Pension and Postretirement Benefits

9 Months Ended

Sep. 30, 2012

Pension and Postretirement Benefits

8.  Pension and Postretirement Benefits

DP&L sponsors a defined benefit pension plan for the vast majority of its employees. 

We generally fund pension plan benefits as accrued in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and, in addition, make voluntary contributions from time to time.  There were no contributions made during the nine months ended September 30, 2012.  DP&L made a discretionary contribution of $40.0 million to the defined benefit plan during the nine months ended September 30, 2011.

The amounts presented in the following tables for pension include both the collective bargaining plan formula, the traditional management plan formula, the cash balance plan formula and the SERP in the aggregate.  The amounts presented for postretirement include both health and life insurance.

The net periodic benefit cost/(income) of the pension and postretirement benefit plans for the three months ended September 30, 2012 and 2011 was:

Net Periodic Benefit Cost / (Income)	Pension				Postretirement
	Successor		Predecessor		Successor		Predecessor
$ in millions	2012		2011		2012		2011
Service cost	$	1.5	$	0.8	$	-	$	-
Interest cost		4.3		4.1		0.2		0.2
Expected return on assets (a)		(5.7)		(6.2)		(0.1)		(0.1)
Amortization of unrecognized:
Actuarial loss / (gain)		1.3		1.7		(0.1)		(0.5)
Prior service cost		0.4		0.5		-		0.1
Net periodic benefit cost / (income) before adjustments		1.8		0.9		-		(0.3)
Settlement cost (b)		0.2		-		-		-
Net periodic benefit cost / (income)	$	2.0	$	0.9	$	-	$	(0.3)

(a) For purposes of calculating the expected return on pension plan assets, under GAAP, the market-related value of assets (MRVA) is used.  GAAP requires that the difference between actual plan asset returns and estimated plan asset returns be included in the MRVA equally over a period not to exceed five years.  We use a methodology under which we include the difference between actual and estimated asset returns in the MRVA equally over a three year period.  The MRVA used in the calculation of expected return on pension plan assets for the 2012 and 2011 net periodic benefit cost was approximately $336.0 million and $316.0 million, respectively.

(b) The settlement cost relates to a former officer who has elected to receive a lump sum distribution in 2012 from the Supplemental Executive Retirement Plan.

The net periodic benefit cost/(income) of the pension and postretirement benefit plans for the nine months ended September 30, 2012 and 2011 was:

Net Periodic Benefit Cost / (Income)	Pension				Postretirement
	Successor		Predecessor		Successor		Predecessor
$ in millions	2012		2011		2012		2011
Service cost	$	4.6	$	3.7	$	0.1	$	0.1
Interest cost		12.9		12.7		0.6		0.7
Expected return on assets (a)		(17.0)		(18.4)		(0.2)		(0.2)
Amortization of unrecognized:
Actuarial loss / (gain)		3.7		6.2		(0.5)		(0.9)
Prior service cost		1.1		1.6		-		0.1
Net periodic benefit cost / (income) before adjustments		5.3		5.8		-		(0.2)
Settlement cost (b)		0.2		-		-		-
Net periodic benefit cost / (income)	$	5.5	$	5.8	$	-	$	(0.2)

(a) For purposes of calculating the expected return on pension plan assets, under GAAP, the market-related value of assets (MRVA) is used.  GAAP requires that the difference between actual plan asset returns and estimated plan asset returns be included in the MRVA equally over a period not to exceed five years.  We use a methodology under which we include the difference between actual and estimated asset returns in the MRVA equally over a three year period.  The MRVA used in the calculation of expected return on pension plan assets for the 2012 and 2011 net periodic benefit cost was approximately $336.0 million and $316.0 million, respectively.

(b) The settlement cost relates to a former officer who has elected to receive a lump sum distribution in 2012 from the Supplemental Executive Retirement Plan.

Benefit payments, which reflect future service, are expected to be paid as follows:
Estimated Future Benefit Payments and Medicare Part D Reimbursements
$ in millions	Pension		Postretirement
2012	$	5.8	$	0.6
2013		22.7		2.3
2014		23.2		2.2
2015		23.8		2.0
2016		24.0		1.9
2017 - 2021		124.4		7.5

DP&L [Member]

Pension and Postretirement Benefits

8.  Pension and Postretirement Benefits

DP&L sponsors a defined benefit pension plan for the vast majority of its employees. 

We generally fund pension plan benefits as accrued in accordance with the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and, in addition, make voluntary contributions from time to time.  There were no contributions made during the nine months ended September 30, 2012.  DP&L made a discretionary contribution of $40.0 million to the defined benefit plan during the nine months ended September 30, 2011.

The amounts presented in the following tables for pension include the collective bargaining plan formula, the traditional management plan formula, the cash balance plan formula and the SERP in the aggregate.  The amounts presented for postretirement include both health and life insurance.

The net periodic benefit cost (income) of the pension and postretirement benefit plans for the three months ended September 30, 2012 and 2011 was:

Net Periodic Benefit Cost / (Income)	Pension				Postretirement
$ in millions	2012		2011		2012		2011
Service cost	$	1.5	$	0.8	$	-	$	-
Interest cost		4.3		4.1		0.2		0.2
Expected return on assets (a)		(5.7)		(6.2)		(0.1)		(0.1)
Amortization of unrecognized:
Actuarial loss / (gain)		2.4		1.7		(0.2)		(0.5)
Prior service cost		0.7		0.5		0.1		0.1
Net periodic benefit cost / (income) before adjustments		3.2		0.9		-		(0.3)
Settlement cost (b)		0.5		-		-		-
Net periodic benefit cost / (income)	$	3.7	$	0.9	$	-	$	(0.3)

(a) For purposes of calculating the expected return on pension plan assets, under GAAP, the market-related value of assets (MRVA) is used.  GAAP requires that the difference between actual plan asset returns and estimated plan asset returns be included in the MRVA equally over a period not to exceed five years.  We use a methodology under which we include the difference between actual and estimated asset returns in the MRVA equally over a three year period.  The MRVA used in the calculation of expected return on pension plan assets for the 2012 and 2011 net periodic benefit cost was approximately $335.0 million and $316.0 million, respectively.

(b) The settlement cost relates to a former officer who has elected to receive a lump sum distribution in 2012 from the Supplemental Executive Retirement Plan.

The net periodic benefit cost (income) of the pension and postretirement benefit plans for the nine months ended September 30, 2012 and 2011 was:

Net Periodic Benefit Cost / (Income)	Pension				Postretirement
$ in millions	2012		2011		2012		2011
Service cost	$	4.6	$	3.7	$	0.1	$	0.1
Interest cost		12.9		12.7		0.6		0.7
Expected return on assets (a)		(17.0)		(18.4)		(0.2)		(0.2)
Amortization of unrecognized:
Actuarial loss / (gain)		7.1		6.2		(0.7)		(0.9)
Prior service cost		2.2		1.6		0.1		0.1
Net periodic benefit cost / (income) before adjustments		9.8		5.8		(0.1)		(0.2)
Settlement cost (b)		0.5		-		-		-
Net periodic benefit cost / (income)	$	10.3	$	5.8	$	(0.1)	$	(0.2)

(a) For purposes of calculating the expected return on pension plan assets, under GAAP, the market-related value of assets (MRVA) is used.  GAAP requires that the difference between actual plan asset returns and estimated plan asset returns be included in the MRVA equally over a period not to exceed five years.  We use a methodology under which we include the difference between actual and estimated asset returns in the MRVA equally over a three year period.  The MRVA used in the calculation of expected return on pension plan assets for the 2012 and 2011 net periodic benefit cost was approximately $335.0 million and $316.0 million, respectively.

(b) The settlement cost relates to a former officer who has elected to receive a lump sum distribution in 2012 from the Supplemental Executive Retirement Plan.

Benefit payments, which reflect future service, are expected to be paid as follows:
Estimated Future Benefit Payments and Medicare Part D Reimbursements
$ in millions	Pension		Postretirement
2012	$	5.8	$	0.6
2013		22.7		2.3
2014		23.2		2.2
2015		23.8		2.0
2016		24.0		1.9
2017 - 2021		124.4		7.5