Note G – Employee and Retiree Benefit Plans

The Company has defined benefit pension plans that are principally noncontributory and cover most full-time employees. All pension plans are funded except for the U.S. and Canadian nonqualified supplemental plans and the U.S. directors’ plan. All U.S. tax qualified plans meet the funding requirements of federal laws and regulations. Contributions to foreign plans are based on local laws and tax regulations. The Company also sponsors health care benefit plans, which are not funded, that cover most active and retired U.S. employees. Additionally, most U.S. retired employees are covered by a life insurance benefit plan. The health care benefits are contributory; the life insurance benefits are noncontributory.

Effective with the spin-off of Murphy’s former U.S. retail marketing operation, Murphy USA Inc. (MUSA) on August 30, 2013, significant modifications were made to the U.S. defined benefit pension plan. Certain Murphy employees’ benefits under the U.S. plan were frozen at that time. No further benefit service will accrue for the affected employees; however, the plan will recognize future eligible earnings after the spin-off date. In addition, all previously unvested benefits became fully vested at the spin-off date. For those affected active employees of the Company, additional U.S. retirement plan benefits will accrue in future periods under a cash balance formula. Upon the spin-off of MUSA, Murphy retained all vested pension defined benefit and other postretirement benefit obligations associated with current and former employees of this separated business. No additional benefit will accrue for any employees of MUSA under the Company’s retirement plan after the spin-off date.

The table that follows provides the components of net periodic benefit expense for the three-month periods ended March 31, 2014 and 2013.


	Three Months Ended March 31,
							Other
	Pension Benefits						Postretirement Benefits
(Thousands of dollars)	2014			2013			2014			2013
Service cost	$	6,556			7,603			672			1,167
Interest cost		8,215			6,431			1,278			1,234
Expected return on plan assets		(8,480	)		(5,700	)		0			0
Amortization of prior service cost		225			276			(21	)		(42	)
Amortization of transitional liability		208			120			1			2
Recognized actuarial loss		1,733			3,532			59			457

Net periodic benefit expense	$	8,457			12,262			1,989			2,818

During the three-month period ended March 31, 2014, the Company made contributions of $10.6 million to its defined benefit pension and postretirement benefit plans. Remaining funding in 2014 for the Company’s defined benefit pension and postretirement plans is anticipated to be $31.9 million.