Pension and other postretirement benefits

Pension Benefits

We maintain noncontributory defined benefit pension plans for all of our domestic hourly and salaried employees. For the domestic salaried employees, plan benefits are based primarily on years of service and average compensation during the later years of employment. For hourly employees, plan benefits are based primarily on a formula that provides a specific benefit for each year of service. Our funding policy is to contribute amounts based upon actuarial and economic assumptions designed to achieve adequate funding of the projected benefit obligations and to meet the minimum funding requirements of the Employee Retirement Income Security Act 1974 ("ERISA"). Plan assets consist principally of U.S. and international equities and fixed income securities. In addition, we maintain the SERB plan for certain current and former executive officers. We account for these plans in accordance with ASC 715. We use a measurement date of December 31^st to determine the pension and OPEB liabilities.

Partial Freeze

In the fourth quarter of 2014, we amended our Salaried Pension Plan to eliminate future accruals for participants who are under age 50 as of January 1, 2015. The plan was also closed to new entrants. The amendment lowered the plans' projected benefit obligations by approximately $6,600 and resulted in a $263 curtailment charge for 2014.

Pension Settlement - Lump Sum Payout

In the fourth quarter of 2014, we offered certain former employees with vested pension benefits a lump sum payout in an effort to reduce our long-term pension obligations. As a result, net periodic benefit cost for our pension plans increased by a settlement charge of $4,701 for 2014 and the projected benefit obligation decreased by $19,573.

Employer contributions

During the year ended December 31, 2014, we made contributions of approximately $5,584 to the qualified defined benefit and SERB plans we sponsor.

PBGC settlement

In April 2013, we entered into a settlement agreement with the Pension Benefit Guaranty Corporation ("PBGC") regarding an alleged "cessation of operations" at our Ravenswood facility as a result of the curtailment of operations at the facility. While we do not believe that a "cessation of operations" has occurred, we reached an agreement with the PBGC to resolve the matter. Pursuant to the terms of the agreement, we will make additional contributions (above any minimum required contributions) to our defined benefit pension plans totaling approximately $17,400 over the term of the agreement, which runs through 2016. In 2013, we made the contributions pursuant to this agreement of approximately $6,700. The remaining contributions under this agreement are approximately $10,700, of which approximately $3,700 was scheduled to be made in 2014. Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we may defer one or more of these payments, but we would be required to provide the PBGC with acceptable security for any deferred payments. In the first quarter of 2014, we elected to defer contributions for 2014 under the PBGC agreement and have provided the PBGC with the appropriate security.

Other Postretirement Benefits (OPEB)

In addition to providing pension benefits, we provide certain healthcare and life insurance benefits for certain domestic retired employees. We account for these plans in accordance with ASC 715-60. ASC 715-60 requires companies to accrue the estimated cost of providing postretirement benefits during the working careers of those employees who could become eligible for such benefits when they retire. We fund these benefits as the retirees submit claims.

Retiree medical benefits changes

In 2012, Century Aluminum of West Virginia ("CAWV") amended its postretirement medical benefit plan for all current and former salaried employees, their dependents and all bargaining unit employees who retired before October 1, 2012, and their dependents. Effective January 1, 2013, CAWV no longer provided retiree medical benefits to active salaried CAWV personnel or any other personnel who retired prior to October 1, 2012. CAWV has made no commitments as to the future status of retiree medical benefits for hourly personnel who are currently covered by an active medical program. For those retirees impacted by the changes and who have elected COBRA coverage, CAWV waived COBRA premiums through June 30, 2013.

The 2012 plan amendment resulted in the immediate recognition of any unamortized prior service cost benefits that were accrued in accumulated other comprehensive loss as of the date of the amendments.

Under the current Hawesville labor agreement, employees who retire during the term of the labor agreement have been divided into sub-groups based on attributes such as Medicare eligibility, hire date, age and years of service. Levels of benefits are defined for the sub-groups and range from no substantive change from the benefits provided under the previous labor agreement to replacement of the defined retiree medical benefit program with individual health reimbursement accounts for each eligible participant. The health reimbursement accounts will be funded by CAKY based on established rates per hour worked by each eligible participant. Eligible participants will be able to withdraw from their health reimbursement accounts to fund their own retiree medical coverage.

Obligations and Funded Status

The change in benefit obligations and change in plan assets as of December 31 are as follows:



	Pension						OPEB
	2014			2013			2014			2013
Change in benefit obligation:
Benefit obligation at beginning of year	$	238,319		$	174,954		$	134,652		$	149,263
Service cost	5,605			4,735			1,591			2,527
Interest cost	11,629			8,908			6,420			5,681
Plan amendments	(5,308		)	—			—			—
Medicare Part D	—			—			273			—
Actuarial loss (gain)	32,772			(21,539		)	17,669			(24,170		)
Acquisition	84,743			82,988			2,857			6,544
Benefits paid	(11,895		)	(11,727		)	(4,681		)	(5,193		)
Settlements	(19,573		)	—			—			—
Benefit obligation at end of year	$	336,292		$	238,319		$	158,781		$	134,652



	Pension						OPEB
	2014			2013			2014			2013
Change in plan assets:
Fair value of plan assets at beginning of year	$	199,304		$	96,234		$	—		$	—
Actual return on plan assets	16,118			21,675			—			—
Acquisition	115,982			81,992			—			—
Employer contributions	5,584			11,130			4,681			5,193
Benefits paid	(11,895		)	(11,727		)	(4,681		)	(5,193		)
Settlements	(19,573		)	—			—			—
Fair value of assets at end of year	$	305,520		$	199,304		$	—		$	—



	Pension						OPEB
	2014			2013			2014			2013
Funded status of plans:
Funded status	$	(30,772	)	$	(39,015	)	$	(158,781	)	$	(134,652	)
Amounts recognized in the Consolidated Balance Sheets:
Non-current assets	$	30,842		$	2,547		$	—		$	—
Current liabilities	(1,744		)	(1,714		)	(6,118		)	(5,368		)
Non-current liabilities	(59,870		)	(39,848		)	(152,663		)	(129,284		)
Net amount recognized	$	(30,772	)	$	(39,015	)	$	(158,781	)	$	(134,652	)
Amounts recognized in accumulated other comprehensive loss (pre-tax):
Net loss	$	63,360		$	45,642		$	79,720		$	65,754
Prior service cost (benefit)	1,335			376			(15,751		)	(19,595		)
	$	64,695		$	46,018		$	63,969		$	46,159

Our pension plans’ projected benefit obligation, accumulated benefit obligation, and fair value of plan assets as of December 31 are as follows:



	Projected Benefit Obligation				Accumulated Benefit Obligation				Fair Value of Plan assets
	2014		2013		2014		2013		2014		2013
Sebree hourly pension plan	$	90,320	$	80,369	$	90,320	$	80,369	$	84,432	$	82,916
CAWV hourly pension plan	61,989		66,866		61,989		66,852		55,273		64,905
Salaried pension plan	71,017		66,686		68,247		60,870		49,367		51,483
CASC pension plan	85,605		—		82,556		—		116,448		—
SERB plan	27,361		24,398		25,851		23,369		—		—
Total	$	336,292	$	238,319	$	328,963	$	231,460	$	305,520	$	199,304

The assets held in the Rabbi trust are restricted to funding the SERB plan. However, the Rabbi trust is classified as a general asset of the company (not plan assets) and therefore, the SERB plan is considered unfunded.

Components of net periodic benefit cost and other amounts recognized in other comprehensive loss:

Net Periodic Benefit Cost:



	Year Ended December 31,
	Pension									OPEB
	2014			2013			2012			2014			2013			2012
Service cost	$	5,605		$	4,735		$	2,802		$	1,591		$	2,527		$	1,790
Interest cost	11,629			8,908			6,871			6,420			5,681			5,512
Expected return on plan assets	(14,694		)	(10,592		)	(6,962		)	—			—			—
Amortization of prior service costs	77			113			137			(3,844		)	(3,995		)	(4,250		)
Amortization of net loss	1,907			3,152			3,642			3,704			5,022			6,195
Net periodic benefit cost	4,524			6,316			6,490			7,871			9,235			9,247
Settlements	4,701			—			—			—			—			—
Curtailment cost	263			(18		)	—			—			(20		)	—
Total net periodic benefit cost	$	9,488		$	6,298		$	6,490		$	7,871		$	9,215		$	9,247

Other changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss (pre-tax):



	Year Ended December 31,
	Pension						OPEB
	2014			2013			2014			2013
Net loss (gain)	$	24,326		$	(32,624	)	$	17,669		$	(24,171	)
Prior service cost (benefit)	1,299			—			—			—
Amortization of net loss, including recognition due to settlement	(6,608		)	(3,152		)	(3,704		)	(5,022		)
Amortization of prior service benefit (cost), including recognition due to curtailment	(340		)	(95		)	3,844			4,015
Total amount recognized in other comprehensive loss	18,677			(35,871		)	17,809			(25,178		)
Net periodic benefit cost	9,488			6,298			7,871			9,215
Total recognized in net periodic benefit cost and other comprehensive loss	$	28,165		$	(29,573	)	$	25,680		$	(15,963	)



Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost during 2015:
	Pension		OPEB
Amortization of net loss	$	3,601	$	4,712
Amortization of prior service cost (benefit)	99		(3,845		)

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



	Pension		OPEB
	2014	2013	2014	2013
Discount rate	4.05%	4.89%	4.00%	4.99%
Rate of compensation increase (1)	3%/4%	3%/4%	3%/4%	3%/4%
Measurement date	12/31/2014	12/31/2013	12/31/2014	12/31/2013


(1)	The rate of compensation increase is 3% per year for first four years and 4% per year for year five and thereafter.

Discount rate change in estimate

In 2012, we changed the approach that we use to determine the yield from the Citigroup Pension Liability Index to the Ryan Discount Rate Curve (the "Ryan Curve"). This change in the approach for determining our discount rate is considered a change in accounting estimate under ASC 250 "Accounting Changes and Error Corrections." In 2012, the discount rates determined using the Ryan Curve were approximately 25 basis points higher than those determined using the Citigroup Pension Liability Index, which lowered the plan projected benefit obligations for our pension and OPEB plans by approximately $10,000 as a result.

Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31:



	Pension						OPEB
	2014		2013		2012		2014		2013		2012
Measurement date	12/31/2013		12/31/2012		12/31/2011		12/31/2013		12/31/2012		12/31/2011
Fiscal year end	12/31/2014		12/31/2013		12/31/2012		12/31/2014		12/31/2013		12/31/2012
Discount rate	4.89	%	4.00	%	4.25	%	4.99	%	4.01	%	3.83	%
Rate of compensation increase (1)	3%/4%		3%/4%		3%/4%		3%/4%		3%/4%		3%/4%
Expected return on plan assets	7.25	%	7.25	%	8.00	%	—		—		—


(1)	For 2014, the rate of compensation increase is 3% per year for first four years and 4% per year for year five and thereafter. For 2013 and 2012, the rate of compensation increase is 3% per year for first five years and 4% per year for year six and thereafter.

For measurement purposes, medical cost inflation is initially estimated to be 8%, declining to 5% over seven years and thereafter.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care benefit obligations. A one-percentage-point change in the assumed health care cost trend rate would have had the following effects in 2014:



	1% Increase		1% Decrease
Effect on total of service and interest cost	$	1,258	$	(1,019	)
Effect on accumulated postretirement benefit obligation	24,815		(20,140		)

Century 401(k) Plans

We sponsor a tax-deferred savings plan under which eligible domestic employees may elect to contribute specified percentages of their compensation with Century. We match a portion of participants' contributions to the savings plan. Employee and matching contributions are considered fully vested immediately upon participation in the plan.



	2014		2013		2012
Company matching contribution to defined contribution (401(k)) plans	$	1,547	$	1,138	$	748

Benefit Plan Assets

Pension Plan Investment Policy and Strategy

We have established the defined benefit pension plans (the "Pension Plans") as a retirement vehicle for the plan participant employees and as a funding vehicle to secure promised benefits. The Pension Plans’ assets are invested in a prudent manner for the exclusive purpose of providing benefits to participants. Other objectives are to:


•	Provide a total return that, over the long term, provides sufficient assets to fund the pension plan liabilities subject to a level of risk, contributions and pension expense deemed appropriate by the company.


•	Minimize, where possible, pension expense volatility, and inclusion of liability driven investing as an investment strategy when appropriate. As the funding ratio improves, the objectives will evolve to minimize the funded status volatility.


•	Diversify investments within asset classes to reduce the impact of losses in single investments.

The assets of the Pension Plans are invested in compliance with ERISA, as amended, and any subsequent applicable regulations and laws.

Performance

Our performance objective is to outperform the return of weighing passive investment alternatives by the policy target allocations after fees at a comparable level of risk. This investment objective is expected to be achieved over the long term and is measured over rolling multi-year periods. Peer-relative performance comparisons will also be considered especially when performance deviates meaningfully from market indexes. Investment objectives for each asset class are included below.

Policy Portfolio

Asset allocation policy is the principal method for achieving the Pension Plans' investment objectives stated above. The Pension Plans’ long-term strategic asset allocation policy targets are as follows:



	Pension Plan Asset Allocation
	Policy Target		December 31, 2014		December 31, 2013
Equities:
U.S. equities	50	%	42	%	43	%
International equities	15	%	18	%	20	%
Fixed income	35	%	40	%	37	%
			100	%	100	%

U.S. and international equities are held for their long-term expected return premium over fixed income investments and inflation. Fixed income is held for diversification relative to equities.

The strategic role of U.S. and international equities is to:


•	Provide higher expected returns of the major asset classes.


•	Maintain a diversified exposure within the U.S. and international stock markets through the use of multi-manager portfolio strategies.


•	Achieve returns in excess of passive indexes through the use of active investment managers and strategies.

The strategic role of fixed income is to:


•	Diversify the Pension Plans’ equity exposure by investing in fixed income securities that exhibit a low correlation to equities, thereby lowering the overall return volatility of the entire investment portfolio.


•	Maintain a diversified exposure within the U.S. fixed income market through the use of multi-manager portfolio strategies.


•	Achieve returns in excess of passive indexes through the use of active investment managers and strategies.

The long-term strategic asset allocation policy is reviewed regularly or whenever significant changes occur to Century’s or the Pension Plans' financial position and liabilities.

Expected rate-of-return assumption

We are currently using a 7.25% long-term rate of return on plan assets for the development of the net periodic cost for the defined benefit pension plans. The rate was selected by taking into account our expected asset mix and is based on historical performance as well as expected future rates of return on plan assets.

Fair Value Measurements of Pension Plan assets

We measured the fair value of our Pension Plans’ assets in accordance with ASC 820. For additional information about fair value measurements, see Note 4 Fair value measurements.

The following table sets forth by level within the ASC 820 fair value hierarchy our Pension Plans' assets. As required by GAAP for fair value measurements and disclosures, these assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and the placement within the fair value hierarchy levels.

Fair Value of Pension Plans’ assets included under the fair value hierarchy:



As of December 31, 2014	Level 1		Level 2		Level 3		Total
Equities:
U.S. equities	$	79,148	$	—	$	—	$	79,148
International equities	33,720		—		—		33,720
Fixed income	76,204		—		—		76,204
Plan receivable (1)	—		—		116,448		116,448
Total	$	189,072	$	—	$	116,448	$	305,520
As of December 31, 2013
Equities:
U.S. equities	$	86,323	$	—	$	—	$	86,323
International equities	40,093		—		—		40,093
Fixed income	72,888		—		—		72,888
Total	$	199,304	$	—	$	—	$	199,304


(1)	Represents the receivable to the Century Aluminum of South Carolina defined benefit plan related to pension funding obligations under the Stock Purchase Agreement. Amount is subject to final approval by the parties which is expected in the second quarter of 2015.

Our Pension Plans’ assets are held in certain mutual funds. The fair value of the mutual funds is based on the Net Asset Value ("NAV") which is calculated every business day. The value of the underlying securities within the mutual funds are determined as follows:


•	U.S. listed equities; equity and fixed income options: Last sale price; last bid price if no last sale price;


•	U.S. over-the-counter equities: Official closing price; last bid price if no closing price;


•	Foreign equities: Official closing price, where available, or last sale price; last bid price if no official closing price; and


•	Municipal bonds, US bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price.

In December 2014, we entered into the Stock Purchase Agreement to acquire Alcoa’s 50.3% stake in Mt. Holly. As part of the transaction, Alcoa and Century agreed to spinoff and fully fund a defined benefit pension plan for eligible current and former Mt. Holly employees. We established a pension plan for the Mt. Holly plan participants with a receivable for the estimated amount required to meet the benefit obligations required under the Stock Purchase Agreement. See Note 2 Business acquisitions for additional information about the pension funding requirements. The plan receivable is considered a Level 3 asset because determining the fair value requires significant unobservable inputs, including census data and various actuarial assumptions.

Our other postretirement benefit plans are unfunded. We fund these benefits as the retirees submit claims.

Pension and OPEB Cash Flows

Contributions

We expect to make the following contributions for 2015:



	2015
Expected pension plan contributions	$	5,306
Expected OPEB benefits payments	6,118

Estimated Future Benefit Payments

The following table provides the estimated future benefit payments for the pension and other postretirement benefit plans:



	Pension Benefits		OPEB Benefits
2015	$	17,487	$	6,118
2016	17,965		6,605
2017	18,191		7,212
2018	19,958		7,691
2019	19,830		8,216
2020 – 2024	97,247		43,357

Participation in Multiemployer Pension Plans

We contribute to one multiemployer defined benefit pension plan under the terms of a collective-bargaining agreement that covers our union-represented employees at Hawesville. Currently, we do not have any plans to withdraw from or curtail participation in this plan. The risks of participating in a multiemployer plan are different from single-employer plans in the following aspects:


•	Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.


•	If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.


•	If a participating employer chooses to stop participating in a multiemployer plan, the employer may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The union-represented employees at Hawesville are part of a United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USWA") sponsored multiemployer plan. Our contributions to the plan are determined at a fixed rate per hour worked.

Century’s participation in the plan for the year ended December 31, 2014, is outlined in the table below.



Fund	Steelworkers Pension Trust
EIN / PN	23-6648508/499
Pension Protection Act Zone Status 2014 (1)	Green
Pension Protection Act Zone Status 2013 (1)	Green
Subject to Financial Improvement/Rehabilitation Plan	No
Contributions of Century Aluminum 2014	$2,164
Contributions of Century Aluminum 2013	$2,171
Contributions of Century Aluminum 2012	$2,282
Withdrawal from Plan Probable	No
Surcharge Imposed	No
Expiration Date of Collective Bargaining Agreement	April 1, 2015

(1)

The most recent Pension Protection Act zone status available in 2014 and 2013 is for the plan's year-end December 31, 2013 and December 31, 2012, respectively. The zone status is based on information that Century received from the plan as well as publicly available information per the Department of Labor and is certified by the plan’s actuary. Among other factors, plans in the green zone are at least 80 percent funded.