, including legal and tax implications, among others. The fair value of the investment is based upon a partnership unit value.

Investments in private equity represent interests in partnerships in multiple early-stage venture capital funds and private equity fund of funds that use a number of diverse investment strategies. Four of the partnerships have limited lives of ten years, while the fifth has a life of 15 years, after which liquidating distributions will be received. Prior to the end of each partnership's life, the investment cannot be redeemed with the partnership; however, the interest may be sold to other parties, subject to the general partner's approval. The PPL Services Corporation Master Trust has unfunded commitments of $76 million that may be required during the lives of the partnerships. Fair value is based on an ownership interest in partners' capital to which a proportionate share of net assets is attributed.

Investments in hedge funds represent investments in three hedge fund of funds. Hedge funds seek a return utilizing a number of diverse investment strategies. The strategies, when combined aim to reduce volatility and risk while attempting to deliver positive returns under all market conditions. Major investment strategies for the hedge fund of funds include long/short equity, market neutral, distressed debt, and relative value. Generally, shares may be redeemed with 65 to 95 days prior written notice. The funds are subject to short term lockups and have limitations on the amount that may be withdrawn based on a percentage of the total net asset value of the fund, among other restrictions. All withdrawals are subject to the general partner's approval. The fair value for two of the funds has been estimated using the net asset value per share and the third fund's fair value is based on an ownership interest in partners' capital to which a proportionate share of net assets is attributed.

The fair value measurements of derivative instruments utilize various inputs that include quoted prices for similar contracts or market-corroborated inputs. In certain instances, these instruments may be valued using models, including standard option valuation models and standard industry models. These securities primarily represent investments in interest rate swaps and swaptions (the option to enter into an interest rate swap) which are valued based on the swap details, such as swap curves, notional amount, index and term of index, reset frequency, volatility and payer/receiver credit ratings.

Insurance contracts, classified as Level 3, represent an investment in an immediate participation guaranteed group annuity contract. The fair value is based on contract value, which represents cost plus interest income less distributions for benefit payments and administrative expenses.

The investment strategy with respect to other postretirement benefit obligations is to fund VEBA trusts and/or 401(h) accounts with voluntary contributions and to invest in a tax efficient manner. Excluding the 401(h) accounts included in the PPL Services Corporation Master Trust, other postretirement benefit plans are invested in a mix of assets for long-term growth with an objective of earning returns that provide liquidity as required for benefit payments. These plans benefit from diversification of asset types, investment fund strategies and investment fund managers, and therefore, have no significant concentration of risk. Equity securities include investments in domestic large-cap commingled funds. Ownership interests in commingled funds that invest entirely in debt securities are classified as equity securities, but treated as debt securities for asset allocation and target allocation purposes. Ownership interests in money market funds are treated as cash and cash equivalents for asset allocation and target allocation purposes. The asset allocation for the PPL VEBA trusts, excluding LKE, and the target allocation, by asset class, at December 31 are detailed below.

LKE's other postretirement benefit plan is invested primarily in a 401(h) account, with insignificant amounts invested in money market funds within VEBA trusts for liquidity.

The fair value of assets in the U.S. other postretirement benefit plans by asset class and level within the fair value hierarchy was:

			December 31, 2013							December 31, 2012
					Fair Value Measurement Using							Fair Value Measurement Using
			Total		Level 1		Level 2		Level 3	Total		Level 1		Level 2		Level 3
Money market funds			$	12	$	12				$	13	$	13
U.S. Equity securities:
		Large-cap		182			$	182			145			$	145
		Commingled debt		100				100			119				119
Debt securities:
		Municipalities		36				36			41				41
Total VEBA trust assets, at fair value				330	$	12	$	318			318	$	13	$	305
Receivables and payables, net (a)				1							1
401(h) account assets (b)				115							102
Total other postretirement benefit plan
	assets		$	446						$	421

(a) Receivables and payables represent amounts for investments sold/purchased but not yet settled along with interest and dividends earned but not yet received.

(b) LKE's other postretirement benefit plan was invested primarily in a 401(h) account as disclosed in the PPL Services Corporation Master Trust.

Investments in money market funds represent investments in funds that invest primarily in a diversified portfolio of investment grade money market instruments, including, but not limited to, commercial paper, notes, repurchase agreements and other evidences of indebtedness with a maturity not exceeding 13 months from the date of purchase. The primary objective of the fund is a high level of current income consistent with stability of principal and liquidity. Redemptions can be made daily on this fund.

Investments in large-cap equity securities represent investments in a passively managed equity index fund that invests in securities and a combination of other collective funds. Fair value measurements are not obtained from a quoted price in an active market but are based on firm quotes of net asset values per share as provided by the trustee of the fund. Redemptions can be made daily on this fund.

Investments in commingled debt securities represent investments in a fund that invests in a diversified portfolio of investment grade long-duration fixed income securities. Redemptions can be made weekly on these funds.

Investments in municipalities represent investments in a diverse mix of tax-exempt municipal securities. The fair value measurements for these securities are based on recently executed transactions for identical securities or for similar securities.

The overall investment strategy of WPD's pension plans is developed by each plan's independent trustees in its Statement of Investment Principles in compliance with the U.K. Pensions Act of 1995 and other U.K. legislation. The trustees' primary focus is to ensure that assets are sufficient to meet members' benefits as they fall due with a longer term objective to reduce investment risk. The investment strategy is intended to maximize investment returns while not incurring excessive volatility in the funding position. WPD's plans are invested in a wide diversification of asset types, fund strategies and fund managers; and therefore, have no significant concentration of risk. Commingled funds that consist entirely of debt securities are traded as equity units, but treated by WPD as debt securities for asset allocation and target allocation purposes. These include investments in U.K. corporate bonds and U.K. gilts.

The asset allocation and target allocation at December 31 of WPD's pension plans are detailed below.

						Target Asset
		Percentage of plan assets				Allocation
		2013		2012		2013
Asset Class
Equity securities
	U.K.		7%		6%		7%
	European (excluding the U.K.)		5%		14%		4%
	Asian-Pacific		3%				3%
	North American		5%				5%
	Emerging markets		8%		3%		8%
	Currency		7%		2%		3%
	Global Tactical Asset Allocation		19%		18%		19%
Debt securities (a)			40%		51%		45%
Alternative investments			6%		6%		6%
	Total		100%		100%		100%

The fair value of assets in the U.K. pension plans by asset class and level within the fair value hierarchy was:

			December 31, 2013							December 31, 2012
					Fair Value Measurement Using							Fair Value Measurement Using
			Total		Level 1		Level 2		Level 3	Total		Level 1		Level 2		Level 3

Cash and cash equivalents			$	10	$	10				$	14	$	14
Equity securities:
	U.K. companies			523		267	$	256			440		223	$	217
	European companies (excluding the U.K.)			355		275		80			956		720		236
	Asian-Pacific companies			226		180		46
	North American companies			352		254		98
	Emerging markets companies			411		126		285			231				231
	Global Equities			161				161
	Currency			485				485			127				127
	Global Tactical Asset Allocation			1,384				1,384			1,220				1,220
	Commingled debt:
		U.K. corporate bonds		504				504			593				593
		U.K. gilts		2,426				2,426			2,907				2,907
Alternative investments:
	Real estate			447				447			423				423
Fair value - U.K. pension plans			$	7,284	$	1,112	$	6,172		$	6,911	$	957	$	5,954

Except for investments in real estate, the fair value measurements of WPD's pension plan assets are based on the same inputs and measurement techniques used to measure the U.S. pension plan assets described above.

Investments in equity securities represent actively and passively managed funds that are measured against various equity indices. The Global Tactical Asset Allocation strategy attempts to benefit from short-term market inefficiencies by taking positions in worldwide markets with the objective to profit from relative movements across those markets.

U.K. corporate bonds include investment grade corporate bonds of companies from diversified U.K. industries.

U.K. gilts include gilts, index-linked gilts and swaps intended to track a portion of the plans' liabilities.

Investments in real estate represent holdings in a U.K. unitized fund that owns and manages U.K. industrial and commercial real estate with a strategy of earning current rental income and achieving capital growth. The fair value measurement of the fund is based upon a net asset value per share, which is based on the value of underlying properties that are independently appraised in accordance with Royal Institution of Chartered Surveyors valuation standards at least annually with quarterly valuation updates based on recent sales of similar properties, leasing levels, property operations and/or market conditions. The fund may be subject to redemption restrictions in the unlikely event of a large forced sale in order to ensure other unit holders are not disadvantaged.

PPL's U.S. defined benefit plans have the option to utilize available prior year credit balances to meet current and future contribution requirements. However, PPL contributed $96 million to its U.S. pension plans in January 2014.

PPL sponsors various non-qualified supplemental pension plans for which no assets are segregated from corporate assets. PPL expects to make approximately $8 million of benefit payments under these plans in 2014.

PPL is not required to make contributions to its other postretirement benefit plans but has historically funded these plans in amounts equal to the postretirement benefit costs recognized. Continuation of this past practice would cause PPL to contribute $21 million to its other postretirement benefit plans in 2014.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the plans and the following federal subsidy payments are expected to be received by PPL.

The PPL Montana pension plan has the option to utilize available prior year credit balances to meet current and future contribution requirements. However, PPL Montana contributed $6 million to its pension plan in January 2014.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the plans.

LKE's defined benefit plans have the option to utilize available prior year credit balances to meet current and future contribution requirements. However, LKE contributed $35 million to its pension plans in January 2014.

LKE sponsors various non-qualified supplemental pension plans for which no assets are segregated from corporate assets. LKE expects to make $3 million of benefit payments under these plans in 2014.

LKE is not required to make contributions to its other postretirement benefit plan but has historically funded this plan in amounts equal to the postretirement benefit costs recognized. Continuation of this past practice would cause LKE to contribute $13 million to its other postretirement benefit plan in 2014.

LG&E's defined benefit plan has the option to utilize available prior year credit balances to meet current and future contribution requirements. LG&E does not plan to contribute to its pension plan in 2014.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the plan.

The pension plans of WPD are subject to formal actuarial valuations every three years, which are used to determine funding requirements. Contribution requirements for periods after April 1, 2014 were evaluated in accordance with the draft valuations performed as of March 31, 2013. Contributions for periods prior to March 31, 2014 were based on a valuation as of June 30, 2011 for the PPL WEM plan and as of March 31, 2010 for the PPL WW plan. WPD expects to make contributions of approximately $313 million in 2014. WPD is currently permitted to recover in rates approximately 75% of their deficit funding requirements for their primary pension plans.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid by the plans.

Substantially all employees of PPL's domestic subsidiaries are eligible to participate in deferred savings plans (401(k)s). Employer contributions to the plans were:

PPL sponsors a non-leveraged ESOP in which domestic employees, excluding those of PPL Montana, LKE and the mechanical contractors, are enrolled on the first day of the month following eligible employee status. Dividends paid on ESOP shares are treated as ordinary dividends by PPL. Under existing income tax laws, PPL is permitted to deduct the amount of those dividends for income tax purposes and to contribute the resulting tax savings (dividend-based contribution) to the ESOP.

The dividend-based contribution, which is discretionary, is used to buy shares of PPL's common stock and is expressly conditioned upon the deductibility of the contribution for federal income tax purposes. Contributions to the ESOP are allocated to eligible participants' accounts as of the end of each year, based 75% on shares held in existing participants' accounts and 25% on the eligible participants' compensation.

For 2013, PPL did not record compensation expense related to the ESOP as no contribution will be made. Compensation expense for ESOP contributions was $8 million in 2012 and 2011. These amounts were offset by the dividend-based contribution tax savings and had no impact on PPL's earnings.

PPL shares within the ESOP at December 31, 2013 were 7,699,472, or 1% of total common shares outstanding, and are included in all EPS calculations.

Certain PPL subsidiaries provide separation benefits to eligible employees. These benefits may be provided in the case of separations due to performance issues, loss of job related qualifications or organizational changes. Until December 1, 2012, certain employees separated were eligible for cash severance payments, outplacement services, accelerated stock award vesting, continuation of group health and welfare coverage, and enhanced pension and postretirement medical benefits. As of December 1, 2012, separation benefits for certain employees were changed to eliminate accelerated stock award vesting and enhanced pension and postretirement medical benefits. Also, the continuation of group health and welfare coverage was replaced with a single sum payment approximating the dollar amount of premium payments that would be incurred for continuation of group health and welfare coverage. Separation benefits are recorded when such amounts are probable and estimable.

See Note 10 for separation benefits recorded in 2011 in connection with a reorganization following the acquisition of WPD Midlands.