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Pension Plans And Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2011
Pension Plans And Other Postretirement Benefits [Abstract] |
Pension Plans And Other Postretirement Benefits | NOTE 9 - Pension Plans and Other Postretirement Benefits The Company has the following retirement plans: a defined contribution plan; a 401(k) plan; a defined benefit plan for employees hired on or before December 31, 1998; and certain employees participate in a supplemental defined contribution plan or a supplemental defined benefit plan or both. After completing the first year of employment, all employees participate in the defined contribution plan. Under this plan, the Company makes contributions to each participant's account based on eligible compensation and years of service. As of the time of this Annual Report on Form 10-K, contribution percentages are as follows: (1) employees hired on or after April 1, 1997, 5% of eligible compensation; (2) employees hired prior to April 1, 1997 with less than 15 years of service, 6% of eligible compensation; and (3) employees hired prior to April 1, 1997 with 15 or more years of service, 7% of eligible compensation. Participants are 100% vested in this plan after 3 years of service. All employees of the Company participate in a 401(k) plan. Beginning January 1, 2002, the Company automatically contributes 3% of eligible compensation to each employee's account, which is 100% vested at the time of the contribution. In addition, employees may voluntarily contribute up to 20% of their eligible compensation into their account. Effective April 1, 2002, participants stopped accruing benefits under the defined benefit and supplemental defined benefit plans but continue to retain the benefits they had accrued to date. Amounts earned under the defined benefit and supplemental defined benefit plans were frozen based on years of service and the highest 36 consecutive months of earnings while under the plan (through March 31, 2002). Participants were 100% vested in these defined benefit plans effective April 1, 2007. The Company's policy with respect to funding the defined benefit plan is to contribute to the plan trust amounts which are actuarially determined to provide the plan with sufficient assets to meet future benefit payments consistent with the funding requirements of federal laws and regulations. For the defined contribution, 401(k) and defined benefit plans, investments have been set aside in separate trust funds. The supplemental retirement plans are unfunded, non-qualified plans. Employees whose compensation exceeds the limits covered under the qualified plans participate in an unfunded, non-qualified defined contribution plan. The Company accrues an amount for each participant based on their compensation, years of service and account balance. Participants are 100% vested in this plan after 3 years of service. Total expense recorded for the qualified and non-qualified defined contribution, 401(k), defined benefit and supplemental retirement plans was $12,353, $10,427 and $11,717 for the years ended December 31, 2011, 2010 and 2009, respectively. Qualified Defined Contribution Plan, 401(k) Plan and Non-qualified Defined Contribution Plan Pension benefits under the qualified defined contribution plan are fully funded. Contributions to employees' accounts under this plan were expensed in the Company's Consolidated Statements of Operations. Investments for this plan are set aside in a trust fund and none of the trust fund assets for the plan have been invested in shares of HMEC's common stock. The 401(k) plan is fully funded. Contributions to employees' accounts under this plan were expensed in the Company's Consolidated Statements of Operations. Investments for this plan are set aside through an annuity contract underwritten by the Company's principal life insurance subsidiary. The annuity contract includes a fixed return account option and several variable return account options, with the account options selected by the individual plan participants for both the Company and participant portions contributed. One of the variable return account options invests in shares of HMEC common stock. The non-qualified defined contribution plan is an unfunded plan. Under this plan, distributions are funded at the time payments are made to retirees. Contributions to employees' accounts under the qualified defined contribution plan, the 401(k) plan and the non-qualified defined contribution plan, as well as total assets of the plans, were as follows:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Qualified defined contribution plan: |  |  |  |  |  |  |  |  |  |  |  |
Contributions to employees' accounts |  | $ | 4,864 |  |  | $ | 5,252 |  |  | $ | 5,516 |
Total assets at the end of the year (1) |  |  | 149,612 |  |  |  | 148,897 |  |  |  | 148,832 |
401(k) plan: |  |  |  |  |  |  |  |  |  |  |  |
Contributions to employees' accounts |  |  | 2,856 |  |  |  | 3,011 |  |  |  | 3,413 |
Total assets at the end of the year (1) |  |  | 111,370 |  |  |  | 117,814 |  |  |  | 112,470 |
Non-qualified defined contribution plan: |  |  |  |  |  |  |  |  |  |  |  |
Contributions to employees' accounts |  |  | - |  |  |  | - |  |  |  | - |
Total assets at the end of the year |  |  | - |  |  |  | - |  |  |  | - |
(1) | As of the date of this Annual Report on Form 10-K, the assets of the plans as of December 31, 2011 are unaudited.
Defined Benefit Plan and Supplemental Retirement Plans The following tables summarize the funding status of the defined benefit and supplemental retirement pension plans as of December 31, 2011, 2010 and 2009 (the measurement dates) and identify (1) the assumptions used to determine the projected benefit obligation and (2) the components of net pension cost for the defined benefit plan and supplemental retirement plans for the following periods:
|  | Defined Benefit Plan |  |  | Supplemental Defined Benefit Plans |
|  | December 31, |  |  | December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |  |  | 2011 |  |  | 2010 |  |  | 2009 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of year |  | $ | 39,553 |  |  | $ | 38,488 |  |  | $ | 37,448 |  |  | $ | 16,801 |  |  | $ | 15,707 |  |  | $ | 14,818 |
Service cost |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (57 | )
Interest cost |  |  | 1,658 |  |  |  | 1,877 |  |  |  | 2,150 |  |  |  | 799 |  |  |  | 841 |  |  |  | 886 |
Plan amendments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 529 |
Actuarial loss (gain) |  |  | 4,650 |  |  |  | 2,817 |  |  |  | 2,640 |  |  |  | 1,755 |  |  |  | 1,401 |  |  |  | 667 |
Benefits paid |  |  | (1,664 | ) |  |  | (3,629 | ) |  |  | (3,750 | ) |  |  | (1,343 | ) |  |  | (1,148 | ) |  |  | (1,136 | )
Settlements |  |  | (2,461 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Projected benefit obligation at end of year |  | $ | 41,736 |  |  | $ | 39,553 |  |  | $ | 38,488 |  |  | $ | 18,012 |  |  | $ | 16,801 |  |  | $ | 15,707 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 29,273 |  |  | $ | 29,006 |  |  | $ | 25,173 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Actual return on plan assets |  |  | 911 |  |  |  | 2,812 |  |  |  | 5,154 |  |  |  | - |  |  |  | - |  |  |  | - |
Employer contributions |  |  | 5,926 |  |  |  | 1,307 |  |  |  | 2,700 |  |  |  | 1,343 |  |  |  | 1,148 |  |  |  | 1,136 |
Benefits paid |  |  | (1,664 | ) |  |  | (3,629 | ) |  |  | (3,750 | ) |  |  | (1,343 | ) |  |  | (1,148 | ) |  |  | (1,136 | )
Expenses paid |  |  | (332 | ) |  |  | (223 | ) |  |  | (271 | ) |  |  | - |  |  |  | - |  |  |  | - |
Settlements |  |  | (2,461 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Fair value of plan assets at end of year |  | $ | 31,653 |  |  | $ | 29,273 |  |  | $ | 29,006 |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Funded status |  | $ | (10,083 | ) |  | $ | (10,280 | ) |  | $ | (9,483 | ) |  | $ | (18,012 | ) |  | $ | (16,801 | ) |  | $ | (15,707 | )
Prepaid (accrued) benefit expense |  | $ | 11,594 |  |  | $ | 8,270 |  |  | $ | 7,747 |  |  | $ | (13,197 | ) |  | $ | (12,918 | ) |  | $ | (12,855 | )
Amounts recognized in Consolidated Balance Sheets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other liabilities |  | $ | (10,083 | ) |  | $ | (10,280 | ) |  | $ | (9,483 | ) |  | $ | (18,012 | ) |  | $ | (16,801 | ) |  | $ | (15,707 | )
Total amount recognized in Consolidated Balance Sheets |  | $ | (10,083 | ) |  | $ | (10,280 | ) |  | $ | (9,483 | ) |  | $ | (18,012 | ) |  | $ | (16,801 | ) |  | $ | (15,707 | )
Amounts recognized in accumulated other comprehensive income (loss) ("AOCI"): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 249 |  |  | $ | 373 |  |  | $ | 498 |
Net actuarial loss |  |  | 21,677 |  |  |  | 18,550 |  |  |  | 17,230 |  |  |  | 4,566 |  |  |  | 3,510 |  |  |  | 2,354 |
Total amount recognized in AOCI |  | $ | 21,677 |  |  | $ | 18,550 |  |  | $ | 17,230 |  |  | $ | 4,815 |  |  | $ | 3,883 |  |  | $ | 2,852 |
Information for pension plans with an accumulated benefit obligation greater than plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Projected benefit obligation |  | $ | 41,736 |  |  | $ | 39,553 |  |  | $ | 38,488 |  |  | $ | 18,012 |  |  | $ | 16,801 |  |  | $ | 15,707 |
Accumulated benefit obligation |  |  | 41,736 |  |  |  | 39,553 |  |  |  | 38,488 |  |  |  | 18,012 |  |  |  | 16,801 |  |  |  | 15,707 |
Fair value of plan assets |  |  | 31,653 |  |  |  | 29,273 |  |  |  | 29,006 |  |  |  | - |  |  |  | - |  |  |  | - |
The change in the Company's AOCI for the defined benefit plan was $3,127, $1,320 and $(1,602), for the years ended December 31, 2011, 2010 and 2009, respectively. The changes in 2011 and 2010 were primarily attributable to revisions of the discount rate assumption. In 2009, the change was attributable primarily to the performance in plan assets.
|  |  |  |  | Supplemental |
|  | Defined Benefit Plan |  |  | Defined Benefit Plans |
|  | Year Ended December 31, |  |  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |  |  | 2011 |  |  | 2010 |  |  | 2009 |
Components of net periodic pension (income) expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit accrual |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | (57 | )
Other expenses |  |  | 250 |  |  |  | 250 |  |  |  | 250 |  |  |  | - |  |  |  | - |  |  |  | - |
Interest cost |  |  | 1,658 |  |  |  | 1,877 |  |  |  | 2,150 |  |  |  | 799 |  |  |  | 841 |  |  |  | 886 |
Expected return on plan assets |  |  | (2,419 | ) |  |  | (2,388 | ) |  |  | (2,213 | ) |  |  | - |  |  |  | - |  |  |  | - |
Settlement loss |  |  | 1,290 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Amortization of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 125 |  |  |  | 124 |  |  |  | 31 |
Actuarial loss |  |  | 1,824 |  |  |  | 1,045 |  |  |  | 1,323 |  |  |  | 698 |  |  |  | 246 |  |  |  | 196 |
Net periodic pension expense |  | $ | 2,603 |  |  | $ | 784 |  |  | $ | 1,510 |  |  | $ | 1,622 |  |  | $ | 1,211 |  |  | $ | 1,056 |
Changes in plan assets and benefit obligations included in other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 529 |
Net actuarial loss (gain) |  |  | 4,951 |  |  |  | 2,365 |  |  |  | (279 | ) |  |  | 1,755 |  |  |  | 1,401 |  |  |  | 667 |
Amortization of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (125 | ) |  |  | (124 | ) |  |  | (31 | )
Actuarial loss |  |  | (1,824 | ) |  |  | (1,045 | ) |  |  | (1,323 | ) |  |  | (698 | ) |  |  | (246 | ) |  |  | (196 | )
Total recognized in other comprehensive income (loss) |  | $ | 3,127 |  |  | $ | 1,320 |  |  | $ | (1,602 | ) |  | $ | 932 |  |  | $ | 1,031 |  |  | $ | 969 |
Weighted-average assumptions used to determine expense: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 4.58 | % |  |  | 5.27 | % |  |  | 6.27 | % |  |  | 4.92 | % |  |  | 5.54 | % |  |  | 6.35 | %
Expected return on plan assets |  |  | 7.50 | % |  |  | 7.50 | % |  |  | 7.50 | % |  |  | * |  |  |  | * |  |  |  | * |
Annual rate of salary increase |  |  | * |  |  |  | * |  |  |  | * |  |  |  | * |  |  |  | * |  |  |  | * |
Weighted-average assumptions used to determine benefit obligations as of December 31: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 3.66 | % |  |  | 4.58 | % |  |  | 5.27 | % |  |  | 3.86 | % |  |  | 4.92 | % |  |  | 5.54 | %
Expected return on plan assets |  |  | 7.50 | % |  |  | 7.50 | % |  |  | 7.50 | % |  |  | * |  |  |  | * |  |  |  | * |
Annual rate of salary increase |  |  | * |  |  |  | * |  |  |  | * |  |  |  | * |  |  |  | * |  |  |  | * |
* | Not applicable.
The discount rates at December 31, 2011 were based on the average yield for long-term, high-grade securities available during the benefit payout period. To set its discount rate, the Company looks to leading indicators, including the Citigroup Pension Discount Curve. The assumption for the long-term rate of return on plan assets was determined by considering actual investment experience during the lifetime of the plan, balanced with reasonable expectations of future growth considering the various classes of assets and percentage allocation for each asset class. The Company has an investment policy for the defined benefit pension plan that aligns the assets within the plan's trust to an approximate 50% equity and 50% stable value funds allocation. Management believes this allocation will produce the targeted long-term rate of return on assets necessary for payment of future benefit obligations, while providing adequate liquidity for payments to current beneficiaries. Assets are reviewed against the defined benefit pension plan's investment policy and the trustee has been directed to adjust invested assets at least quarterly to maintain the target allocation percentages. Fair values of the equity security funds and fixed income funds have been determined from public quotations. The following table presents the fair value hierarchy for the Company's defined benefit pension plan assets, excluding cash held, as of December 31, 2011.
|  |  | $000,000 |  |  | $000,000 |  |  | $000,000 |  |  | $000,000
|  |  |  |  | Fair Value Measurements at
|  |  |  |  | Reporting Date Using
|  | Total |  |  | Level 1 |  | Level 2 |  |  | Level 3
December 31, 2011 |  |  |  |  |  |  |  |  |  |  |  |
Asset category |  |  |  |  |  |  |  |  |  |  |  |
Equity security funds (1) |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | $ 12,784 |  |  | $ - |  |  | $ 12,784 |  |  | $ -
International |  |  | 2,968 |  |  | - |  |  | 2,968 |  |  | -
Fixed income funds |  |  | 15,756 |  |  | - |  |  | 15,756 |  |  | -
Total |  |  | $ 31,508 |  |  | $ - |  |  | $ 31,508 |  |  | $ -
December 31, 2010 |  |  |  |  |  |  |  |  |  |  |  |
Asset category |  |  |  |  |  |  |  |  |  |  |  |
Equity security funds (1) |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | $ 11,630 |  |  | $ - |  |  | $ 11,630 |  |  | $ -
International |  |  | 2,923 |  |  | - |  |  | 2,923 |  |  | -
Fixed income funds |  |  | 14,607 |  |  | - |  |  | 14,607 |  |  | -
Total |  |  | $ 29,160 |  |  | $ - |  |  | $ 29,160 |  |  | $ -
(1) | None of the trust fund assets for the defined benefit pension plan have been invested in shares of HMEC's common stock.
There were no Level 3 assets held during the years ended December 31, 2011 and 2010. There is a minimum funding requirement of approximately $1,000 for the Company's defined benefit plan in 2012. The Company expects to contribute approximately $2,300 to the defined benefit plan and expects to contribute approximately $1,300 to the supplemental retirement plans in 2012. In addition, the Company expects amortization of net losses of $2,367 and $980 for the defined benefit plan and the supplemental retirement plans, respectively, and expects amortization of prior service cost of $124 for the supplemental retirement plans to be included in net periodic pension expense in 2012. Postretirement Benefits Other than Pensions In addition to providing pension benefits, the Company also provides certain health care and life insurance benefits to eligible employees. Only employees who were at least age 55 with at least 20 years of service by December 31, 2008 are eligible to participate in this program. Postretirement benefits other than pensions of active and retired employees are accrued as expense over the employees' service years. Effective January 1, 2007, the Company eliminated the previous group health insurance benefits for retirees 65 years of age and over and established a Health Reimbursement Account ("HRA") for each eligible participant. Health care benefits for eligible retirees under 65 years of age will continue to be provided as a bridge to Medicare eligibility. Eligible participants will receive a one-time credit of $10 to their HRA account to use for covered expenses incurred on or after age 65. As of December 31, 2006, HRA accounts were established for eligible participants and totaled $7,310. As of December 31, 2011, the balance of the HRA accounts was $3,165. Also, the new plan does not provide life insurance benefits to individuals who retired after December 31, 1993. As a result of the changes in the plan for other postretirement benefits, the Company recorded a reduction in its expenses of $379, $350 and $339 for the years ended December 31, 2011, 2010 and 2009, respectively. The following table presents the funded status of postretirement benefits other than pensions of active and retired employees (including employees on disability more than 2 years) as of December 31, 2011, 2010 and 2009 (the measurement dates) reconciled with amounts recognized in the Company's Consolidated Balance Sheets:
|  | December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Change in accumulated postretirement benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |
Accumulated postretirement benefit obligations at beginning of year |  | $ | 3,489 |  |  | $ | 4,470 |  |  | $ | 4,549 |
Changes during fiscal year |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  |  | - |  |  |  | - |  |  |  | - |
Interest cost |  |  | 122 |  |  |  | 170 |  |  |  | 250 |
Medicare prescription reimbursements |  |  | - |  |  |  | - |  |  |  | - |
Employer payments net of participant contributions |  |  | (526 | ) |  |  | (744 | ) |  |  | (616 | )
Actuarial (gain) loss |  |  | 241 |  |  |  | (407 | ) |  |  | 287 |
Accumulated postretirement benefit obligations at end of year |  | $ | 3,326 |  |  | $ | 3,489 |  |  | $ | 4,470 |
Unfunded status |  | $ | (3,326 | ) |  | $ | (3,489 | ) |  | $ | (4,470 | )
Amounts recognized in Consolidated Balance Sheets: |  |  |  |  |  |  |  |  |  |  |  |
Other liabilities |  | $ | (3,326 | ) |  | $ | (3,489 | ) |  | $ | (4,470 | )
Total amount recognized in Consolidated Balance Sheets |  | $ | (3,326 | ) |  | $ | (3,489 | ) |  | $ | (4,470 | )
Amounts recognized in accumulated other comprehensive income (loss) ("AOCI"): |  |  |  |  |  |  |  |  |  |  |  |
Prior service credit |  | $ | - |  |  | $ | - |  |  | $ | - |
Net actuarial gain |  |  | (1,355 | ) |  |  | (2,097 | ) |  |  | (2,210 | )
Total amount recognized in AOCI |  | $ | (1,355 | ) |  | $ | (2,097 | ) |  | $ | (2,210 | )
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Components of net periodic benefit: |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | - |  |  | $ | - |  |  | $ | - |
Interest cost |  |  | 122 |  |  |  | 170 |  |  |  | 250 |
Amortization of prior service cost |  |  | - |  |  |  | - |  |  |  | - |
Amortization of prior gain |  |  | (501 | ) |  |  | (520 | ) |  |  | (589 | )
Net periodic income |  | $ | (379 | ) |  | $ | (350 | ) |  | $ | (339 | )
The Company expects to contribute approximately $519 to the postretirement benefit plans other than pensions in 2012. In addition, the Company expects amortization of net gains of $522 to be included in net periodic pension expense in 2012. Sensitivity Analysis and Assumptions for Postretirement Benefits Other than Pensions A one percentage point change in the assumed health care cost trend rate for each year would change the accumulated postretirement benefit obligations as follows:
|  | December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Accumulated postretirement benefit obligations |  |  |  |  |  |  |  |  |  |  |  |
Effect of a one percentage point increase |  | $ | 53 |  |  | $ | 59 |  |  | $ | 91 |
Effect of a one percentage point decrease |  |  | (50 | ) |  |  | (56 | ) |  |  | (85 | )
Service and interest cost components of the net periodic postretirement benefit expense |  |  |  |  |  |  |  |  |  |  |  |
Effect of a one percentage point increase |  | $ | 2 |  |  | $ | 2 |  |  | $ | 4 |
Effect of a one percentage point decrease |  |  | (1 | ) |  |  | (2 | ) |  |  | (4 | )
Weighted-average assumptions used to determine benefit obligations as of December 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 2.95 | % |  |  | 3.68 | % |  |  | 4.49 | %
Healthcare cost trend rate |  |  | 8.00 | % |  |  | 8.00 | % |  |  | 8.50 | %
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.00 | %
Year the rate is assumed to reach the ultimate trend rate |  |  | 2022 |  |  |  | 2021 |  |  |  | 2017 |
Expected return on plan assets |  |  | * |  |  |  | * |  |  |  | * |
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  |  | 3.68 | % |  |  | 4.49 | % |  |  | 5.98 | %
Healthcare cost trend rate |  |  | 8.00 | % |  |  | 8.50 | % |  |  | 9.00 | %
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 5.50 | %
Year the rate is assumed to reach the ultimate trend rate |  |  | 2021 |  |  |  | 2017 |  |  |  | 2013 |
Expected return on plan assets |  |  | * |  |  |  | * |  |  |  | * |
* | Not applicable.
The discount rates at December 31, 2011 were based on the average yield for long-term, high-grade securities available during the benefit payout period. To set its discount rate, the Company looks to leading indicators, including the Citigroup Pension Discount Curve. Estimated Future Benefit Payments The Company's defined benefit plan may be subject to settlement accounting. Assumptions for both the number of individuals retiring in a calendar year and their elections regarding lump sum distributions are significant factors impacting the payout patterns for each of the plans below. Therefore, actual results could vary from the estimates shown. Estimated future benefit payments as of December 31, 2011 are as follows:
|  | 2012 |  |  | 2013 |  |  | 2014 |  |  | 2015 |  |  | 2016 |  |  | 2017-2021 |
Pension plans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Defined benefit plan |  | $ | 5,545 |  |  | $ | 4,100 |  |  | $ | 3,832 |  |  | $ | 3,733 |  |  | $ | 2,995 |  |  | $ | 13,723 |
Supplemental retirement plans |  |  | 1,313 |  |  |  | 1,308 |  |  |  | 1,301 |  |  |  | 1,293 |  |  |  | 1,285 |  |  |  | 6,172 |
Other postretirement benefits |  |  | 519 |  |  |  | 475 |  |  |  | 422 |  |  |  | 413 |  |  |  | 355 |  |  |  | 1,110 |

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