EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2014 |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS |
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The NuStar Thrift Plan |
The NuStar Thrift Plan (the Thrift Plan) is a qualified defined contribution plan that became effective June 26, 2006. Participation in the Thrift Plan is voluntary and is open to eligible NuStar GP, LLC employees upon their date of hire. Thrift Plan participants can contribute from 1% up to 30% of their total annual compensation to the Thrift Plan in the form of pre-tax and/or after tax employee contributions. NuStar GP, LLC makes matching contributions in an amount equal to 100% of each participant’s employee contributions up to a maximum of 6% of the participant’s total annual compensation. Our matching contributions to the Thrift Plan for the years ended December 31, 2014, 2013 and 2012 totaled $5.9 million, $5.9 million and $6.9 million, respectively. |
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NuStar GP, LLC also maintains an excess thrift plan (the Excess Thrift Plan) that became effective July 1, 2006. The Excess Thrift Plan is a nonqualified deferred compensation plan that provides benefits to those employees of NuStar GP, LLC whose compensation and/or annual contributions under the Thrift Plan are subject to the limitations applicable to qualified retirement plans under the Code. |
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Pension and Other Postretirement Benefits |
The NuStar Pension Plan (the Pension Plan) is a qualified non-contributory defined benefit pension plan that provides eligible employees with retirement income as calculated under a cash balance formula. Under the cash balance formula, benefits are determined based on age, service and interest credits, and employees become fully vested in their benefits upon attaining three years of vesting service. Prior to January 1, 2014, eligible employees were covered under either a cash balance formula or a final average pay formula (FAP). Effective January 1, 2014, the Pension Plan was amended to freeze the FAP benefits as of December 31, 2013, and going forward, all eligible employees are covered under the cash balance formula discussed above. |
NuStar GP, LLC also maintains an excess pension plan (the Excess Pension Plan) which is a nonqualified deferred compensation plan that provides benefits to a select group of management or other highly compensated employees of NuStar GP, LLC. |
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Neither the Excess Thrift Plan nor the Excess Pension Plan is intended to constitute either a qualified plan under the provisions of Section 401 of the Code or a funded plan subject to the Employee Retirement Income Security Act. |
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NuStar GP, LLC also sponsors a contributory medical benefits plan for employees that retired prior to April 1, 2014. For employees that retire on or after April 1, 2014, we provide partial reimbursement for eligible third-party health care premiums. |
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The Pension Plan, Excess Pension Plan and the supplemental executive retirement plan (the SERP), which terminated in 2014, are collectively referred to as the Pension Plans in the tables and discussion below. We use December 31 as the measurement date for our pension and other postretirement plans. |
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The changes in the benefit obligation, the changes in fair value of plan assets, the funded status and the amounts recognized in our consolidated balance sheet for our Pension Plans and other postretirement benefit plans as of and for the years ended December 31, 2014 and 2013 were as follows: |
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| Pension Plans | | Other Postretirement | | | | | | | | |
Benefit Plans | | | | | | | | |
| 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Change in benefit obligation: | | | | | | | | | | | | | | | |
Benefit obligation, January 1 | $ | 87,632 | | | $ | 114,046 | | | $ | 7,154 | | | $ | 20,962 | | | | | | | | | |
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Service cost | 8,049 | | | 16,321 | | | 374 | | | 1,171 | | | | | | | | | |
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Interest cost | 4,225 | | | 5,036 | | | 373 | | | 940 | | | | | | | | | |
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Transfer to joint venture | — | | | — | | | — | | | (1,284 | ) | | | | | | | | |
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Disposition charges (a) | — | | | 180 | | | — | | | — | | | | | | | | | |
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Plan amendments | — | | | (24,560 | ) | | — | | | (11,822 | ) | | | | | | | | |
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Benefits paid | (9,296 | ) | | (7,353 | ) | | (341 | ) | | (248 | ) | | | | | | | | |
Participants contributions | — | | | — | | | 206 | | | 125 | | | | | | | | | |
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Actuarial loss (gain) | 16,238 | | | (15,708 | ) | | 2,718 | | | (2,690 | ) | | | | | | | | |
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Curtailment (a) | — | | | (330 | ) | | — | | | — | | | | | | | | | |
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Benefit obligation, December 31 | $ | 106,848 | | | $ | 87,632 | | | $ | 10,484 | | | $ | 7,154 | | | | | | | | | |
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Change in plan assets: | | | | | | | | | | | | | | | |
Plan assets at fair value, January 1 | $ | 75,573 | | | $ | 69,269 | | | $ | — | | | $ | — | | | | | | | | | |
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Actual return on plan assets | 6,135 | | | 11,905 | | | — | | | — | | | | | | | | | |
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Company contributions | 10,953 | | | 1,752 | | | 135 | | | 123 | | | | | | | | | |
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Benefits paid | (9,296 | ) | | (7,353 | ) | | (341 | ) | | (248 | ) | | | | | | | | |
Participants contributions | — | | | — | | | 206 | | | 125 | | | | | | | | | |
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Plan assets at fair value, December 31 | $ | 83,365 | | | $ | 75,573 | | | $ | — | | | $ | — | | | | | | | | | |
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Reconciliation of funded status: | | | | | | | | | | | | | | | |
Fair value of plan assets at December 31 | $ | 83,365 | | | $ | 75,573 | | | $ | — | | | $ | — | | | | | | | | | |
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Less: Benefit obligation at December 31 | 106,848 | | | 87,632 | | | 10,484 | | | 7,154 | | | | | | | | | |
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Funded status at December 31 | $ | (23,483 | ) | | $ | (12,059 | ) | | $ | (10,484 | ) | | $ | (7,154 | ) | | | | | | | | |
Amounts recognized in the consolidated balance sheets: | | | | | | | | | | | | | | | |
Accrued compensation expense | $ | (60 | ) | | $ | (2,333 | ) | | $ | (304 | ) | | $ | (141 | ) | | | | | | | | |
Long-term liabilities | (23,423 | ) | | (9,726 | ) | | (10,180 | ) | | (7,013 | ) | | | | | | | | |
Net pension liability | $ | (23,483 | ) | | $ | (12,059 | ) | | $ | (10,484 | ) | | $ | (7,154 | ) | | | | | | | | |
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(a) | Disposition charge in 2013 relates to NuStar Energy’s San Antonio Refinery Sale and the curtailment in 2013 relates to the SERP retirement benefits. | | | | | | | | | | | | | | | | | | | | | | |
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The accumulated benefit obligation is the present value of benefits earned to date, assuming no future salary increases. The aggregate accumulated benefit obligation for our Pension Plans as of December 31, 2014 and 2013 was $106.2 million and $86.9 million, respectively. As of December 31, 2014 and 2013, the aggregate accumulated benefit obligation for the Pension Plans exceeded plan assets. |
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NuStar Energy reimbursed and will continue to reimburse all costs incurred by us related to these employee benefit plans at cost. The components of net periodic benefit cost (income) related to our Pension Plans and other postretirement benefit plans, which are reimbursed to us by NuStar Energy, were as follows: |
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| Pension Plans | | Other Postretirement |
Benefit Plans |
| Year Ended December 31, | | Year Ended December 31, |
| 2014 | | 2013 | | 2012 | | 2014 | | 2013 | | 2012 |
| (Thousands of Dollars) |
Service cost | $ | 8,049 | | | $ | 16,321 | | | $ | 15,614 | | | $ | 374 | | | $ | 1,171 | | | $ | 1,258 | |
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Interest cost | 4,225 | | | 5,036 | | | 4,012 | | | 373 | | | 940 | | | 976 | |
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Expected return on plan assets | (4,574 | ) | | (4,535 | ) | | (3,917 | ) | | — | | | — | | | — | |
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Amortization of prior service credit | (2,063 | ) | | (41 | ) | | (18 | ) | | (1,145 | ) | | (198 | ) | | — | |
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Amortization of net loss | 179 | | | 2,071 | | | 1,393 | | | 114 | | | 209 | | | 139 | |
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Other (a) | (39 | ) | | 847 | | | 4,397 | | | — | | | — | | | 1,284 | |
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Net periodic benefit cost (income) | $ | 5,777 | | | $ | 19,699 | | | $ | 21,481 | | | $ | (284 | ) | | $ | 2,122 | | | $ | 3,657 | |
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(a) | In 2013, other includes charges for the Pensions Plans related to an Excess Pension settlement, disposition charges and a curtailment gain associated with SERP retirement benefits. Other charges in 2012 include disposition charges related to the 2012 Asphalt Sale. | | | | | | | | | | | | | | | | | | | | | | |
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Adjustments recognized in other comprehensive (loss) income related to our Pension Plans and other postretirement benefit plans were as follows: |
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| Pension Plans | | Other Postretirement |
Benefit Plans |
| Year Ended December 31, | | Year Ended December 31, |
| 2014 | | 2013 | | 2012 | | 2014 | | 2013 | | 2012 |
| (Thousands of Dollars) |
Net unrecognized (loss) gain | | | | | | | | | | | |
arising during the year: |
Net actuarial (loss) gain (a) | $ | (14,716 | ) | | $ | 24,122 | | | $ | (11,800 | ) | | $ | (2,718 | ) | | $ | 2,690 | | | $ | (1,368 | ) |
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Prior service credit | — | | | 24,514 | | | 295 | | | — | | | 11,822 | | | 2,420 | |
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Net (gain) loss reclassified into income: | | | | | | | | | | | |
Amortization of prior service credit | (2,063 | ) | | (41 | ) | | (18 | ) | | (1,145 | ) | | (198 | ) | | — | |
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Amortization of net loss | 179 | | | 2,071 | | | 1,393 | | | 114 | | | 209 | | | 139 | |
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Net (gain) loss reclassified into income | (1,884 | ) | | 2,030 | | | 1,375 | | | (1,031 | ) | | 11 | | | 139 | |
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Income tax benefit (expense) | 5,314 | | | (18,053 | ) | | 4,269 | | | 984 | | | (5,499 | ) | | (390 | ) |
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Total changes in other | $ | (11,286 | ) | | $ | 32,613 | | | $ | (5,861 | ) | | $ | (2,765 | ) | | $ | 9,024 | | | $ | 801 | |
comprehensive (loss) income |
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(a) In 2013 net actuarial (loss) gain for the Pension Plans includes an Excess Pension settlement and in 2012 includes a curtailment related to the 2012 Asphalt Sale. |
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The amounts recorded as a component of accumulated other comprehensive (loss) income related to our Pension Plans and other postretirement benefit plans were as follows: |
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| Pension Plans | | Other Postretirement | | | | | | | | |
Benefit Plans | | | | | | | | |
| December 31, | | December 31, | | | | | | | | |
| 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Unrecognized actuarial loss (a) | $ | (24,820 | ) | | $ | (10,283 | ) | | $ | (4,893 | ) | | $ | (2,289 | ) | | | | | | | | |
Prior service credit (a) | 22,790 | | | 24,853 | | | 12,899 | | | 14,044 | | | | | | | | | |
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Deferred tax asset (liability) | 1,675 | | | (3,639 | ) | | (3,344 | ) | | (4,328 | ) | | | | | | | | |
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Accumulated other comprehensive (loss) income, net of tax | $ | (355 | ) | | $ | 10,931 | | | $ | 4,662 | | | $ | 7,427 | | | | | | | | | |
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(a) | Represents the balance of accumulated other comprehensive (loss) income that has not been recognized as a component of net periodic benefit cost. | | | | | | | | | | | | | | | | | | | | | | |
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The following pre-tax amounts in accumulated other comprehensive loss as of December 31, 2014 are expected to be recognized as components of net periodic benefit cost (income) in 2015: |
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| Pension Plans | | Other | | | | | | | | | | | | | | | | |
Postretirement | | | | | | | | | | | | | | | | |
Benefit Plans | | | | | | | | | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | | | | | | | | | |
Unrecognized actuarial loss | $ | 1,845 | | | $ | 269 | | | | | | | | | | | | | | | | | |
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Prior service credit | $ | (2,063 | ) | | $ | (1,145 | ) | | | | | | | | | | | | | | | | |
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Investment Policies and Strategies |
The investment policies and strategies for the assets of our qualified Pension Plan incorporate a well-diversified approach that is expected to earn long-term returns from capital appreciation and a growing stream of current income. This approach recognizes that assets are exposed to risk, and the market value of the Pension Plan’s assets may fluctuate from year to year. Risk tolerance is determined based on NuStar Energy’s financial ability to withstand risk within the investment program and the willingness to accept return volatility. In line with the investment return objective and risk parameters, the Pension Plan’s mix of assets includes a diversified portfolio of equity and fixed-income instruments. The aggregate asset allocation is reviewed on an annual basis. As of December 31, 2014, the target allocations for plan assets are 65% equity securities and 35% fixed income investments. |
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The overall expected long-term rate of return on plan assets for the Pension Plan is estimated using models of asset returns. Model assumptions are derived using historical data with the assumption that capital markets are informationally efficient. Three models are used to derive the long-term expected returns for each asset class. Since each method has distinct advantages and disadvantages and differing results, an equal weighted average of the methods’ results is used. |
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Fair Value of Plan Assets |
We disclose the fair value for each major class of plan assets in the Pension Plan into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists. |
The major classes of plan assets measured at fair value for the Pension Plan, were as follows: |
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| December 31, 2014 | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Asset class: | | | | | | | | | | | | | | | |
Cash equivalent securities | $ | 1,225 | | | $ | — | | | $ | — | | | $ | 1,225 | | | | | | | | | |
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Equity securities: | | | | | | | | | | | | | | | |
U.S. large cap equity fund (a) | — | | | 50,009 | | | — | | | 50,009 | | | | | | | | | |
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International stock index fund (b) | 8,092 | | | — | | | — | | | 8,092 | | | | | | | | | |
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Fixed income securities: | | | | | | | | | | | | | | | |
Bond market index fund (c) | 24,039 | | | — | | | — | | | 24,039 | | | | | | | | | |
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Total | $ | 33,356 | | | $ | 50,009 | | | $ | — | | | $ | 83,365 | | | | | | | | | |
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| December 31, 2013 | | | | | | | | |
| Level 1 | | Level 2 | | Level 3 | | Total | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | |
Asset class: | | | | | | | | | | | | | | | |
Cash equivalent securities | $ | 1,552 | | | $ | — | | | $ | — | | | $ | 1,552 | | | | | | | | | |
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Equity securities: | | | | | | | | | | | | | | | |
U.S. large cap equity fund (a) | — | | | 45,756 | | | — | | | 45,756 | | | | | | | | | |
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International stock index fund (b) | 7,652 | | | — | | | — | | | 7,652 | | | | | | | | | |
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Fixed income securities: | | | | | | | | | | | | | | | |
Bond market index fund (c) | 20,613 | | | — | | | — | | | 20,613 | | | | | | | | | |
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Total | $ | 29,817 | | | $ | 45,756 | | | $ | — | | | $ | 75,573 | | | | | | | | | |
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(a) | This fund is a low-cost equity index fund not actively managed that tracks the S&P 500. Fair values were estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. | | | | | | | | | | | | | | | | | | | | | | |
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(b) | This fund tracks the performance of the Total International Composite Index. | | | | | | | | | | | | | | | | | | | | | | |
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(c) | This fund tracks the performance of the Barclays Capital U.S. Aggregate Bond Index. | | | | | | | | | | | | | | | | | | | | | | |
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Contributions to the Pension Plans |
For the year ended December 31, 2014, we contributed $11.0 million and $0.1 million to the Pension Plans and other postretirement benefit plans, respectively. We expect to contribute approximately $8.1 million to the Pension Plans and $0.3 million to our other postretirement benefit plans during 2015, which principally represents contributions either required by regulations or laws, or with respect to unfunded plans, necessary to fund current benefits. Since costs incurred by us related to the Pension Plan and our other postretirement benefit plan are reimbursed by NuStar Energy, funding for these plans will primarily be provided by NuStar Energy. |
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Estimated Future Benefit Payments |
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the years ending December 31: |
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| Pension Plans | | Other | | | | | | | | | | | | | | | | |
Postretirement | | | | | | | | | | | | | | | | |
Benefit Plans | | | | | | | | | | | | | | | | |
| (Thousands of Dollars) | | | | | | | | | | | | | | | | |
2015 | $ | 5,763 | | | $ | 304 | | | | | | | | | | | | | | | | | |
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2016 | $ | 6,163 | | | $ | 323 | | | | | | | | | | | | | | | | | |
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2017 | $ | 6,850 | | | $ | 327 | | | | | | | | | | | | | | | | | |
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2018 | $ | 7,407 | | | $ | 357 | | | | | | | | | | | | | | | | | |
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2019 | $ | 8,234 | | | $ | 404 | | | | | | | | | | | | | | | | | |
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Years 2020-2024 | $ | 49,390 | | | $ | 2,629 | | | | | | | | | | | | | | | | | |
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Assumptions |
The weighted-average assumptions used to determine the benefit obligations were as follows: |
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| Pension Plans | | Other | | | | | | | | | | | | |
Postretirement | | | | | | | | | | | | |
Benefit Plans | | | | | | | | | | | | |
| December 31, | | December 31, | | | | | | | | | | | | |
| 2014 | | 2013 | | 2014 | | 2013 | | | | | | | | | | | | |
Discount rate | 4.22 | % | | 5.04 | % | | 4.34 | % | | 5.28 | % | | | | | | | | | | | | |
Rate of compensation increase | 3.51 | % | | 3.51 | % | | n/a | | | n/a | | | | | | | | | | | | | |
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The weighted-average assumptions used to determine the net periodic benefit cost (income) were as follows: |
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| Pension Plans | | Other Postretirement | | | | | | |
Benefit Plans | | | | | | |
| Year Ended December 31, | | Year Ended December 31, | | | | | | |
| 2014 | | 2013 | | 2012 | | 2014 | | 2013 | | 2012 | | | | | | |
Discount rate | 5.04 | % | | 4.48 | % | | 5.21 | % | | 5.28 | % | | 4.51 | % | | 5.25 | % | | | | | | |
Expected long-term rate of | 6.75 | % | | 6.75 | % | | 7 | % | | n/a | | | n/a | | | n/a | | | | | | | |
return on plan assets | | | | | | |
Rate of compensation increase | 3.51 | % | | 3.69 | % | | 4.05 | % | | n/a | | | n/a | | | n/a | | | | | | | |
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The assumed health care cost trend rates were as follows: |
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| December 31, | | | | | | | | | | | | | | | | | | |
| 2014 | | 2013 | | | | | | | | | | | | | | | | | | |
Health care cost trend rate assumed for next year | 7.46 | % | | 7.45 | % | | | | | | | | | | | | | | | | | | |
Rate to which the cost trend rate was assumed to decline (the ultimate trend rate) | 5 | % | | 5 | % | | | | | | | | | | | | | | | | | | |
Year that the rate reached the ultimate trend rate | 2022 | | | 2020 | | | | | | | | | | | | | | | | | | | |
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Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. We sponsor a contributory postretirement health care plan for employees that retired prior to April 1, 2014. The plan has an annual limitation (a cap) on the increase of the employer’s share of the cost of covered benefits. The cap on the increase in employer’s cost is 2.5% per year. The assumed increase in total health care cost exceeds the 2.5% indexed cap, so increasing or decreasing the health care cost trend rate by 1% does not materially change our obligation or expense for the postretirement health care plan. |