PENSION BENEFITS AND RETIREMENT HEALTH AND LIFE INSURANCE BENEFITS

We have two qualified noncontributory defined benefit pension plans. One plan covers our U.S. unionized hourly employees and the other plan covers all other U.S. employees hired through December 30, 2007. We also have established a nonqualified unfunded noncontributory defined benefit pension plan to restore certain retirement benefits that might otherwise be lost due to limitations imposed by federal law on qualified pension plans, as well as to provide supplemental retirement benefits, for certain senior executives of the Company.

In addition, we sponsor multiple fully insured or self-funded medical plans and a fully insured life insurance plan for retirees. The measurement date for all plans is December 31 for each respective plan year.

We are required, as an employer, to: (a) recognize in our statement of financial position an asset for a plan's overfunded status or a liability for a plan's underfunded status; (b) measure a plan's assets and our obligations that determine our funded status as of the end of the fiscal year; and (c) recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur and report these changes in accumulated other comprehensive income. In addition, actuarial gains and losses that are not immediately recognized as net periodic pension cost are recognized as a component of accumulated other comprehensive income (loss) and amortized into net periodic pension cost in future periods.

Defined Benefit Pension Plan Amendments and Retiree Medical Plan Amendments

In the second quarter of 2013, we made changes to our retirement plans in order to better plan and manage related expenses which have a significant and variable impact on earnings. Effective June 30, 2013, for salaried and non-union hourly employees in the U.S. and effective December 31, 2013 for union employees in the U.S., benefits under our defined benefit pension plans will no longer accrue. The freeze of the defined benefit pension plan for salaried and non-union hourly employees was approved by the Board of Directors on May 3, 2013. The freeze of the union employees' defined benefit pension plan was approved upon ratification of the labor agreement on April 14, 2013. These changes resulted in a remeasurement event requiring us to remeasure the plan asset and liabilities, as well as the expense related to the plans, as of April 30, 2013. This date was considered the accounting date, per the related accounting guidance, as it was reasonably close to the approval dates of these changes for both the union and salaried plans.



(Dollars in thousands)	Pension Benefits						Retirement Health and Life Insurance Benefits
Change in benefit obligation:	2014			2013			2014			2013

Benefit obligation at beginning of year	$	174,325		$	209,844		$	10,824		$	11,891
Service cost	—			2,473			556			627
Interest cost	8,015			7,753			305			262
Actuarial (gain) loss	34,006			(15,834		)	(1,071		)	(1,205		)
Benefit payments	(24,934		)	(7,276		)	(775		)	(751		)
Settlement charge	—			—			—			—
Special termination benefit	(3,530		)	(22,635		)	—			—
Benefit obligation at end of year	$	187,882		$	174,325		$	9,839		$	10,824



Change in plan assets:	2014			2013			2014			2013

Fair value of plan assets at the beginning of the year	$	171,218		$	143,540		$	—		$	—
Actual return on plan assets	10,445			21,954			—			—
Employer contributions	13,871			13,000			775			751
Benefit payments	(24,934		)	(7,276		)	(775		)	(751		)
Fair value of plan assets at the end of the year	170,600			171,218			—			—
Funded status	$	(17,282	)	$	(3,107	)	$	(9,839	)	$	(10,824	)

Amounts recognized in the consolidated statements of financial position consist of:



(Dollars in thousands)	Pension Benefits						Retirement Health and Life Insurance Benefits
	2014			2013			2014			2013
Noncurrent assets	$	404		$	2,983		$	—		$	—
Current liabilities	(34		)	(654		)	(1,071		)	(1,175		)
Noncurrent liabilities	(17,652		)	(5,436		)	(8,768		)	(9,649		)
Net amount recognized at end of year	$	(17,282	)	$	(3,107	)	$	(9,839	)	$	(10,824	)



(Dollars in thousands)	Pension Benefits		Retirement Health and Life Insurance Benefits
	2014		2014
Net actuarial loss	$	62,053	$	707
Prior service cost	—		—
Net amount recognized at end of year	$	62,053	$	707

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with an accumulated benefit obligation in excess of plan assets were $155.2 million, $155.2 million and $137.6 million, respectively, as of December 31, 2014 and $144.3 million, $144.3 million and $138.2 million, respectively, as of December 31, 2013.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with plan assets in excess of an accumulated benefit obligation were $32.6 million, $32.6 million and $33.0 million, respectively, as of December 31, 2014. For 2013, the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with plan assets in excess of an accumulated benefit obligation were 30.0 million, 30.0 million, and 33.0 million, respectively.

Components of Net Periodic Benefit Cost



(Dollars in thousands)	Pension Benefits									Postretirement Health and Life Insurance Benefits
	2014			2013			2012			2014		2013			2012

Service cost	$	—		$	2,473		$	4,596		$	556	$	627		$	630
Interest cost	8,015			7,753			8,420			305		262			364
Expected return of plan assets	(12,909		)	(11,247		)	(9,892		)	—		—			—
Amortization of prior service cost	—			124			463			—		(230		)	(451		)
Amortization of net loss	686			3,615			5,471			—		204			313
Settlement charge/(credit)	5,321			—			2,073			—		—			—
Special termination benefit	—			—			—			—		—			1,592
Curtailment charge	—			1,537			—			—		—			—
Net periodic benefit cost	$	1,113		$	4,255		$	11,131		$	861	$	863		$	2,448

In the first quarter of 2012, we implemented an early retirement program for certain eligible employees. As a result of this program, we incurred $1.6 million in charges in 2012 related to a special termination benefit associated with the retirement health and life insurance benefits program, as we extended eligibility benefits to certain individuals who chose to participate in the program.

Early in the third quarter of 2012, we made a one-time cash payment to our former President and Chief Executive Officer of approximately $6.3 million in accordance with the provisions of his retirement contract as part of his Pension Restoration Plan. This payment resulted in a settlement charge of approximately $2.1 million, which was recognized in the third quarter of 2012.

In the second quarter of 2013, the decision to freeze the accruing of benefits in the defined benefit pension plans resulted in a curtailment charge of $1.5 million.

In the fourth quarter of 2014, certain eligible participants in the defined benefit pension plans were given a lump sum payout offer. The payout of this program resulted in a settlement charge of $5.2 million.

The estimated net loss for the defined benefit pension plans that will be amortized from other comprehensive income into net periodic benefit cost over the next fiscal year is $1.7 million. The estimated net loss (gain) for the defined benefit postretirement plans that will be amortized from other comprehensive income into net periodic benefit cost over the next fiscal year is $0.0 million.

Weighted-average assumptions used to determine benefit obligations at December 31:



	Pension Benefits				Retirement Health and Life Insurance Benefits
	2014		2013		2014		2013

Discount rate	4.00	%	4.75	%	3.00	%	3.25	%
Expected long-term rate of return on plan assets	6.50	%	7.50	%	—		—

Weighted-average assumptions used to determine net benefit cost for the years ended:



	Pension Benefits				Retirement Health and Life Insurance Benefits
	2014		2013		2014		2013

Discount rate	4.75	%	4.00	%	3.25	%	2.50	%
Expected long-term rate of return on plan assets	7.50	%	7.50	%	—		—
Rate of compensation increase	4.00	%	4.00	%	—		—

Long-term rate of return on assets - To determine the expected long-term rate of return on plan assets, we review historical and projected portfolio performance, the historical long-term rate of return, and how any change in the allocation of the assets could affect the anticipated returns. Adjustments are made to the projected rate of return if it is deemed necessary based on those factors and other current market trends.

Discount rate - To determine the discount rate, we review current market indices of high quality corporate bonds, particularly the PruCurve index, to ensure that the rate used in our calculations is consistent and within an acceptable range based on these indices, which reflect current market conditions. The market-based rates are modified to be Rogers-specific, and this is done by applying our pension benefit cash flow projections to the generic index rate. At December 31, 2014, this analysis resulted in a 75 basis point decrease to the discount rate which went from 4.75% at December 31, 2013 to 4.00% at December 31, 2014.

Health care cost trend rates - For measurement purposes as of December 31, 2014 we assumed annual health care cost trend rates of 7.50% and 7.50% for covered health care benefits for retirees pre-age 65 and post-age 65, respectively. The rates were assumed to decrease gradually by 0.5% annually until reaching 4.50% and 4.50%, respectively, and remain at those levels thereafter. For measurement purposes as of December 31, 2013, we assumed annual health care cost trend rates of 8.00% and 8.00% for covered health care benefits for retirees pre-age 65 and post-age 65, respectively. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:



(Dollars in thousands)	One Percentage Point
	Increase			Decrease

Effect on total service and interest cost	$	60		$	527
Effect on other postretirement benefit obligations	(55		)	(495		)

Plan Assets

Our defined benefit pension assets are invested with the objective of achieving a total rate of return over the long-term that is sufficient to fund future pension obligations. In managing these assets and our investment strategy, we take into consideration future cash contributions to the plans, as well as the potential of the portfolio underperforming the market, which is partially mitigated by maintaining a diversified portfolio of assets.

In order to meet our investment objectives, we set asset allocation target ranges based on current funding status and future projections in order to mitigate the risk in the plan while maintaining its funded status. During 2014 we implemented pension risk reduction steps related to our investments, which included a change in our asset mix to hold a larger amount of fixed income securities. At December 31, 2014, we held approximately 23% equity securities and 77% fixed income securities in our portfolio, which is a significant shift from our allocation at December 31, 2013 of 60% equity and 40% fixed income.

In determining our investment strategy and calculating our plan liability and related expense, we utilize an expected long-term rate of return on plan assets. This rate is developed based on several factors, including the plans' asset allocation targets, the historical and projected performance on those asset classes, and on the plans' current asset composition. To justify our assumptions, we analyze certain data points related to portfolio performance. For example, we analyze the actual historical performance of our total plan assets, which has generated a return of approximately 8.2% over the past 19 year period (earliest data available for our analysis was 1996). Also, we analyze hypothetical rates of return for plan assets based on our current asset allocation mix, which we estimate would have generated a return of approximately, 7.5% over the last 20 years and 7.0% over the last 10 years. Additionally, we analyzed the potential return associated with our portfolio mix and determined it to be a projected return of 4.5% to 7.5% for the 25th to 75th percentile of assets, with a average return of 6.5%. Based on the historical returns and the projected future returns we determined that a target return of 6.5% is appropriate for the current portfolio.

Investments are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).

Securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the plan year. The fair value of the guaranteed deposit account is determined through discounting expected future investment cash flow from both investment income and repayment of principal for each investment purchased.

The estimated fair values of the participation units owned by the plan in pooled separate accounts are based on quoted redemption values and adjusted for management fees and asset charges, as determined by the record keeper, on the last business day of the Plan year. Pooled separate accounts are accounts established solely for the purpose of investing the assets of one or more plans. Funds in a separate account are not commingled with other assets of the Company for investment purposes.

The following table presents the fair value of the net assets by asset category at December 31, 2014 and 2013:



(Dollars in thousands)	2014		2013

Pooled separate accounts	$	5,204	$	38,584
Fixed income bonds	102,535		—
Mutual funds	51,097		119,277
Guaranteed deposit account	11,764		13,357
Total investments at fair value	$	170,600	$	171,218

The following tables set forth by level, within the fair value hierarchy, the assetscarried at fair value as of December 31, 2014 and 2013.



	Assets at Fair Value as of December 31, 2014
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Pooled separate accounts	$	—	$	5,204	$	—	$	5,204
Fixed income bonds	—		102,535		—		102,535
Mutual funds	51,097		—		—		51,097
Guaranteed deposit account	—		—		11,764		11,764
Total assets at fair value	$	51,097	$	107,739	$	11,764	$	170,600

	Assets at Fair Value as of December 31, 2013
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Pooled separate accounts	$	—	$	38,584	$	—	$	38,584
Mutual funds	119,277		—		—		119,277
Guaranteed deposit account	—		—		13,357		13,357
Total assets at fair value	$	119,277	$	38,584	$	13,357	$	171,218

The table below sets forth a summary of changes in the fair value of the guaranteed deposit account's Level 3 assetsfor the year ended December 31, 2014.



(Dollars in thousands)	Guaranteed Deposit Account

Balance at beginning of year	$	13,357
Realized gains (losses)	—
Unrealized gains relating to instruments still held at the reporting date	785
Purchases, sales, issuances and settlements (net)	(2,378		)
Transfers in and/or out of Level 3	—
Balance at end of year	$	11,764

Cash Flows

Contributions

At December 31, 2014, we have met the minimum funding requirements for our qualified defined benefit pension plans and were therefore not required to make a contribution to the plans in 2014 for any past years. In 2014 and 2013, we made voluntary contributions of $13.0 million and $13.0 million, respectively. As there is no funding requirement for the nonqualified defined benefit pension plans and the Retiree Health and Life Insurance benefit plans, we fund the amount of benefit payments made during the year, which is consistent with past practices. We currently estimate that we will make voluntary contributions of approximately $10.0 million in 2015 towards our qualified defined benefit pension plans.

Estimated Future Payments

The following pension benefit payments, which reflect expected future employee service, as appropriate, are expected to be paid through the utilization of plan assets for the funded plans and from operating cash flows for the unfunded plans. The Retiree Health and Life Insurance benefits, for which no funding has been made, are expected to be paid from operating cash flows. The benefit payments are based on the same assumptions used to measure our benefit obligation at the end of fiscal 2014.



	Pension Benefits		Retiree Health and Life Insurance Benefits

2015	$	8,126	$	1,071
2016	$	8,125	$	1,052
2017	$	8,355	$	1,017
2018	$	8,621	$	994
2019	$	8,944	$	1,038
2020-2024	$	50,043	$	5,839