Employee Retirement Plans

12 Months Ended

Sep. 30, 2011

Employee Retirement Plans [Abstract]

Employee Retirement Plans

Note 7 — Employee Retirement Plans

Defined Benefit Pension and Other Postretirement Plans. In the U.S., we currently sponsor one defined benefit pension plan for employees hired prior to January 1, 2009 of UGI, UGI Utilities, PNG, CPG and certain of UGI’s other domestic wholly owned subsidiaries (“Pension Plan”). We also provide postretirement health care benefits to certain retirees and active employees and postretirement life insurance benefits to nearly all domestic active and retired employees. In addition, Antargaz employees are covered by certain defined benefit pension and postretirement plans. Although the disclosures in the tables below include amounts related to the Antargaz plans, such amounts are not material.

Effective December 31, 2010, UGI Utilities merged its then-existing two defined benefit pension plans (“Utilities Pension Plan Merger”). As a result of the Utilities Pension Plan Merger and in accordance with GAAP relating to accounting for retirement benefits, the Company remeasured the combined plan’s assets and benefit obligations as of December 31, 2010, which decreased other noncurrent liabilities by $46.7; decreased associated regulatory assets by $43.1; and increased pre-tax other comprehensive income by $3.6. The Pension Plan, and the other U.S. pension plan that existed prior to the Utilities Pension Plan Merger, are hereafter referred to as the “U.S. Pension Plans.”

The following table provides a reconciliation of the projected benefit obligations (“PBOs”) of the U.S. Pension Plans and the Antargaz pension plans, the accumulated benefit obligations (“ABOs”) of our other postretirement benefit plans, plan assets, and the funded status of pension and other postretirement plans as of September 30, 2011 and 2010. ABO is the present value of benefits earned to date with benefits based upon current compensation levels. PBO is ABO increased to reflect estimated future compensation.

	Pension						Other Postretirement
	Benefits						Benefits
	2011			2010			2011			2010
Change in benefit obligations:
Benefit obligations — beginning of year	$	471.8		$	428.9		$	22.9		$	21.4
Service cost		8.8			8.7			0.4			0.4
Interest cost		24.1			23.5			1.1			1.1
Actuarial (gain) loss		(22.0	)		32.2			(2.4	)		1.6
Plan amendments		—			—			(0.1	)		—
Plan settlements		—			(2.7	)		—			—
Foreign currency		(0.1	)		(0.5	)		—			(0.2	)
Benefits paid		(19.7	)		(18.3	)		(1.4	)		(1.4	)
Benefit obligations — end of year	$	462.9		$	471.8		$	20.5		$	22.9
Change in plan assets:
Fair value of plan assets — beginning of year	$	287.9		$	279.8		$	10.0		$	9.7
Actual gain on plan assets		2.6			25.9			0.1			0.7
Foreign currency		—			(0.2	)		—			—
Employer contributions		19.2			3.4			1.1			1.0
Settlement payments		—			(2.7	)		—			—
Benefits paid		(19.7	)		(18.3	)		(1.4	)		(1.4	)
Fair value of plan assets — end of year	$	290.0		$	287.9		$	9.8		$	10.0
Funded status of the plans — end of year	$	(172.9	)	$	(183.9	)	$	(10.7	)	$	(12.9	)
(Liabilities) recorded in the balance sheet:
Unfunded liabilities — included in other current liabilities	$	(27.6	)	$	(20.3	)	$	—		$	—
Unfunded liabilities — included in other noncurrent liabilities		(145.3	)		(163.6	)		(10.7	)		(12.9	)
Net amount recognized	$	(172.9	)	$	(183.9	)	$	(10.7	)	$	(12.9	)
Amounts recorded in UGI Corporation stockholders’ equity (pre-tax):
Prior service (credit) cost	$	(0.2	)	$	(0.4	)	$	(0.1	)	$	0.1
Net actuarial loss (gain)		13.6			13.8			(0.8	)		0.1
Total	$	13.4		$	13.4		$	(0.9	)	$	0.2
Amounts recorded in regulatory assets and liabilities (pre-tax):
Prior service cost (credit)	$	1.8		$	0.3		$	(3.2	)	$	(3.4	)
Net actuarial loss		146.9			155.6			6.3			5.9
Total	$	148.7		$	155.9		$	3.1		$	2.5

In Fiscal 2012, we estimate that we will amortize approximately $8.8 of net actuarial losses and $0.2 of prior service credits from UGI stockholders’ equity and regulatory assets into retiree benefit cost.

Actuarial assumptions for our domestic plans are described below. Assumptions for the Antargaz plans are based upon market conditions in France. The discount rates at September 30 are used to measure the year-end benefit obligations and the earnings effects for the subsequent year. The discount rate assumption was determined by selecting a hypothetical portfolio of high quality corporate bonds appropriate to provide for the projected benefit payments of the plans. The discount rate was then developed as the single rate that equates the market value of the bonds purchased to the discounted value of the plans’ benefit payments. The expected rate of return on assets assumption is based on the current and expected asset allocations as well as historical and expected returns on various categories of plan assets (as further described below).

	Pension Plans												Other Postretirement Benefits
	2011(a)			2010			2009			2008			2011			2010			2009			2008
Weighted-average assumptions:
Discount rate		5.3	%		5.0	%		5.5	%		6.8	%		5.3	%		5.0	%		5.5	%		6.8	%
Expected return on plan assets		8.0	%		8.5	%		8.5	%		8.5	%		5.5	%		5.5	%		5.5	%		5.5	%
Rate of increase in salary levels		3.5	%		3.8	%		3.8	%		3.8	%		3.5	%		3.8	%		3.8	%		3.8	%

(a) The discount rate used during Fiscal 2011 to calculate pension expense was a rate of 5.0% through December 31, 2010 (the date of the Utilities Plan Merger) and 5.5% for the remainder of Fiscal 2011.

The ABO for the U. S. Pension Plans was $415.0 and $417.8 as of September 30, 2011 and 2010, respectively.

Net periodic pension expense and other postretirement benefit costs include the following components:

	Pension Benefits									Other Postretirement Benefits
	2011			2010			2009			2011			2010			2009
Service cost	$	8.8		$	8.7		$	7.1		$	0.4		$	0.4		$	0.3
Interest cost		24.1			23.5			23.3			1.1			1.1			1.2
Expected return on assets		(25.8	)		(25.8	)		(25.7	)		(0.5	)		(0.5	)		(0.6	)
Curtailment gain		—			—			—			(3.2	)		—			—
Settlement loss		—			1.0			1.8			—			—			—
Amortization of:
Transition obligation		—			—			—			—			—			0.2
Prior service cost (benefit)		0.2			—			—			(0.7	)		(0.4	)		(0.4	)
Actuarial loss (gain)		7.5			5.9			3.8			0.4			0.1			(0.1	)
Net benefit cost (income)		14.8			13.3			10.3			(2.5	)		0.7			0.6
Change in associated regulatory liabilities		—			—			—			3.1			3.1			3.3
Net benefit cost after change in regulatory liabilities	$	14.8		$	13.3		$	10.3		$	0.6		$	3.8		$	3.9

U.S. Pension Plans’ assets are held in trust. It is our general policy to fund amounts for pension benefits equal to at least the minimum required contribution set forth in applicable employee benefit laws. From time to time we may, at our discretion, contribute additional amounts. During Fiscal 2011 and 2010, we made cash contributions to the U.S. Pension Plans of $18.7 and $3.4, respectively. We did not make any contributions to the U.S. Pension Plans in Fiscal 2009. In conjunction with the settlement of obligations under a subsidiary retirement benefit plan, Antargaz made a settlement payment of €4.1 ($5.7) during Fiscal 2009. We believe that in Fiscal 2012 we will be required to make contributions to the U.S. Pension Plans totaling approximately $27.6.

UGI Utilities has established a Voluntary Employees’ Beneficiary Association (“VEBA”) trust to pay retiree health care and life insurance benefits by depositing into the VEBA the annual amount of postretirement benefits costs determined under GAAP. The difference between such amounts and amounts included in UGI Gas’ and Electric Utility’s rates is deferred for future recovery from, or refund to, ratepayers. The required contributions to the VEBA during Fiscal 2012 are not expected to be material.

Expected payments for pension benefits and for other postretirement welfare benefits are as follows:

			Other
	Pension		Postretirement
	Benefits		Benefits
Fiscal 2012	$	20.7	$	2.0
Fiscal 2013		21.7		2.0
Fiscal 2014		23.0		2.0
Fiscal 2015		24.3		2.0
Fiscal 2016		26.0		2.0
Fiscal 2017 - 2021		148.5		9.9

The assumed domestic health care cost trend rates are 7.5% for Fiscal 2012, decreasing to 5.0% in Fiscal 2017. A one percentage point change in the assumed health care cost trend rate would not have a material impact on the Fiscal 2011 other postretirement benefit cost or September 30, 2011 other postretirement benefit ABO.

We also sponsor unfunded and non-qualified supplemental executive retirement plans. At September 30, 2011 and 2010, the PBOs of these plans were $25.6 and $23.9, respectively. We recorded net costs for these plans of $3.0 in Fiscal 2011, $2.6 in Fiscal 2010 and $3.1 in Fiscal 2009. These costs are not included in the tables above. Amounts recorded in UGI’s stockholders’ equity for these plans include pre-tax losses of $7.6 and $4.7 at September 30, 2011 and 2010, respectively, principally representing unrecognized actuarial losses. We expect to amortize approximately $0.7 of such pre-tax actuarial losses into retiree benefit cost in Fiscal 2012.

U.S. Pension Plans and VEBA Assets. The assets of the U.S. Pension Plans and the VEBA are held in trust. The investment policies and asset allocation strategies for the assets in these trusts are determined by an investment committee comprising officers of UGI and UGI Utilities. The overall investment objective of the U.S. Pension Plans and the VEBA is to achieve the best long-term rates of return within prudent and reasonable levels of risk. To achieve the stated objective, investments are made principally in publicly-traded diversified equity and fixed income mutual funds and UGI Common Stock.

The targets, target ranges and actual allocations for the U.S. Pension Plans’ and VEBA trust assets at September 30 are as follows:

U.S. Pension Plans

							Target
	Actual						Asset			Permitted
	2011			2010			Allocation			Range
Equity investments:
Domestic		49.4	%		56.1	%		52.5	%		40.0% - 65.0	%
International		10.7	%		12.2	%		12.5	%		7.5% - 17.5	%
Total		60.1	%		68.3	%		65.0	%		60.0% - 70.0	%
Fixed income funds & cash equivalents		39.9	%		31.7	%		35.0	%		30.0% - 40.0	%
Total		100.0	%		100.0	%		100.0	%

VEBA

							Target
	Actual						Asset			Permitted
	2011			2010			Allocation			Range
Domestic equity investments		62.2	%		65.0	%		65.0	%		60.0% - 70.0	%
Fixed income funds & cash equivalents		37.8	%		35.0	%		35.0	%		30.0% - 40.0	%
Total		100.0	%		100.0	%		100.0	%

Domestic equity investments include investments in large-cap mutual funds indexed to the S&P 500 and actively managed mid- and small-cap mutual funds. Investments in international equity mutual funds are indexed to various Morgan Stanley Composite indices. The fixed income investments comprise investments designed to match the duration of the Barclays Capital Aggregate Bond Index. According to statute, the aggregate holdings of all qualifying employer securities may not exceed 10% of the fair value of trust assets at the time of purchase. UGI Common Stock represented 7.6% and 8.3% of U.S. Pension Plans assets at September 30, 2011 and 2010, respectively. At September 30, 2011, there were no significant concentrations of risk (defined as greater than 10% of the fair value of total assets) associated with any individual company, industry sector or international geographic region.

GAAP establishes a hierarchy that prioritizes fair value measurements based upon the inputs and valuation techniques used to measure fair value. This fair value hierarchy groups assets into three levels, as described in Note 2. We maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The fair values of U.S. Pension Plans and VEBA trust assets are derived from quoted market prices as substantially all of these instruments have active markets. Cash equivalents are valued at the fund’s unit net asset value as reported by the trustee.

The fair values of the U.S. Pension Plans’ and VEBA trust assets at September 30, 2011 and 2010 by asset class are as follows:

	Pension Plans
	Quoted Prices
	in Active		Significant
	Markets for		Other
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
September 30, 2011:
Equity investments:
Domestic	$	143.1	$	—	$	—	$	143.1
International		31.0		—		—		31.0
Fixed income		113.6		—		—		113.6
Cash equivalents		—		2.0		—		2.0
Total	$	287.7	$	2.0	$	—	$	289.7
September 30, 2010:
Equity investments:
Domestic	$	161.5	$	—	$	—	$	161.5
International		35.2		—		—		35.2
Fixed income		88.9		—		—		88.9
Cash equivalents		—		2.3		—		2.3
Total	$	285.6	$	2.3	$	—	$	287.9

	VEBA
	Quoted Prices
	in Active		Significant
	Markets for		Other
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
September 30, 2011:
Domestic equity	$	6.1	$	—	$	—	$	6.1
Fixed income		3.3		—		—		3.3
Cash equivalents		—		0.4		—		0.4
Total	$	9.4	$	0.4	$	—	$	9.8
September 30, 2010:
Domestic equity	$	6.5	$	—	$	—	$	6.5
Fixed income		3.0		—		—		3.0
Cash equivalents		—		0.5		—		0.5
Total	$	9.5	$	0.5	$	—	$	10.0

The expected long-term rates of return on U.S. Pension Plans’ and VEBA trust assets have been developed using a best estimate of expected returns, volatilities and correlations for each asset class. The estimates are based on historical capital market performance data and future expectations provided by independent consultants. Future expectations are determined by using simulations that provide a wide range of scenarios of future market performance. The market conditions in these simulations consider the long-term relationships between equities and fixed income as well as current market conditions at the start of the simulation. The expected rate begins with a risk-free rate of return with other factors being added such as inflation, duration, credit spreads and equity risk premiums. The rates of return derived from this process are applied to our target asset allocation to develop a reasonable return assumption.

Defined Contribution Plans. We sponsor 401(k) savings plans for eligible employees of UGI and certain of UGI’s domestic subsidiaries. Generally, participants in these plans may contribute a portion of their compensation on either a before-tax basis, or on both a before-tax and after-tax basis. These plans also provide for employer matching contributions at various rates. The cost of benefits under the savings plans totaled $10.4 in Fiscal 2011, $9.8 in Fiscal 2010 and $10.1 in Fiscal 2009.