|
19. Pension Plans
Employee Defined Benefit Plans—Certain U.S., Canadian, European and Brazilian based subsidiaries of Bunge sponsor non-contributory defined benefit pension plans covering substantially all employees of the subsidiaries. The plans provide benefits based primarily on participants' salary and length of service.
The funding policies for Bunge's defined benefit pension plans are determined in accordance with statutory funding requirements. The most significant defined benefit plan is in the United States. The U.S. funding policy requires at least those amounts required by the Pension Protection Act of 2006. Assets of the plans consist primarily of equity and fixed income investments.
Plan Amendments and Transfers In—There were no significant amendments to Bunge's employee benefit plans during the years ended December 31, 2011 and 2010, respectively. At December 31, 2010, there was a transfer in of assets and liabilities of a plan sponsored by one of Bunge's European subsidiaries due to statutory changes. This plan was previously accounted for as a defined contribution plan.
Plan Settlements and Transfers Out—In 2010, there was a transfer out that resulted from the divestiture of Bunge's Brazilian fertilizer nutrients assets (see Note 3), which included its Brazil-based fertilizer subsidiary, Ultrafertil, SA (Ultrafertil). Ultrafertil was a participating sponsor in a frozen multiple-employer defined benefit pension plan (the "Petros Plan") that was managed by Fundaçao Petrobras de Securidade Social (Petros). The Petros Plan began in 1970 prior to the Brazilian government's deregulation of the fertilizer industry in Brazil. The Petros Plan was funded in accordance with Brazilian statutory requirements. The sale of Bunge's investment in Ultrafertil as part of the Brazilian fertilizer nutrients assets sale transaction resulted in a settlement of the Plan of approximately $42 million for accounting purposes.
The following table sets forth in aggregate a reconciliation of the changes in the U.S. and foreign defined benefit pension plans' benefit obligations, assets and funded status at December 31, 2011 and 2010 for plans with assets in excess of benefit obligations and plans with benefit obligations in excess of plan assets. A measurement date of December 31 was used for all plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension Benefits December 31, |
|
Foreign Pension Benefits December 31, |
|
|
(US$ in millions) |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Change in benefit obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation as of beginning of year |
|
$ |
432 |
|
$ |
394 |
|
$ |
136 |
|
$ |
479 |
|
|
Service cost |
|
|
15 |
|
|
13 |
|
|
7 |
|
|
3 |
|
|
Interest cost |
|
|
25 |
|
|
24 |
|
|
6 |
|
|
22 |
|
|
Actuarial loss (gain), net |
|
|
58 |
|
|
19 |
|
|
4 |
|
|
9 |
|
|
Employee contributions |
|
|
— |
|
|
— |
|
|
3 |
|
|
1 |
|
|
Net transfers in (out) |
|
|
— |
|
|
— |
|
|
— |
|
|
(398 |
) |
|
Plan amendments |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
Plan settlements |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
42 |
|
|
Benefits paid |
|
|
(16 |
) |
|
(17 |
) |
|
(4 |
) |
|
(19 |
) |
|
Expenses paid |
|
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
|
— |
|
|
Impact of foreign exchange rates |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(4 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Benefit obligation as of end of year |
|
$ |
513 |
|
$ |
432 |
|
$ |
143 |
|
$ |
136 |
|
| |
|
|
|
|
|
|
|
|
|
|
Change in plan assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets as of beginning of year |
|
$ |
330 |
|
$ |
298 |
|
$ |
115 |
|
$ |
493 |
|
|
Actual return on plan assets |
|
|
21 |
|
|
48 |
|
|
6 |
|
|
28 |
|
|
Employer contributions |
|
|
22 |
|
|
2 |
|
|
11 |
|
|
14 |
|
|
Employee contributions |
|
|
— |
|
|
— |
|
|
3 |
|
|
1 |
|
|
Plan settlements |
|
|
— |
|
|
— |
|
|
(3 |
) |
|
(2 |
) |
|
Divestitures |
|
|
— |
|
|
— |
|
|
— |
|
|
(398 |
) |
|
Benefits paid |
|
|
(17 |
) |
|
(17 |
) |
|
(4 |
) |
|
(19 |
) |
|
Expenses paid |
|
|
(1 |
) |
|
(1 |
) |
|
(1 |
) |
|
— |
|
|
Impact of foreign exchange rates |
|
|
— |
|
|
— |
|
|
(3 |
) |
|
(2 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets as of end of year |
|
$ |
355 |
|
$ |
330 |
|
$ |
124 |
|
$ |
115 |
|
| |
|
|
|
|
|
|
|
|
|
|
Funded (unfunded) status and net amounts recognized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan assets (less than) in excess of benefit obligation |
|
$ |
(158 |
) |
$ |
(102 |
) |
$ |
(19 |
) |
$ |
(21 |
) |
|
Net (liability) asset recognized in the balance sheet |
|
$ |
(158 |
) |
$ |
(102 |
) |
$ |
(19 |
) |
$ |
(21 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Amounts recognized in the balance sheet consist of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
$ |
— |
|
$ |
2 |
|
$ |
9 |
|
$ |
10 |
|
|
Current liabilities |
|
|
(1 |
) |
|
(1 |
) |
|
(2 |
) |
|
(2 |
) |
|
Non-current liabilities |
|
|
(157 |
) |
|
(103 |
) |
|
(26 |
) |
|
(29 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Net (liability) asset recognized |
|
$ |
(158 |
) |
$ |
(102 |
) |
$ |
(19 |
) |
$ |
(21 |
) |
| |
|
|
|
|
|
|
|
|
|
Included in accumulated other comprehensive income at December 31, 2011 are the following amounts that have not yet been recognized in net periodic benefit costs: unrecognized initial net asset of $1 million (zero net of tax), unrecognized prior service cost of $7 million ($5 million, net of tax) and unrecognized actuarial loss of $171 million ($111 million, net of tax). The prior service cost included in accumulated other comprehensive income that is expected to be recognized in net periodic benefit costs in 2012 is $2 million ($1 million, net of tax) and unrecognized actuarial loss of $12 million ($8 million, net of tax).
Bunge has aggregated certain U.S. and foreign defined benefit pension plans with projected benefit obligations in excess of fair value of plan assets with pension plans that have fair value of plan assets in excess of projected benefit obligations. At December 31, 2011, the $513 million and $143 million projected benefit obligations for U.S. and foreign plans, respectively, include plans with projected benefit obligations of $513 million and $36 million, respectively, which were in excess of the fair value of related plan assets of $355 million and $7 million, respectively. At December 31, 2010, the $432 million and $136 million projected benefit obligations for U.S. and foreign plans, respectively, include plans with projected benefit obligations of $381 million and $39 million, respectively, which were in excess of the fair value of related plan assets of $276 million and $8 million, respectively. The accumulated benefit obligation for the U.S. and foreign defined benefit pension plans, respectively, was $468 million and $137 million at December 31, 2011 and $381 million and $81 million at December 31, 2010, respectively.
The following table summarizes information relating to aggregated U.S. and foreign defined benefit pension plans with an accumulated benefit obligation in excess of plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension Benefits December 31, |
|
Foreign Pension Benefits December 31, |
|
|
(US$ in millions) |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Projected benefit obligation |
|
$ |
513 |
|
$ |
381 |
|
$ |
36 |
|
$ |
29 |
|
|
Accumulated benefit obligation |
|
|
468 |
|
|
330 |
|
|
34 |
|
|
28 |
|
|
Fair value of plan assets |
|
$ |
355 |
|
$ |
276 |
|
$ |
7 |
|
$ |
3 |
|
The components of net periodic benefit costs are as follows for U.S. and foreign defined benefit plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension Benefits
December 31, |
|
Foreign Pension Benefits
December 31, |
|
|
(US$ in millions) |
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
|
2009 |
|
|
Service cost |
|
$ |
15 |
|
$ |
13 |
|
$ |
12 |
|
$ |
7 |
|
$ |
3 |
|
$ |
3 |
|
|
Interest cost |
|
|
25 |
|
|
24 |
|
|
22 |
|
|
6 |
|
|
22 |
|
|
41 |
|
|
Expected return on plan assets |
|
|
(26 |
) |
|
(24 |
) |
|
(22 |
) |
|
(6 |
) |
|
(25 |
) |
|
(43 |
) |
|
Amortization of prior service cost |
|
|
2 |
|
|
2 |
|
|
2 |
|
|
— |
|
|
1 |
|
|
1 |
|
|
Amortization of net loss |
|
|
5 |
|
|
5 |
|
|
3 |
|
|
1 |
|
|
— |
|
|
(2 |
) |
|
Settlement loss recognized |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
26 |
|
|
1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit costs |
|
$ |
21 |
|
$ |
20 |
|
$ |
17 |
|
$ |
8 |
|
$ |
27 |
|
$ |
1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average actuarial assumptions used in determining the benefit obligation under the U.S. and foreign defined benefit pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension Benefits
December 31, |
|
Foreign Pension Benefits
December 31, |
|
|
(US$ in millions) |
|
2011 |
|
2010 |
|
2011 |
|
2010 |
|
|
Discount rate |
|
|
5.0 |
% |
|
6.0 |
% |
|
4.2 |
% |
|
4.4 |
% |
|
Increase in future compensation levels |
|
|
3.8 |
% |
|
4.2 |
% |
|
2.7 |
% |
|
2.4 |
% |
The weighted-average actuarial assumptions used in determining the net periodic benefit cost under the U.S. and foreign defined benefit pension plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Pension Benefits
December 31, |
|
Foreign Pension Benefits
December 31, |
|
|
(US$ in millions) |
|
2011 |
|
2010 |
|
2009 |
|
2011 |
|
2010 |
|
2009 |
|
|
Discount rate |
|
|
6.0 |
% |
|
6.2 |
% |
|
6.5 |
% |
|
4.4 |
% |
|
10.5 |
% |
|
11.4 |
% |
|
Expected long-term rate of return on assets |
|
|
8.0 |
% |
|
8.0 |
% |
|
8.0 |
% |
|
5.3 |
% |
|
11.4 |
% |
|
10.9 |
% |
|
Increase in future compensation levels |
|
|
4.2 |
% |
|
4.2 |
% |
|
4.2 |
% |
|
2.4 |
% |
|
6.3 |
% |
|
6.7 |
% |
The sponsoring subsidiaries select the expected long-term rate of return on assets in consultation with their investment advisors and actuaries. These rates are intended to reflect the average rates of earnings expected on the funds invested or to be invested to provide required plan benefits. The plans are assumed to continue in effect as long as assets are expected to be invested.
In estimating the expected long-term rate of return on assets, appropriate consideration is given to historical performance for the major asset classes held or anticipated to be held by the applicable plan trusts and to current forecasts of future rates of return for those asset classes. Cash flows and expenses are taken into consideration to the extent that the expected returns would be affected by them. As assets are generally held in qualified trusts, anticipated returns are not reduced for taxes.
Plan Assets—The objectives of the U.S. plans' trust funds are to sufficiently diversify plan assets to maintain a reasonable level of risk without imprudently sacrificing returns, with a target asset allocation of approximately 40% fixed income securities and approximately 60% equities. Bunge implements its investment strategy through a combination of indexed mutual funds and a proprietary portfolio of fixed income securities. Bunge's policy is not to invest plan assets in Bunge Limited shares.
Plan investments are stated at fair value which is the amount 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. The Plan classifies its investments in Level 1, which refers to securities that are actively traded on a public exchange and valued using quoted prices from active markets for identical assets, Level 2, which refers to securities not traded in an active market but for which observable market inputs are readily available and Level 3, which refers to other assets valued based on significant unobservable inputs.
The fair values of Bunge's U.S. and foreign defined benefit pension plans' assets as of the measurement date for 2011 and 2010, by category, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (US$ in millions) |
|
Fair Value Measurements at December 31, 2011 |
|
| Asset Category |
|
Total |
|
Quoted Prices in Active
Markets for Identical
Assets (Level 1) |
|
Significant
Observable
Inputs (Level 2) |
|
Significant
Unobservable
Inputs (Level 3) |
|
|
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
|
Equities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds (1) |
|
$ |
220 |
|
$ |
78 |
|
$ |
220 |
|
$ |
1 |
|
$ |
— |
|
$ |
17 |
|
$ |
— |
|
$ |
— |
|
|
Fixed income securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds (2) |
|
|
135 |
|
|
46 |
|
|
73 |
|
|
5 |
|
|
62 |
|
|
101 |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
355 |
|
$ |
124 |
|
$ |
293 |
|
$ |
6 |
|
$ |
62 |
|
$ |
118 |
|
$ |
— |
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (US$ in millions) |
|
Fair Value Measurements at December 31, 2010 |
|
| Asset Category |
|
Total |
|
Quoted Prices in Active
Markets for Identical
Assets (Level 1) |
|
Significant
Observable
Inputs (Level 2) |
|
Significant
Unobservable
Inputs (Level 3) |
|
|
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
U.S.
Pension
Benefits |
|
Foreign
Pension
Benefits |
|
|
Equities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds (1) |
|
$ |
213 |
|
$ |
20 |
|
$ |
213 |
|
$ |
1 |
|
$ |
— |
|
$ |
19 |
|
$ |
— |
|
$ |
— |
|
|
Fixed income securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds (2) |
|
|
117 |
|
|
95 |
|
|
65 |
|
|
— |
|
|
52 |
|
|
46 |
|
|
— |
|
|
49 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
330 |
|
$ |
115 |
|
$ |
278 |
|
$ |
1 |
|
$ |
52 |
|
$ |
65 |
|
$ |
— |
|
$ |
49 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- (1)
- This category represents a portfolio of equity investments comprised of equity index funds that invest in U.S. equities and non-U.S. equities. The U.S. equities are comprised of investments focusing on large, mid and small cap companies and non-U.S. equities are comprised of international, emerging markets and real estate investment trusts.
- (2)
- This category represents a portfolio of fixed income investments in mutual funds comprised of investment grade U.S. government bonds and notes, foreign government bonds and corporate bonds from diverse industries.
|
|
|
|
|
|
(US$ in millions) |
|
Fair Value
Measurements
Using Significant
Unobservable
Inputs (Level 3) |
|
|
|
Insured |
|
|
|
Asset |
|
|
Beginning balance, January 1, 2011 |
|
$ |
49 |
|
|
Actual return on plan assets: |
|
|
|
|
|
Relating to assets still held at December 31, 2011 |
|
|
— |
|
|
Relating to assets sold during 2011 |
|
|
— |
|
|
Purchase, sales and settlements |
|
|
— |
|
|
Transfers into Level 3 |
|
|
— |
|
|
Transfers out of Level 3 |
|
|
(49 |
) |
| |
|
|
|
|
Ending balance, December 31, 2011 |
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
(US$ in millions) |
|
Fair Value
Measurements
Using Significant
Unobservable
Input (Level 3) |
|
|
|
Insured |
|
|
|
Asset |
|
|
Beginning balance, January 1, 2010 |
|
$ |
— |
|
|
Actual return on plan assets: |
|
|
|
|
|
Relating to assets still held at December 31, 2010 |
|
|
— |
|
|
Relating to assets sold during 2010 |
|
|
— |
|
|
Purchase, sales and settlements |
|
|
— |
|
|
Transfers into Level 3 (1) |
|
|
49 |
|
| |
|
|
|
|
Ending balance, December 31, 2010 |
|
$ |
49 |
|
| |
|
|
|
- (1)
- At December 31, 2010, there was a transfer in of a plan previously accounted for as a defined contribution plan. This plan's assets are classified as insured assets and are held by a collective insurance fund. Bunge does not actively participate in the administration or the asset management of the collective fund.
Bunge expects to contribute $6 million and $9 million, respectively, to its U.S. and foreign-based defined benefit pension plans in 2012.
The following benefit payments, which reflect future service as appropriate, are expected to be paid related to U.S. and foreign defined benefit pension plans:
|
|
|
|
|
|
|
|
|
(US$ in millions) |
|
U.S. Pension
Benefit Payments |
|
Foreign Pension
Benefit Payments |
|
|
2012 |
|
$ |
19 |
|
$ |
9 |
|
|
2013 |
|
|
21 |
|
|
8 |
|
|
2014 |
|
|
23 |
|
|
9 |
|
|
2015 |
|
|
27 |
|
|
9 |
|
|
2016 |
|
|
28 |
|
|
9 |
|
|
2017-2021 |
|
|
169 |
|
|
48 |
|
Employee Defined Contribution Plans—Bunge also makes contributions to qualified defined contribution plans for eligible employees. Contributions to these plans amounted to $14 million, $12 million and $17 million in 2011, 2010 and 2009, respectively. |