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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2015
EMPLOYEE BENEFIT PLANS |
EMPLOYEE BENEFIT PLANS | 19. EMPLOYEE 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. Certain United States and Brazil based subsidiaries of Bunge have benefit plans to provide certain postretirement healthcare benefits to eligible retired employees of those subsidiaries. The plans require minimum retiree contributions and define the maximum amount the subsidiaries will be obligated to pay under the plans. Bunge's policy is to fund these costs as they become payable. Plan Amendments and Transfers In and Out—There were no significant amendments, settlements or transfers into or out of Bunge's employee benefit plans during the years ended December 31, 2015 or 2014. The following table sets forth in aggregate the changes in the defined benefit pension and postretirement benefit plans' benefit obligations, assets and funded status at December 31, 2015 or 2014. A measurement date of December 31 was used for all plans.
|  | Pension Benefits December 31, |  | Postretirement Benefits December 31, |
(US$ in millions) |  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Change in benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at the beginning of year |  | $ | 906 |  | $ | 755 |  | $ | 69 |  | $ | 69 |
Service cost |  |  | 35 |  |  | 30 |  |  | — |  |  | — |
Interest cost |  |  | 33 |  |  | 36 |  |  | 5 |  |  | 6 |
Plan curtailments |  |  | (6 | ) |  | — |  |  | — |  |  | (3 | )
Actuarial (gain) loss, net |  |  | (54 | ) |  | 138 |  |  | 8 |  |  | 11 |
Employee contributions |  |  | 6 |  |  | 4 |  |  | 1 |  |  | 1 |
Plan settlements |  |  | (6 | ) |  | (2 | ) |  | — |  |  | — |
Benefits paid |  |  | (30 | ) |  | (29 | ) |  | (8 | ) |  | (8 | )
Expenses paid |  |  | (3 | ) |  | (3 | ) |  | — |  |  | — |
Impact of foreign exchange rates |  |  | (17 | ) |  | (23 | ) |  | (19 | ) |  | (7 | )
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Benefit obligation at the end of year |  | $ | 864 |  | $ | 906 |  | $ | 56 |  | $ | 69 |
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Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at the beginning of year |  | $ | 650 |  | $ | 614 |  | $ | — |  | $ | — |
Actual return on plan assets |  |  | (3 | ) |  | 64 |  |  | — |  |  | — |
Employer contributions |  |  | 90 |  |  | 19 |  |  | 7 |  |  | 7 |
Employee contributions |  |  | 6 |  |  | 4 |  |  | 1 |  |  | 1 |
Plan settlements |  |  | (6 | ) |  | (2 | ) |  | — |  |  | — |
Benefits paid |  |  | (30 | ) |  | (29 | ) |  | (8 | ) |  | (8 | )
Expenses paid |  |  | (3 | ) |  | (3 | ) |  | — |  |  | — |
Impact of foreign exchange rates |  |  | (15 | ) |  | (17 | ) |  | — |  |  | — |
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Fair value of plan assets at the end of year |  | $ | 689 |  | $ | 650 |  | $ | — |  | $ | — |
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Funded (unfunded) status and net amounts recognized: |  |  |  |  |  |  |  |  |  |  |  |  |
Plan assets (less than) in excess of benefit obligation |  | $ | (175 | ) | $ | (256 | ) | $ | (56 | ) | $ | (69 | )
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Net (liability) asset recognized in the balance sheet |  | $ | (175 | ) | $ | (256 | ) | $ | (56 | ) | $ | (69 | )
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Amounts recognized in the balance sheet consist of: |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current assets |  | $ | 12 |  | $ | 12 |  | $ | — |  | $ | — |
Current liabilities |  |  | (5 | ) |  | (5 | ) |  | (6 | ) |  | (7 | )
Non-current liabilities |  |  | (182 | ) |  | (263 | ) |  | (50 | ) |  | (62 | )
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Net liability recognized |  | $ | (175 | ) | $ | (256 | ) | $ | (56 | ) | $ | (69 | )
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Included in accumulated other comprehensive income for pension benefits at December 31, 2015 are the following amounts that have not yet been recognized in net periodic benefit costs: unrecognized prior service credit of $5 million ($3 million, net of tax) and unrecognized actuarial loss of $182 million ($118 million, net of tax). Expected prior service costs and unrecognized actuarial losses as a component of net periodic benefit costs included in accumulated other comprehensive income in 2016 is $10 million ($6 million, net of tax). Included in accumulated other comprehensive income for postretirement healthcare benefits at December 31, 2015 are the following amounts that have not yet been recognized in net periodic benefit costs: unrecognized prior service credit of $1 million ($1 million, net of tax), and unrecognized actuarial loss of $4 million ($3 million, net of tax). Bunge does not expect to recognize any unrecognized prior service credits or unrecognized actuarial losses as components of net periodic benefit costs for its postretirement benefit plans in 2016. Bunge has aggregated certain 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, 2015, $864 million projected benefit obligations includes plans with projected benefit obligations of $758 million which were in excess of the fair value of related plan assets of $570 million. At December 31, 2014, the $906 million projected benefit obligations include plans with projected benefit obligations of $770 million which were in excess of the fair value of related plan assets of $502 million. The accumulated benefit obligation for the defined pension benefit plans, respectively, was $786 million at December 31, 2015 and $814 million at December 31, 2014. The following table summarizes information relating to aggregated defined benefit pension plans with an accumulated benefit obligation in excess of plan assets:
|  | Pension Benefits December 31, |
(US$ in millions) |  | 2015 |  | 2014 |
Projected benefit obligation |  | $ | 642 |  | $ | 761 |
Accumulated benefit obligation |  | $ | 588 |  | $ | 677 |
Fair value of plan assets |  | $ | 474 |  | $ | 495 |
At December 31, 2015, for measurement purposes related to postretirement benefit plans, an 8.1% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2016, decreasing to 7.4% by 2029, remaining at that level thereafter. At December 31, 2014, for measurement purposes related to postretirement benefit plans, an 7.9% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2015, decreasing to 7.0% by 2029, remaining at that level thereafter. A one-percentage point change in assumed healthcare cost trend rates would have the following effects:
(US$ in millions) |  | One-percentage point increase |  | One-percentage point decrease |
Effect on total service and interest cost |  | $ | — |  | $ | — |
Effect on postretirement benefit obligation |  | $ | 4 |  | $ | (3 | )
The components of net periodic benefit costs are as follows for defined benefit pension plans and postretirement benefit plans:
|  | Pension Benefits December 31, |  | Postretirement Benefits December 31, |
(US$ in millions) |  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013 |
Service cost |  | $ | 35 |  | $ | 30 |  | $ | 30 |  | $ | — |  | $ | — |  | $ | — |
Interest cost |  |  | 33 |  |  | 36 |  |  | 31 |  |  | 5 |  |  | 6 |  |  | 7 |
Expected return on plan assets |  |  | (42 | ) |  | (39 | ) |  | (35 | ) |  | — |  |  | — |  |  | — |
Amortization of prior service cost |  |  | 1 |  |  | 1 |  |  | 1 |  |  | — |  |  | — |  |  | — |
Amortization of net loss |  |  | 12 |  |  | 4 |  |  | 19 |  |  | — |  |  | (1 | ) |  | — |
Curtailment loss |  |  | 1 |  |  | — |  |  | 1 |  |  | — |  |  | (2 | ) |  | (2 | )
Settlement loss recognized |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Special termination benefit |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | — |  |  | — |
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Net periodic benefit costs |  | $ | 41 |  | $ | 32 |  | $ | 50 |  | $ | 5 |  | $ | 3 |  | $ | 5 |
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The weighted-average actuarial assumptions used in determining the benefit obligation under the defined benefit pension and postretirement benefit plans are as follows:
|  | Pension Benefits December 31, |  | Postretirement Benefits December 31, |
|  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Discount rate |  |  | 4.2 | % |  | 3.8 | % |  | 11.4 | % |  | 9.8 | %
Increase in future compensation levels |  |  | 3.3 | % |  | 3.5 | % |  | N/A |  |  | N/A |
The weighted-average actuarial assumptions used in determining the net periodic benefit cost under the defined benefit pension and postretirement benefit plans are as follows:
|  | Pension Benefits December 31, |  | Postretirement Benefits December 31, |
|  | 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013 |
Discount rate |  |  | 3.8 | % |  | 4.9 | % |  | 4.0 | % |  | 9.8 | % |  | 10.0 | % |  | 7.9 | %
Expected long-term rate of return on assets |  |  | 6.7 | % |  | 6.7 | % |  | 6.6 | % |  | N/A |  |  | N/A |  |  | N/A |
Increase in future compensation levels |  |  | 3.5 | % |  | 3.5 | % |  | 3.7 | % |  | N/A |  |  | N/A |  |  | N/A |
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. Pension Benefit Plan Assets—The objectives of the 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 defined benefit pension plans' assets at the measurement date, by category, are as follows:
|  | Fair Value Measurements at December 31, 2015 |
|  | Pension Benefits |
(US$ in millions) Asset Category |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |
Cash |  | $ | 81 |  | $ | 81 |  | $ | — |  | $ | — |
Equities: |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual Funds(1) |  |  | 354 |  |  | 306 |  |  | 48 |  |  | — |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual Funds(2) |  |  | 242 |  |  | 80 |  |  | 162 |  |  | — |
Others(3) |  |  | 12 |  |  | — |  |  | 12 |  |  | — |
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Total |  | $ | 689 |  | $ | 467 |  | $ | 222 |  | $ | — |
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|  | Fair Value Measurements at December 31, 2014 |
|  | Pension Benefits |
(US$ in millions) Asset Category |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |
Cash |  | $ | 3 |  | $ | 3 |  | $ | — |  | $ | — |
Equities: |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual Funds(1) |  |  | 368 |  |  | 310 |  |  | 58 |  |  | — |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual Funds(2) |  |  | 263 |  |  | 92 |  |  | 171 |  |  | — |
Others(3) |  |  | 16 |  |  | 2 |  |  | 14 |  |  | — |
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Total |  | $ | 650 |  | $ | 407 |  | $ | 243 |  | $ | — |
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(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. (3) This category represents a portfolio consisting of a mixture of equity, fixed income and cash. Bunge expects to contribute $15 million and $6 million, respectively, to its defined benefit pension and postretirement benefit plans in 2016. The following benefit payments, which reflect future service as appropriate, are expected to be paid related to defined benefit pension and postretirement benefit plans:
(US$ in millions) |  | Pension Benefit Payments |  | Postretirement Benefit Payments |
2016 |  | $ | 37 |  | $ | 6 |
2017 |  |  | 39 |  |  | 6 |
2018 |  |  | 41 |  |  | 6 |
2019 |  |  | 43 |  |  | 6 |
2020 |  |  | 45 |  |  | 5 |
2021 and onwards |  |  | 252 |  |  | 23 |
Employee Defined Contribution Plans—Bunge also makes contributions to qualified defined contribution plans for eligible employees. Contributions to these plans amounted to $11 million, $12 million and $12 million during the years ended December 31, 2015, 2014 and 2013, respectively.

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