Retirement Plans

Defined Benefit Retirement Plans

The Company has a qualified and a nonqualified noncontributory retirement plan, which are defined benefit plans that cover certain employees. The plans are closed to new employees and frozen with respect to all future benefit accruals, therefore no additional benefits accrue for active participants under the plans.

The following table presents changes in, and components of, the Company’s net liability for retirement costs as of and for the years ended September 30, 2014, 2013 and 2012, based on measurement dates of September 30, 2014, 2013 and 2012, respectively:



(in millions)	September 30, 2014			September 30, 2013			September 30, 2012
Changes in benefit obligation:
Benefit obligation, beginning of year	$	37.5		$	42.8		$	39.0
Interest cost	1.7			1.5			1.8
Actuarial loss	2.3			(2.6		)	5.8
Benefits paid	(3.3		)	(4.2		)	(3.8		)
Benefit obligation, end of year	38.2			37.5			42.8
Changes in plan assets:
Fair value, beginning of year	28.9			26.5			24.2
Actual return	2.9			3.7			4.6
Employer contribution	2.7			2.9			1.5
Benefits paid	(3.3		)	(4.2		)	(3.8		)
Fair value, end of year	31.2			28.9			26.5
Funded status	$	(7.0	)	$	(8.6	)	$	(16.3	)

The Company is required to recognize the funded status of its defined benefit pension plans measured as the difference between plan assets at fair value and the projected benefit obligation on the consolidated balance sheets as of September 30, 2014 and 2013, and to recognize changes in the funded status, that arise during the periods but are not recognized as components of net periodic pension cost, within accumulated other comprehensive loss, net of tax. Amounts recognized in the consolidated balance sheets consist of $0.7 million and $0.5 million included in ‘other assets’ as of September 30, 2014 and 2013, respectively, and $7.7 million and $9.1 million included in ‘accounts payable and other accrued liabilities’ as of September 30, 2014 and 2013, respectively.

Accumulated other comprehensive loss, net of tax, includes amounts for actuarial losses in the amount of $3.6 million and $2.9 million as of September 30, 2014 and 2013, respectively. The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost during fiscal 2015 is $0.3 million.

The following table displays the Company’s defined benefit plans that have accumulated benefit obligations and projected benefit obligations in excess of the fair value of plans assets (underfunded ABO) as of September 30, 2014 and 2013:



(in millions)	September 30, 2014		September 30, 2013
Accumulated benefit obligations	$	38.2	$	37.5
Projected benefit obligations	$	38.2	$	37.5
Plan assets	$	31.2	$	28.9

The defined benefit obligations were based upon annual measurement dates of September 30, 2014 and 2013. The following weighted-average assumptions were used to determine benefit obligations in the accompanying consolidated balance sheets as of September 30, 2014 and 2013:



	September 30, 2014	September 30, 2013
Weighted average assumptions:
Discount rate	4.15%	4.60%
Expected return on assets	6.00%	7.00%

The following weighted-average assumptions were used to determine net periodic pension cost for the years ended September 30, 2014, 2013 and 2012:



	Year Ended September 30,
	2014	2013	2012
Weighted average assumptions:
Discount rate	4.60%	3.80%	4.80%
Expected return on assets	7.00%	7.00%	7.30%

To account for the defined benefit pension plans in accordance with the guidance in the Compensation – Retirement Benefits Topic of the ASC the Company makes two main determinations at the end of each fiscal year. These determinations are reviewed annually and updated as necessary, but nevertheless, are subjective and may vary from actual results.

First, the Company must determine the actuarial assumption for the discount rate used to reflect the time value of money in the calculation of the projected benefit obligations for the end of the current fiscal year and to determine the net periodic pension cost for the subsequent fiscal year. The objective of the discount rate assumption is to reflect the interest rate at which pension benefits could be effectively settled. In making this determination, the Company considers the timing and amount of benefits that would be available under the plans. The discount rates as of September 30, 2014, 2013 and 2012 were based on a model portfolio of high-quality fixed-income debt instruments with durations that are consistent with the expected cash flows of the benefit obligations.

Second, the Company must determine the expected long-term rate of return on assets assumption that is used to determine the expected return on plan assets component of the net periodic pension cost for the subsequent period. The expected long-term rate of return on asset assumption was determined, with the assistance of the Company’s investment consultants, based on a variety of factors. These factors include, but are not limited to, the plan’s asset allocations, a review of historical capital market performance, historical plan performance, current market factors such as inflation and interest rates, and a forecast of expected future asset returns. The Company reviews this long-term assumption on an annual basis.

As a result of the defined benefit plans having a frozen status, no additional benefits will be accrued for active participants under the plan, and accordingly no assumption will be made for the rate of increase in compensation levels in the future.

The components of net periodic pension cost recognized in the consolidated income statements for the years ended September 30, 2014, 2013 and 2012 were as follows:



	Year Ended September 30,
(in millions)	2014			2013			2012
Interest cost	$	1.7		$	1.5		$	1.8
Less expected return on assets	(2.0		)	(1.8		)	(1.7		)
Net amortization and deferral	0.2			0.8			0.4
Net periodic pension cost	$	(0.1	)	$	0.5		$	0.5

Other changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended September 30, 2014 and 2013 were as follows:



	Year Ended September 30,
(in millions)	2014			2013
Net (gain) loss	$	1.4		$	(4.6	)
Amortization of loss	(0.2		)	(0.8		)
Total recognized in other comprehensive income	1.2			(5.4		)
Total recognized in net periodic benefit cost and other comprehensive income	$	1.1		$	(4.9	)

Plan Assets

The following table sets forth the actual asset allocation as of September 30, 2014 and 2013, and the target asset allocation for the Company’s plan assets:



	September 30, 2014	September 30, 2013	Target Asset Allocation ⁽¹⁾
Equity securities	34%	68%	35%
Debt securities	66%	32%	65%
Total	100%	100%

⁽¹⁾ During January 2014, the Company changed its relative mix of investments held as a result of a change in the overall investment strategy.

The long-term goal for equity exposure and for fixed income exposure is presented above. The exact allocation at any point in time is at the discretion of the investment manager, but should recognize the need to satisfy both the volatility and the rate of return objectives for equity exposure and satisfy the objective of preserving capital for the fixed income exposure.

The investment philosophy of the Company’s pension plans reflect that over the long-term, the risk of owning equities has been and should continue to be rewarded with a greater return than that available from fixed income investments. The primary objective is for the plan to achieve a rate of return sufficient to fully fund the pension obligation without assuming undue risk.

Investments in the Company’s pension plans include debt and equity securities. The fair value of plan assets is based upon the fair value of the underlying investments, which include cash equivalents, common stock, U.S. government securities and federal agency obligations, municipal and corporate bonds, and equity funds. Cash equivalents consist of short-term money market funds that are stated at cost, which approximates fair value. The shares of common stock, U.S. government securities and federal agency obligations, municipal and corporate bonds are stated at estimated fair value based upon quoted market prices, if available, or dealer quotes. The equity funds are investment vehicles valued using the net asset value (“NAV”) provided by the administrator of the fund. The NAV is based on the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Equity securities did not include any INTL FCStone Inc. common stock as of September 30, 2014 and 2013, respectively.

The following tables summarize the Company’s pension assets, excluding cash held in the plan, by major category of plan assets measured at fair value on a recurring basis (at least annually) as of September 30, 2014 and 2013. For additional information and a detailed description of each level within the fair value hierarchy, see Note 3.



	September 30, 2014
(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	—	$	1.0	$	—	$	1.0
Fixed income:
Government and agencies	—		—		—		—
Collective funds:
Fixed income	—		19.6		—		19.6
Equities	—		10.0		—		10.0
Real estate	—		0.6		—		0.6
Total	$	—	$	31.2	$	—	$	31.2



	September 30, 2013
(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	—	$	0.5	$	—	$	0.5
Fixed income:
Government and agencies	—		0.6		—		0.6
Collective funds:
Fixed income	—		8.1		—		8.1
Equities	—		18.7		—		18.7
Real estate	—		1.0		—		1.0
Total	$	—	$	28.9	$	—	$	28.9

Cash equivalents are mostly comprised of short-term money market instruments and the valuation is based on inputs derived from observable market data of related assets.

Fixed Income: These securities primarily include debt issued by the U.S. Department of Treasury and securities issued or backed by U.S. government sponsored entities and municipal bonds. These investments are valued utilizing a market approach that includes various valuation techniques and sources such as, broker quotes in active and non-active markets, benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data and are generally classified within Level 2.

Collective Funds: These collective investment funds are unregistered investment vehicles that invest in portfolios of stock, bonds, or other securities. The fair value of these investments is based on the NAV of the units held in the respective funds. As no redemption restrictions or other features are noted that require adjustment to NAV. These funds are classified as Level 2 investments.

The Company expects to contribute $2.5 million to the pension plans during fiscal 2015, which represents the minimum funding requirement. However, the Company is currently determining what voluntary pension plan contributions, if any, will be made in fiscal 2015.

The following benefit payments, which reflect expected future service, are expected to be paid:



(in millions)
Year ending September 30,
2015	$	3.3
2016	3.2
2017	2.9
2018	2.0
2019	2.0
2020 - 2024	9.5
	$	22.9

Defined Contribution Retirement Plans

U.K. based employees of INTL FCStone are eligible to participate in a defined contribution pension plan. The Company contributes double the employee’s contribution up to 10% of total base salary for this plan. For this plan, employees are 100% vested in both the employee and employer contributions at all times.

The Company offers participation in the INTL FCStone Inc. 401(k) Plan (“401(k) Plan”), a defined contribution plan providing retirement benefits, to all domestic employees who have reached 21 years of age, and provided four months of service to the Company. Employees may contribute from 1% to 80% of their annual compensation to the 401(k) Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The Company makes matching contributions to the 401(k) Plan in an amount equal to 62.5% of each participant’s eligible elective deferral contribution to the 401(k) Plan, up to 8%. Matching contributions vest, by participant, based on the following years of service schedule: less than two years – none, two to three years – 20%, three to four years – 40%, four to five years – 60%, and greater than five years – 100%.

For fiscal years ended September 30, 2014, 2013 and 2012, the Company’s contribution to these defined contribution plans were $4.1 million, $4.0 million and $3.7 million, respectively.