Postretirement and Other Benefits

North American Pension and Postretirement Healthcare and Life Insurance Benefits

The U.S. operations have defined benefit retirement plans that cover certain full-time employees. Retirement benefits are based on either a cash balance benefit formula or a final average pay formula for certain employees who were "grandfathered" and retained retirement benefits under the terms of the plan prior to its amendment to include a cash balance benefit formula. Benefits related to the U.S. defined benefit and pension plan are frozen for all employees.

The U.S. operations also have unfunded healthcare and life insurance benefit plans, or OPEB plans, which cover certain of its retirees through age 65. Some employees who retained benefits under the terms of the Company's plans prior to certain past amendments receive retiree healthcare coverage at rates subsidized by the Company. For other eligible employees, retiree healthcare coverage access is offered at full cost to the retiree. The postretirement healthcare plans include a limit on the Company's share of costs for current and future retirees. The U.S. operations' retiree life insurance plans are noncontributory. The Company's Canadian postretirement benefits liability is immaterial and therefore is not included in these disclosures.

French Pension Benefits

In France, employees are covered under a government-administered program. In addition, the Company's French operations sponsor retirement indemnity plans, which pay a lump sum retirement benefit to all of its permanent employees who retire. In addition, the Company's French operations sponsor a supplemental executive pension plan. Plan assets are principally invested in the general asset portfolio of a French insurance company.

U.S. and French Pension and U.S. Other Postretirement Benefit Disclosures

The U.S. pension and OPEB plans and French pension plans accounted for the majority of the Company's total plan assets and total ABO at December 31, 2014 for the Company and all of its consolidated subsidiaries.

The Company uses a measurement date of December 31 for its pension plans in the United States and France and other postretirement healthcare and life insurance benefit plans in the United States. The funded status of these plans as of December 31, 2014 and 2013 was as follows ($ in millions):



	Pension Benefits												OPEB Benefits
	United States						France						United States
	2014			2013			2014			2013			2014			2013
Change in Projected Benefit Obligation, or PBO:
PBO at beginning of year	$	121.6		$	132.6		$	37.7		$	33.6		$	2.8		$	5.4
Service cost	—			—			1.3			1.3			—			0.1
Interest cost	5.6			5.1			0.8			0.8			0.1			0.1
Actuarial (gain) loss	14.6			(8.8		)	4.4			2.6			(0.1		)	(0.7		)
Participant contributions	—			—			—			—			0.2			0.3
Plan amendment	(2.1		)	—			—			—			(0.6		)	(1.7		)
Gross benefits paid	(7.3		)	(7.3		)	(1.7		)	(2.0		)	(0.6		)	(0.7		)
Currency translation effect	—			—			(5.2		)	1.4			—			—
PBO at end of year	$	132.4		$	121.6		$	37.3		$	37.7		$	1.8		$	2.8
Change in Plan Assets:
Fair value of plan assets at beginning of year	126.0			120.4			12.3			13.4			—			—
Actual return on plan assets	12.3			12.2			0.5			(0.4		)	—			—
Employer contributions	—			0.7			1.0			0.8			0.4			0.4
Participant contributions	—			—			—			—			0.2			0.3
Plan amendment	(2.1		)	—			—			—			—			—
Gross benefits paid	(7.3		)	(7.3		)	(2.2		)	(2.0		)	(0.6		)	(0.7		)
Currency translation effect	—			—			(1.4		)	0.5			—			—
Fair value of plan assets at end of year	$	128.9		$	126.0		$	10.2		$	12.3		$	—		$	—
Funded status at end of year	$	(3.5	)	$	4.4		$	(27.1	)	$	(25.4	)	$	(1.8	)	$	(2.8	)

The PBO and Accumulated Benefit Obligations (ABO) exceeded the fair value of pension plan assets for the Company's French defined benefit pension plans as of December 31, 2014 and 2013 and U.S. defined benefit plan as of December 31, 2014 as follows ($ in millions):



	United States				France
	2014		2013		2014		2013
PBO	$	132.4	$	121.6	$	37.3	$	37.7
ABO	132.4		121.6		32.2		31.2
Fair value of plan assets	128.9		126.0		10.2		12.3

As of December 31, 2014, the pre-tax amounts in accumulated other comprehensive income that have not been recognized as components of net periodic benefit cost for the U.S. and French pension plans and other postretirement benefit plans in the United States are as follows ($ in millions):



	Pension Benefits					OPEB Benefits
	United States		France			United States
Accumulated loss	$	42.1	$	19.0		$	1.0
Prior service credit	—		(4.4		)	(1.1		)
Accumulated other comprehensive loss (income)	$	42.1	$	14.6		$	(0.1	)

The amounts in accumulated other comprehensive loss at December 31, 2014, which are expected to be recognized as components of U.S. and French net periodic benefit cost in 2015 are as follows ($ in millions):



	Pension Benefits						OPEB Benefits
	United States			France			United States
Amortization of accumulated loss	$	(5.5	)	$	(1.5	)	$	(0.3	)
Amortization of prior service credit	—			0.3			0.6
Total	$	(5.5	)	$	(1.2	)	$	0.3

Actuarial assumptions are used to determine the Company's benefit obligations. The discount rate represents the interest rate used to determine the present value of future cash flows currently expected to be required to settle pension obligations. The discount rate fluctuates from year to year based on current market interest rates for high-quality, fixed-income investments. The Company also evaluates the expected average duration of its pension obligations in determining its discount rate. An assumed long-term rate of compensation increase is also used to determine the PBO. The weighted average assumptions used to determine benefit obligations as of December 31, 2014 and 2013 were as follows:



	Pension Benefits								OPEB Benefits
	United States				France				United States
	2014		2013		2014		2013		2014		2013
Discount rate	3.94	%	4.78	%	1.17	%	2.38	%	3.82	%	4.30	%
Rate of compensation increase	—	%	—	%	1.90	%	2.50	%	3.50	%	3.50	%

The U.S. postretirement healthcare plan provides for benefits to be limited to a cost ceiling which has already been reached. Therefore, no increases in the health care cost trend rates are included in the measurement of the plan's benefit obligation.

The components of net pension and OPEB benefit costs for U.S. employees and net pension benefit costs for French employees during the years ended December 31, 2014, 2013 and 2012 were as follows ($ in millions):



	U.S. Pension Benefits									French Pension Benefits									U.S. OPEB Benefits
	2014			2013			2012			2014			2013			2012			2014			2013			2012
Service cost	$	—		$	—		$	—		$	1.3		$	1.3		$	0.9		$	—		$	0.1		$	0.1
Interest cost	5.6			5.1			5.5			0.8			0.8			1.0			0.1			0.1			0.4
Expected return on plan assets	(7.4		)	(7.1		)	(7.6		)	(0.4		)	(0.4		)	(0.6		)	—			—			—
Amortizations and other	4.2			6.7			5.9			0.7			0.5			0.4			(0.5		)	(0.7		)	(0.3		)
Curtailment benefit	—			—			—			—			—			—			(2.7		)	(3.2		)	—
Net periodic benefit cost	$	2.4		$	4.7		$	3.8		$	2.4		$	2.2		$	1.7		$	(3.1	)	$	(3.7	)	$	0.2

Assumptions are used to determine net periodic benefit costs. In addition to the discount rate and rate of compensation increase, which are used to determine benefit obligations, an expected long-term rate of return on plan assets is also used to determine net periodic pension benefit costs. The weighted average assumptions used to determine net periodic benefit costs for the years ended December 31, 2014, 2013 and 2012 were as follows:



	Pension Benefits												OPEB Benefits
	United States						France						United States
	2014		2013		2012		2014		2013		2012		2014		2013		2012
Discount rate	4.78	%	4.00	%	4.50	%	1.17	%	2.38	%	4.40	%	4.02	%	3.25	%	4.50	%
Expected long-term rate of return on plan assets	6.48	%	6.50	%	7.00	%	3.00	%	3.25	%	3.25	%	—		—		—
Rate of compensation increase	—		—		—	%	1.90	%	2.50	%	2.50	%	3.50	%	3.50	%	3.50	%

The Company's investment strategy with respect to its U.S. pension plan assets is to maximize the return on investment of plan assets at an acceptable level of risk and to assure the plans' fiscal health. The target asset allocation varies based on the funded status of the plan in an effort to match the duration of the plan's liabilities to investments in long duration fixed income assets over time. The Company's investments under the French pension plans are primarily invested as directed by governmental authorities, their contracted providers or the participants without direction from the Company. The primary goal of the Company's pension plans is to maintain the highest probability of assuring future benefit payments to participants while providing growth of capital in real terms. To achieve this goal, the investment philosophy is to protect plan assets from large investment losses, particularly over time, while steadily growing the assets in a prudent manner. While there cannot be complete assurance that the objectives will be realized, the Company believes that the likelihood of realizing the objectives are reasonable based upon this investment philosophy. The Company has an investment committee that meets on a periodic basis to review the portfolio returns and to determine asset mix targets. The U.S. and French pension plans' asset target allocations by asset category for 2015 and actual allocations by asset category at December 31, 2014 and 2013 were as follows:



	United States						France
	2015 Target		2014		2013		2014		2013
Asset Category
Cash and cash equivalents	1	%	1	%	3	%	11	%	25	%
Equity securities*
Domestic Large Cap	8		5		25		17		19
Domestic Small Cap	2		4		8
International	17		17		12
Fixed income securities	67		68		47		71		55
Alternative investments**	5		5		5		1		1
Total	100	%	100	%	100	%	100	%	100	%


*	None of the Company's pension plan assets are targeted for investment in SWM stock, except that it is possible that one or more mutual funds held by the plan could hold shares of SWM.


**	Investments in this category under the U.S. pension plan only may include hedge funds, and may include real estate under the French pension plan.

The Company's pension assets are classified according to an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument's level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are described below:


Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;


Level 2	Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;


Level 3	Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The following table sets forth by level, within the fair value hierarchy, the U.S. and French pension plans' assets at fair value as of December 31, 2014 ($ in millions):



	United States								France
Plan Asset Category	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2
Cash equivalents	$	1.1	$	1.1	$	—	$	—	$	1.1	$	1.1	$	—
Equity securities
Domestic Large Cap	7.2		—		7.2		—		1.7		1.7		—
Domestic Small Cap	5.5		—		5.5		—		—		—		—
International	21.3		—		21.3		—		—		—		—
Fixed income securities	87.0		—		87.0		—		7.3		—		7.3
Alternative investments*	6.8		—		—		6.8		0.1		—		0.1
Total	$	128.9	$	1.1	$	121.0	$	6.8	$	10.2	$	2.8	$	7.4

The following table sets forth by level, within the fair value hierarchy, the U.S. and French pension plans' assets at fair value as of December 31, 2013 ($ in millions):



	United States								France
Plan Asset Category	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2
Cash equivalents	$	3.6	$	3.6	$	—	$	—	$	3.1	$	3.1	$	—
Equity securities
Domestic Large Cap	31.1		31.1		—		—		2.3		2.3		—
Domestic Small Cap	10.1		10.1		—		—		—		—		—
International	15.2		10.0		5.2		—		—		—		—
Fixed income securities	59.6		59.6		—		—		6.8		—		6.8
Alternative investments*	6.4		—		—		6.4		0.1		—		0.1
Total	$	126.0	$	114.4	$	5.2	$	6.4	$	12.3	$	5.4	$	6.9

* Alternative investments include ownership interests in shares of registered investment companies.

Values for Level 3 assets may be determined through appraisals and models for illiquid assets. The following table shows the changes in Level 3 asset values ($ in millions):



U.S. Level 3 Asset Reconciliation	Alternative Investments Total
Beginning balance, January 1, 2012	$	6.0
Realized and unrealized gains	0.6
Purchases	—
Sales	(0.2		)
Ending balance, December 31, 2013	6.4
Realized and unrealized gains	0.5
Purchases	—
Sales	(0.1		)
Ending balance, December 31, 2014	$	6.8

The Company expects the following estimated undiscounted future pension benefit payments for the United States and France and future postretirement healthcare and life insurance benefit payments for the United States, which are to be made from pension plan and employer assets, net of amounts that will be funded from retiree contributions, and which reflect expected future service, as appropriate ($ in millions):



	United States				France
	Pension Benefits		Healthcare and Life Insurance Benefits		Pension Benefits
2015	$	8.0	$	0.4	$	1.8
2016	8.0		0.3		1.8
2017	8.1		0.2		4.0
2018	8.3		0.1		1.2
2019	8.3		0.1		2.5
2020 - 2024	41.7		0.4		7.7

The Company is not required to contribute during 2015 to its U.S. and French pension plans; although, it may make discretionary contributions dependent on market conditions to remain aligned with its investment policy statement.

Other Foreign Pension Benefits

In Brazil and Poland, employees are covered under government-administered programs. In Poland and Canada, the employee pension benefits are not significant and therefore are not included in the above disclosures.

Other Benefits

We sponsor a qualified defined contribution plan covering substantially all U.S. employees. Under the plan, the Company matches a portion of employee contributions. The Company's cost under the plan was $2.0 million, $1.8 million and $1.7 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company provides U.S. executives, certain other key personnel and its directors the opportunity to participate in deferred compensation plans. Participating employees can elect to defer a portion of their salaries and certain other compensation. Participating directors can elect to defer their meeting fees, as a cash deferral, as well as their quarterly retainer fees, as deferred stock unit credits. The Company's liability balance under these deferred compensation plans totaled $13.1 million and $13.4 million at December 31, 2014 and 2013, respectively, which were included in the consolidated balance sheet in other liabilities. In connection with these plans, the Company has a grantor trust into which it has contributed funds toward its future obligations under the various plans (See Note 10, Other Assets). The balance of grantor trust assets totaled $10.3 million and $10.0 million at December 31, 2014 and 2013, respectively, which were included in other assets in the consolidated balance sheets. These assets are restricted from Company use until all obligations are satisfied.

In accordance with French law, certain salaried employees in France may accumulate unused regular vacation and supplemental hours of paid leave that can be credited to an individual's Compte Epargne Temps, or CET. The CET account may grow over an individual's career and the hours accumulated may be withdrawn upon retirement or under other special circumstances at the individual's then current rate of pay. The balance of the Company's liability for this program reflected in the accompanying consolidated balance sheets in other liabilities was $8.1 million and $8.9 million at December 31, 2014 and 2013, respectively.