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EMPLOYEE RETIREMENT PLANS | 6 Months Ended
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Jun. 30, 2013
EMPLOYEE RETIREMENT PLANS |
EMPLOYEE RETIREMENT PLANS | 11. EMPLOYEE RETIREMENT PLANS Defined Benefit Plans The Company sponsors and/or contributes to pension and postretirement medical, insurance and other benefit plans covering many of our U.S. employees, in whole or in part, based on meeting certain eligibility criteria. In addition, our Company and its subsidiaries have various pension plans and other forms of postretirement arrangements outside the United States, namely in Canada and Taiwan. As part of the Merger, we assumed certain liabilities related to pensions ("Assumed Pension Plans") and other postretirement benefit plans ("Assumed Postretirement Plans"). Refer to Note 2 for additional information related to the Merger. We did not have any other postretirement benefit obligations prior to the Transactions. Pension and Postretirement Welfare Plans Certain employees in the United States who were hired before January 1, 2009 are covered by a defined benefit pension plan. That plan was frozen to future benefit accruals in 2009. The Assumed Postretirement Plans provide ongoing benefit accruals to certain employees and are closed to new hires. The Assumed Postretirement Plans are unfunded and provide medical and life insurance benefits for certain employees of the Merged Business and their dependents. In connection with the Merger, we also acquired an Employee Group Waiver Plan ("EGWP") for certain Medicare-eligible retirees of the Merged Business and their dependents. The EGWP includes a fully-insured Medicare Part D prescription drug plan. The postretirement medical and life insurance programs require retiree contributions based on retiree- selected coverage levels for certain retirees and their dependents and provide for sharing of future benefit cost increases between Axiall and participants. The preliminary estimated fair value of pension investment assets related to the Assumed Pension Plans was $479.2 million as of January 28, 2013. As of the same date, our estimated preliminary projected benefit obligation with respect to these assets was $576.1 million. The unfunded status of pension obligations assumed by us and calculated on a projected benefit obligation basis as of January 28, 2013, was approximately $96.9 million. The aggregate amount of the unfunded other postretirement benefit obligations of the Assumed Postretirement Plans as of January 28, 2013, was approximately $182.9 million. Net periodic benefit cost (income) for the three months ended June 30, 2013 and 2012 includes the following:
|  | Pensions Three Months Ended June 30, |  | Other Postretirement Benefits Three Months Ended June 30, |
--- | --- | --- | --- | --- | ---
(In millions) |  | 2013 |  | 2012 |  | 2013 |
Components of net periodic benefit cost (income): |  |  |  |  |  |  |  |  |  |
Interest cost |  | $ | 7.5 |  | $ | 1.8 |  | $ | 2.0 |
Service cost |  |  | 1.7 |  |  | - |  |  | 0.6 |
Expected return on assets |  |  | (9.8 | ) |  | (2.2 | ) |  | - |
Amortization of actuarial loss |  |  | 0.5 |  |  | 0.4 |  |  | - |
Total net periodic benefit cost (income) |  | $ | (0.1 | ) | $ | - |  | $ | 2.6 |
Net periodic benefit cost (income) for the six months ended June 30, 2013 and 2012 includes the following:
|  | Pensions Six Months Ended June 30, |  | Other Postretirement Benefits Six Months Ended June 30, |
--- | --- | --- | --- | --- | ---
(In millions) |  | 2013 |  | 2012 |  | 2013 |
Components of net periodic benefit cost: |  |  |  |  |  |  |  |  |  |
Interest cost |  | $ | 13.0 |  | $ | 3.6 |  | $ | 3.3 |
Service cost |  |  | 2.8 |  |  | - |  |  | 1.1 |
Expected return on assets |  |  | (17.2 | ) |  | (4.3 | ) |  | - |
Amortization of actuarial loss |  |  | 1.1 |  |  | 0.8 |  |  | - |
Total net periodic benefit cost |  | $ | (0.3 | ) | $ | 0.1 |  | $ | 4.4 |
Assumptions The following weighted average assumptions were used to determine the benefit obligation for the defined benefit pension and other postretirement welfare plans. The rate of compensation increase was not applicable in 2012 as all future benefits with respect to compensation increases were frozen.
|  | Pensions |  | Other Postretirement Benefits
--- | --- | --- | --- | ---
|  | 2013 |  | 2012 |  | 2013
Discount rate |  | 4.09% |  | 5.00% |  |  | 4.35%
Expected return on assets |  | 6.81% |  | 8.25% |  |  | Not Applicable
Rate of compensation increase |  | 3.15% |  | Not Applicable |  |  | 3.11%
The weighted-average healthcare cost trend rate (inflation) used for 2013 is 6.64 percent declining to 4.50 percent in eleven years. In selecting the rates for our current and long-term health care cost assumptions, we take into consideration a number of factors including our actual health care cost increases, the design of our benefit programs, the demographics of our active and retiree populations and external expectations of future medical cost inflation rates. Contributions There were no significant contributions to the pension plan trusts during the three and six months ended June 30, 2013 and 2012. We estimate that we will make payments of approximately $2.1 million and $6.8 million, respectively, for benefit payments related to unfunded pension and postretirement welfare plans for the year ending December 31, 2013. Pursuant to the Merger Agreement related to the Transactions, additional payments may be required to PPG or by PPG to Axiall depending on the final funded status of the Assumed Plans. Defined Contribution Plans Most pre-Merger employees are covered by defined contribution plans under which we make contributions to individual employee accounts. Our expense related to our defined contribution plans was approximately $7.3 million and $3.5 million for the six months ended June 30, 2013 and 2012, respectively.

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