| Retirement Benefits | Retirement Benefits Defined Benefit Plans Towers Watson sponsors both qualified and non-qualified defined benefit pension plans and other post-retirement benefit plan (“OPEB”) plans in North America and Europe. As of June 30, 2015 , these funded and unfunded plans represented 98 percent of Towers Watson’s pension and OPEB obligations and are disclosed herein. Towers Watson also sponsors funded and unfunded defined benefit pension plans in certain other countries, representing an additional $85.5 million in projected benefit obligations, $64.8 million in assets and a net liability of $20.7 million . North America United States – Beginning January 1, 2012, all associates, including named executive officers, accrue qualified and non-qualified benefits under a new stable value pension design. Prior to this date, associates hired prior to December 31, 2010 earned benefits under their legacy plan formulas, which were frozen on December 31, 2011. The non-qualified plan is unfunded. Retiree medical benefits provided under our U.S. postretirement benefit plans were closed to new hires effective January 1, 2011. Life insurance benefits under the same plans were frozen with respect to service, eligibility and amounts as of January 1, 2012 for active associates. Canada – Effective on January 1, 2011, associates hired on or after January 1, 2011 and effective on January 1, 2012 associates hired prior to January 1, 2011, accrue qualified and non-qualified benefits based on a career average benefit formula. Additionally, participants can choose to make voluntary contributions to purchase enhancements to their pension. Prior to the January 1, 2011, associates earned benefits under their legacy plan formulas. Retiree life, medical and dental benefits provided under our Canadian postretirement benefit plans were closed to new hires effective January 1, 2011. Associates that meet the eligibility requirements as of January 1, 2016 are eligible to participate in the postretirement benefits plan of Towers Perrin or Watson Wyatt, as applicable. The non-qualified plans in North America provide for the additional pension benefits that would be covered under the qualified plan in the respective country were it not for statutory maximums. The non-qualified plans are unfunded. Europe United Kingdom – Benefit accruals earned under the legacy Watson Wyatt defined benefit plan (predominantly pension benefits) ceased on February 28, 2015, although benefits earned prior to January 1, 2008 retain a link to salary until the employee leaves Towers Watson. Benefit accruals earned under the legacy Towers Perrin defined benefit plan (predominantly lump sum benefits) were frozen on March 31, 2008. All associates now accrue defined contribution benefits. Germany – Effective January 1, 2011, all new associates participate in a defined contribution plan. Associates hired prior to this date continue to participate in various defined contribution and defined benefit arrangements according to legacy plan formulas. The legacy defined benefit plans are primarily account-based, with some long-service associates continuing to accrue benefits according to grandfathered final-average-pay formulas. Netherlands – Benefits under the Netherlands plan used to accrue on a final pay basis on earnings up to a maximum amount each year. The benefit accrual under the final pay plan stopped at December 31, 2010. The accrued benefits will receive conditional indexation each year. The determination of Towers Watson’s obligations and annual expense under the plans is based on a number of assumptions that, given the longevity of the plans, are long-term in focus. A change in one or a combination of these assumptions could have a material impact on Towers Watson’s pension benefit obligation and related cost. Any difference between actual and assumed results is amortized into Towers Watson’s pension cost over the average remaining service period of participating associates. Towers Watson considers several factors prior to the start of each fiscal year when determining the appropriate annual assumptions, including economic forecasts, relevant benchmarks, historical trends, portfolio composition and peer company comparisons. Funding is based on actuarially determined contributions and is limited to amounts that are currently deductible for tax purposes. Since funding calculations are based on different measurements than those used for accounting purposes, pension contributions are not equal to net periodic pension cost. Assumptions Used in the Valuations of the Defined Benefit Pension Plans The following assumptions were used in the valuations of Towers Watson’s defined benefit pension plans. The assumptions presented for the North American plans represent the weighted-average of rates for all U.S. and Canadian plans. The assumptions presented for Towers Watson’s European plans represent the weighted-average of rates for the U.K., Germany and Netherlands plans. The assumptions used to determine net periodic benefit cost for the fiscal years ended June 30, 2015, 2014 and 2013 were as follows: Fiscal Year Ended June 30, 2015 2014 2013 North America Europe North America Europe North America Europe Discount rate 4.86 % 3.99 % 5.32 % 4.41 % 4.86 % 4.80 % Expected long-term rate of return on assets 7.67 % 5.79 % 7.67 % 5.77 % 8.11 % 6.07 % Rate of increase in compensation levels 3.98 % 3.00 % 4.36 % 3.93 % 4.35 % 3.93 % The following table presents the assumptions used in the valuation to determine the projected benefit obligation for the fiscal years ended June 30, 2015 and 2014 : June 30, 2015 June 30, 2014 North Europe North Europe Discount rate 4.87 % 3.45 % 4.86 % 3.99 % Rate of increase in compensation levels 4.01 % 3.00 % 3.98 % 3.00 % Components of Net Periodic Benefit Cost for Defined Benefit Pension Plans The following tables set forth the components of net periodic benefit cost for our defined benefit pension plans for North America and Europe for the fiscal years ended June 30, 2015, 2014 and 2013 : Fiscal Year ended June 30, 2015 2014 2013 North America Europe North America Europe North America Europe Service cost $ 71,189 $ 9,856 $ 70,346 $ 12,321 $ 70,795 $ 10,262 Interest cost 137,519 39,471 140,736 41,148 135,726 37,937 Expected return on plan assets (211,730 ) (51,894 ) (188,391 ) (46,352 ) (185,435 ) (42,244 ) Amortization of net loss/(gain) 17,667 11,686 22,088 9,019 45,372 5,905 Amortization of prior service (credit)/cost (8,380 ) 41 (8,379 ) 42 (8,377 ) 41 Settlement/curtailment loss — 3,859 — — — — Other adjustments — 196 — 254 — 85 Net periodic benefit cost $ 6,265 $ 13,215 $ 36,400 $ 16,432 $ 58,081 $ 11,986 Changes to other comprehensive income for the Company’s defined benefit pension plans as follows: Fiscal Year ended June 30, 2015 2014 2013 North America Europe North America Europe North America Europe Current year actuarial (gain)/loss $ 254,396 $ 62,075 $ (26,558 ) $ 60,022 $ (188,011 ) $ 51,384 Amortization of actuarial (loss)/gain (17,667 ) (11,686 ) (22,088 ) (9,019 ) (45,372 ) (5,905 ) Amortization of prior service credit/(cost) 8,380 (41 ) 8,379 (42 ) 8,377 (41 ) Recognition of actuarial loss due to settlement/curtailment — (3,859 ) — — — — Other (5,466 ) (22,149 ) (909 ) 12,992 (1,699 ) (1,418 ) Total recognized in other comprehensive (income)/loss $ 239,643 $ 24,340 $ (41,176 ) $ 63,953 $ (226,705 ) $ 44,020 The change in Other in the 2015 fiscal year is primarily due to the currency impact, specifically the decrease in the British Pound. For North America, the actuarial loss recorded in fiscal year 2015 is due to a lower than expected return on assets and a change in assumptions based on the new mortality tables. In October 2014, the Society of Actuaries released final reports on a study of mortality and mortality improvement in U.S. pension plans, which suggest that recent mortality experience across U.S. pension plans is stronger than that which has been assumed in the determination of our pension and postretirement obligations and cost. We estimate that these changes will increase annual U.S. benefit plan costs for the Company starting in fiscal year 2016. For North America, the return on assets more than offset actuarial losses due to a decrease in the discount rates for fiscal year 2014 and the actuarial gain recorded in fiscal year 2013 was due to an increase in the discount rates used for our plans. For Europe, the actuarial loss recorded in fiscal years 2015, 2014 and 2013 was primarily related to a decrease in the discount rates used for our plans. Towers Watson’s discount rate assumptions were determined by matching expected future pension benefit payments with current AA corporate bond yields from the respective countries for the same periods. In the United States, specific bonds were selected to match plan cash flows. In Canada, yields were taken from a corporate bond yield curve. In Europe, the discount rate was set based on yields on European AA corporate bonds at the measurement date. The U.K. is based on the U.K. AA corporate bonds, while Germany and the Netherlands are based on European AA corporate bonds. The estimated amounts that will be amortized from other comprehensive income into net periodic benefit cost during fiscal 2016 for the Company’s defined benefit pension plans are shown below: Fiscal 2016 North Europe Actuarial loss $ 40,051 $ 10,860 Prior service (credit)/cost (7,976 ) 41 Total $ 32,075 $ 10,901 The following table provides a reconciliation of the changes in the projected benefit obligations and fair value of assets for the years ended June 30, 2015 and 2014 , and the funded status as of June 30, 2015 and 2014 . 2015 2014 North North Europe North North America- Unqualified Europe Change in Benefit Obligation Benefit obligation at beginning of year $ 2,547,781 $ 395,778 $ 1,087,298 $ 2,324,353 $ 416,461 $ 887,047 Service cost 59,948 11,241 9,856 58,777 11,569 12,321 Interest cost 121,176 16,343 39,471 121,548 19,187 41,148 Actuarial losses/(gains) 135,221 (13,218 ) 141,358 149,163 21,416 61,836 Benefit payments (101,960 ) (42,212 ) (30,522 ) (102,495 ) (71,576 ) (20,566 ) Participant contributions — — 1,405 — — 2,338 Curtailments — — 3,859 — — — Other 1,217 — 196 516 — 1,462 Foreign currency adjustment (46,776 ) (13,481 ) (112,017 ) (4,081 ) (1,279 ) 101,712 Benefit obligation at end of year $ 2,716,607 $ 354,451 $ 1,140,904 $ 2,547,781 $ 395,778 $ 1,087,298 Change in Plan Assets Fair value of plan assets at beginning of year $ 2,813,591 $ — $ 919,160 $ 2,461,764 $ — $ 750,856 Actual return on plan assets 79,338 — 135,036 385,528 — 48,166 Company contributions 31,526 42,212 53,481 71,663 71,576 41,941 Participant contributions — — 1,405 — — 2,338 Benefit payments (101,960 ) (42,212 ) (30,522 ) (102,495 ) (71,576 ) (20,566 ) Other 1,216 — — 516 — 1,208 Foreign currency adjustment (45,553 ) — (80,123 ) (3,385 ) — 95,217 Fair value of plan assets at end of year $ 2,778,158 $ — $ 998,437 $ 2,813,591 $ — $ 919,160 Funded status at end of year $ 61,551 $ (354,451 ) $ (142,467 ) $ 265,810 $ (395,778 ) $ (168,138 ) Accumulated Benefit Obligation $ 2,694,611 $ 357,006 $ 1,132,200 $ 2,517,911 $ 390,246 $ 1,077,939 2015 2014 North America - Qualified North America- Unqualified Europe North America- Qualified North America- Unqualified Europe Amounts recognized in Consolidated Balance Sheets consist of: Noncurrent assets $ 73,494 $ — $ 1,156 $ 273,940 $ — $ 9,593 Current liabilities — (44,316 ) — — (51,113 ) — Noncurrent liabilities (11,943 ) (310,135 ) (143,622 ) (8,131 ) (344,665 ) (177,730 ) Net amount recognized $ 61,551 $ (354,451 ) $ (142,466 ) $ 265,809 $ (395,778 ) $ (168,137 ) Amounts recognized in Accumulated Other Comprehensive Income consist of: Net actuarial loss $ 354,029 $ 46,067 $ 202,814 $ 100,608 $ 68,224 $ 178,395 Net prior service (credit)/cost (35,273 ) (9,071 ) 398 (41,757 ) (10,965 ) 477 Accumulated Other Comprehensive Loss $ 318,756 $ 36,996 $ 203,212 $ 58,851 $ 57,259 $ 178,872 The following table presents the projected benefit obligation and fair value of plan assets for our qualified plans that have a projected benefit obligation in excess of plan assets as of June 30, 2015 and 2014 : 2015 2014 North America Europe North America Europe Projected benefit obligation at end of year $ 101,760 $ 824,677 $ 105,278 $ 210,898 Fair value of plan assets at end of year $ 89,817 $ 681,055 $ 97,147 $ 33,168 The following table presents the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for our qualified plans that have an accumulated benefit obligation in excess of plan assets as of June 30, 2015 and 2014 : 2015 2014 North Europe North Europe Projected benefit obligation at end of year $ 101,760 $ 824,677 $ — $ 210,898 Accumulated benefit obligation at end of year $ 94,006 $ 815,974 $ — $ 201,540 Fair value of plan assets at end of year $ 89,817 $ 681,055 $ — $ 33,168 Our investment strategy is designed to generate returns that will reduce the interest rate risk inherent in each of the plans’ benefit obligations and enable the plans to meet their future obligations. The precise amount for which these obligations will be settled depends on future events, including the life expectancy of the plan participants and salary inflation. The obligations are estimated using actuarial assumptions, based on the current economic environment. Each pension plan seeks to achieve total returns sufficient to meet expected future obligations when considered in conjunction with expected future company contributions and prudent levels of investment risk and diversification. Each plan’s targeted asset allocation is determined through a plan-specific Asset-Liability Modeling study. These comprehensive studies provide an evaluation of the projected status of asset and benefit obligation measures for each plan under a range of both positive and negative environments. The studies include a number of different asset mixes, spanning a range of diversification and potential equity exposures. In evaluating the strategic asset allocation choices, an emphasis is placed on the long-term characteristics of each individual asset class, such as expected return, volatility of returns and correlations with other asset classes within the portfolios. Consideration is also given to the proper long-term level of risk for each plan, the impact on the volatility and magnitude of plan contributions and cost, and the impact certain actuarial techniques may have on the plan’s recognition of investment experience. For the Towers Watson funded plans in the U.S., Canada and the U.K., the targeted equity allocation as of June 30, 2015 is 23% , 60% and 32% , respectively. In the U.S. and U.K. funded plans, besides the target equity allocation, an additional 44% and 23% , respectively, of the target allocation is directed to other investment vehicles including alternative credit, alternative beta and private equities. The remaining allocation for each of the funded plans is directed to fixed income securities. The duration of the fixed income assets is plan specific and each has been targeted to minimize fluctuations in plan funded status as a result of changes in interest rates. The Netherlands plan is invested in an insurance contract. Consequently, the asset allocation of the plan is managed by the insurer. We monitor investment performance and portfolio characteristics on a quarterly basis to ensure that managers are meeting expectations with respect to their investment approach. There are also various restrictions and controls placed on managers, including prohibition from investing in our stock. The expected rate of return on assets assumption is developed in conjunction with advisors and using our asset model that reflects a combination of rigorous historical analysis and the forward-looking views of the financial markets as revealed through the yield on long-term bonds, the price-earnings ratios of the major stock market indices and long-term inflation. We evaluate the need to transfer between levels based upon the nature of the financial instrument and size of the transfer relative to the total net assets of the plans. There were no significant transfers between Levels 1 , 2 or 3 in the fiscal years ended June 30, 2015 and 2014 . In accordance with Subtopic 820-10, Fair Value Measurement and Disclosures , certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statements of net assets. The fair value of our plan assets by asset category at June 30, 2015 and 2014 are as follows (see Note 2 for a description of the fair value levels and Note 7 for a summary of management’s procedures around prices received from third-parties): Fair Value Measurements at June 30, 2015 Level 1 Level 2 Level 3 Total North Europe North Europe North Europe Asset category: Cash $ 15,581 $ 37,789 $ — $ — $ — $ — $ 53,370 Short-term securities 633 — — — — — 96,568 Equity securities: U.S. large cap companies 48,898 11,695 — — — — 60,593 U.S. mid cap companies 4,441 — — — — — 4,441 U.S. small cap companies 1,823 — — — — — 1,823 International equities 46,084 24,123 — — — — 70,207 Fixed income: Government issued securities 211,186 — — — — — 211,186 Corporate bonds (S&P rating of A or higher) — — 316,398 — — — 316,398 Corporate bonds (S&P rating of lower than A) — — 218,132 — 445 — 218,577 Other fixed income — — 54,374 (a) 205,202 (a) — — 259,576 Pooled / commingled funds — — — — — — 2,175,786 (b) Mutual funds — — — — — — 159,194 Private equity — — — — 7,108 — 135,782 Derivatives — — 1,476 (c) 18,827 (c) — — 20,303 Insurance contracts — — — — — 14,805 14,805 Total assets $ 328,646 $ 73,607 $ 590,380 $ 224,029 $ 7,553 $ 14,805 $ 3,798,609 Liability category: Derivatives $ — $ — $ 491 (c) $ — $ — $ — $ 491 Net assets $ 328,646 $ 73,607 $ 589,889 $ 224,029 $ 7,553 $ 14,805 $ 3,798,118 Fair Value Measurements at June 30, 2014 Level 1 Level 2 Level 3 Total North Europe North Europe North Europe Asset category: Cash $ 1,845 $ 69,433 $ — $ — $ — $ — $ 71,278 Short-term securities 499 — — — — — 64,363 Equity securities: U.S. large cap companies 127,996 15,440 — — — — 143,436 U.S. mid cap companies 49,494 563 — — — — 50,057 U.S. small cap companies 40,691 — — — — — 40,691 International equities 114,441 471 — — — — 114,912 Fixed income: Government issued securities 206,517 — — — — — 206,517 Corporate bonds (S&P rating of A or higher) — — 320,005 — — — 320,005 Corporate bonds (S&P rating of lower than A) — — 216,983 — 450 — 217,433 Other fixed income — — 56,519 (a) 155,160 (a) — — 211,679 Pooled / commingled funds — — — — — — 1,922,479 (b) Mutual funds — — — — — — 189,014 Private equity — — — — 2,256 — 155,456 Derivatives — — 1,654 (c) 4,758 (c) — — 6,412 Insurance contracts — — — — — 18,091 18,091 Total assets $ 541,483 $ 85,907 $ 595,161 $ 159,918 $ 2,706 $ 18,091 $ 3,731,823 Liability category: Derivatives $ — $ — $ 350 (c) $ — $ — $ — $ 350 Net assets $ 541,483 $ 85,907 $ 594,811 $ 159,918 $ 2,706 $ 18,091 $ 3,731,473 (a) This category includes municipal and foreign bonds. (b) This category includes pooled funds of both equity and fixed income securities. Fair value is based on the calculated net asset value of shares held by the plan as reported by the sponsor of the funds and, in accordance with subtopic 820-10, Fair Value Measurements and Disclosures , are not included in the fair value hierarchy. (c) We use various derivatives such as interest rate swaps, futures and options to match the duration of the corporate bond portfolio with the duration of the plan liability. Following is a description of the valuation methodologies used for investments at fair value: Short-term securities : Valued at the net value of shares held by the Company at year end as reported by the sponsor of the funds. Common stocks and exchange-traded mutual funds: Valued at the closing price reported on the active market on which the individual securities are traded. Government issued securities : Valued at the closing price reported in the active market in which the individual security is traded. Government bonds are valued at the closing price reported in the active market in which the bond is traded. Corporate bonds: Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. Fixed Income : Foreign and municipal bonds are valued at the closing price reported in the active market in which the bond is traded. Corporate bonds are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Pooled / Commingled Funds and Mutual Funds : Valued at the net value of shares held by the Company at year end as reported by the manager of the funds. Derivative investments : Valued at the closing level of the relevant index or security and interest accrual through the valuation date. Private equity funds: The fair value for these investments is estimated based on the net asset value derived from the latest audited financial statements or most recent capital account statements provided by the private equity fund’s investment manager or third-party administrator. Insurance contracts: The fair values are determined using model-based techniques that include option-pricing models, discounted cash flow models, and similar techniques. The following table reconciles the net plan investments to the total fair value of the plan assets: June 30, 2015 2014 Net assets held in investments $ 3,798,118 $ 3,731,473 Net payable for investments purchased (24,251 ) (5,541 ) Dividend and interest receivable 9,057 8,856 Other, net (6,329 ) (2,037 ) Fair value of plan assets $ 3,776,595 $ 3,732,751 The following table sets forth a summary of changes in the fair value of the plan’s Level 3 assets for the fiscal years ended June 30, 2015 and 2014 : Private Equity Insurance Contracts Corporate Bonds Total Beginning balance at June 30, 2013 $ 109,768 $ 15,040 $ 411 $ 125,219 Assets no longer leveled in accordance with ASU 2015-07 (109,768 ) — — $ (109,768 ) Net actual return on plan assets relating to assets still held at the end of the year — 676 39 715 Net purchases, sales and settlements 2,256 1,586 — 3,842 Change in foreign currency exchange rates — 789 — 789 Ending balance at June 30, 2014 $ 2,256 $ 18,091 $ 450 $ 20,797 Assets no longer leveled in accordance with ASU 2015-07 (1,280 ) — — (1,280 ) Net actual return on plan assets relating to assets still held at the end of the year (681 ) 557 (5 ) (129 ) Net purchases, sales and settlements 6,813 (480 ) — 6,333 Change in foreign currency exchange rates — (3,363 ) — (3,363 ) Ending balance at June 30, 2015 $ 7,108 $ 14,805 $ 445 $ 22,358 The following table sets forth our projected pension contributions to our qualified plans for fiscal year 2016 , as well as the pension contributions to our qualified plans in fiscal years 2015 and 2014 : 2016 2015 2014 U.S $ 30,000 $ 30,000 $ 50,000 Canada $ 4,599 $ 1,526 $ 21,663 UK $ 21,211 $ 25,314 $ 28,706 Germany $ 20,065 $ 19,785 $ 10,178 Expected benefit payments from our defined benefit pension plans to current plan participants, including the effect of their expected future service, as appropriate, are as follows: Benefit Payments Fiscal Year North America Europe Total 2016 $ 172,374 $ 28,850 $ 201,224 2017 179,968 29,675 209,643 2018 182,700 27,326 210,026 2019 186,087 29,397 215,484 2020 194,534 31,718 226,252 Years 2021 - 2025 1,080,658 216,982 1,297,640 $ 1,996,321 $ 363,948 $ 2,360,269 Defined Contribution Plan Eligible Towers Watson U.S. associates participate in a savings plan design which provides for 100% match on the first 2% of pay and 50% match on the next 4% of pay; associates vest in the employer match upon two years of service. The cost of the Company’s contributions to the plans for the fiscal years ended June 30, 2015, 2014 and 2013 amounted to $30.4 million , $30.0 million and $30.2 million , respectively. The Towers Watson U.K. pension plan has a money purchase feature to which we make core contributions plus additional contributions matching those of the participating associates up to a maximum rate. Contribution rates depend on the age of the participant and whether or not they arise from salary sacrifice arrangements through which the associate has elected to receive a pension contribution in lieu of additional salary. The cost of the Company’s contributions to the plan for the fiscal years ended June 30, 2015, 2014 and 2013 amounted to $20.5 million , $20.2 million , and $22.2 million , respectively. Health Care Benefits We sponsor a contributory health care plan that provides hospitalization, medical and dental benefits to substantially all U.S. associates. We accrue a liability for estimated incurred but unreported claims. The liability totaled $5.5 million and $6.0 million at June 30, 2015 and 2014 , respectively. This liability is included in accounts payable, accrued liabilities, and deferred income in the consolidated balance sheets. Postretirement Benefits We provide certain health care and life insurance benefits for retired associates. The principal plans cover associates in the U.S. and Canada who have met certain eligibility requirements. Our principal post-retirement benefit plans are primarily unfunded. Retiree medical benefits provided under our U.S. postretirement benefit plans were closed to new hires effective January 1, 2011. Life insurance benefits under the plans were frozen with respect to service, eligibility and amounts as of January 1, 2012 for active associates. The assumptions used in the valuation of the postretirement benefit cost and obligation were as follows: Fiscal Year Ended June 30, 2015 2014 2013 Discount rate 4.68 % 5.30 % 4.80 % Expected long-term rate of return on assets 2.00 % 2.00 % 2.00 % Rate of increase in compensation levels — % — % 4.50 % Health care cost trend Initial rate 7.00 % 7.08 % 7.16 % Ultimate rate 5.00 % 5.00 % 5.00 % Year reaching ultimate rate 2019 2019 2019 June 30, 2015 2014 Discount rate, accumulated postretirement benefit obligation 4.57 % 4.68 % Rate of compensation increase — % — % Health care cost trend Initial rate 6.91 % 7.00 % Ultimate rate 5.00 % 5.00 % Year reaching ultimate rate 2019 2019 Actuarial gains and losses associated with changing any of the assumptions are accumulated as part of the unrecognized net gain or loss and amortized into the net periodic postretirement costs over the average remaining service period of participating associates, which is approximately 9.3 years. A one percentage point change in the assumed health care cost trend rates would have the following effect: 1% Increase 1% Decrease Effect on net periodic postretirement benefit cost in fiscal year 2015 $ 82 $ (23 ) Effect on accumulated postretirement benefit obligation as of June 30, 2015 $ 1,870 $ (746 ) Net periodic postretirement benefit cost consists of the following: Fiscal Year Ended June 30, 2015 2014 2013 Service cost $ 1,278 $ 1,460 $ 1,770 Interest cost 8,137 8,856 8,807 Expected return on assets (96 ) (112 ) (130 ) Amortization of net unrecognized (gains)/losses (1,761 ) (1,752 ) 369 Amortization of prior service credit (6,905 ) (7,004 ) (8,228 ) Net periodic postretirement benefit cost $ 653 $ 1,448 $ 2,588 Changes in other comprehensive income for the Company’s postretirement benefit plans as follows: 2015 2014 Current year actuarial gain/(loss) $ (48,421 ) $ 7,131 Amortization of actuarial gain 1,761 1,752 Amortization of prior service credit 6,905 7,004 Other (51 ) (29 ) Total recognized in other comprehensive income $ (39,806 ) $ 15,858 The estimated amounts that will be amortized from other comprehensive income into net periodic benefit cost during fiscal 2016 for the Company’s other postretirement benefit plans are shown below: 2016 Actuarial gain $ (5,992 ) Prior service credit (6,905 ) Total $ (12,897 ) The following table provides a reconciliation of the changes in the accumulated postretirement benefit obligation and fair value of assets for the fiscal years ended June 30, 2015 and 2014 and a statement of funded status as of June 30, 2015 and 2014 : June 30, 2015 2014 Change in Benefit Obligation Benefit obligation at beginning of year $ 181,306 $ 172,729 Service cost 1,278 1,460 Interest cost 8,137 8,856 Actuarial losses/(gains) (48,464 ) 6,972 Benefit payments (14,504 ) (14,443 ) Medicare Part D 639 68 Participant contributions 6,545 6,035 Foreign currency adjustment (3,860 ) (371 ) Benefit obligation at end of year $ 131,077 $ 181,306 Change in Plan Assets Fair value of plan assets at beginning of year $ 5,168 $ 5,958 Actual return on plan assets 52 (47 ) Company contributions 7,220 7,665 Participant contributions 6,545 6,035 Benefit payments (14,504 ) (14,443 ) Fair value of plan assets at end of year $ 4,481 $ 5,168 Funded status at end of year $ (126,596 ) $ (176,138 ) Amounts recognized in Consolidated Balance Sheets consist of: Noncurrent assets $ — $ — Current liabilities (3,971 ) (4,678 ) Noncurrent liabilities (122,625 ) (171,459 ) Net amount recognized $ (126,596 ) $ (176,137 ) Amounts recognized in Accumulated Other Comprehensive Income consist of: Net actuarial gain $ (64,480 ) $ (17,769 ) Net prior service credit (26,929 ) (33,835 ) Accumulated Other Comprehensive Income $ (91,409 ) $ (51,604 ) Expected benefit payments to current plan participants, including the effect of their future service, as appropriate, and the related retiree drug subsidy expected to be received, are as follows: Fiscal Year Expected benefit payments Retiree drug subsidy 2016 $ 16,254 $ 55 2017 16,676 — 2018 17,557 — 2019 18,532 — 2020 19,531 — Years 2021-2025 113,737 — $ 202,287 $ 55 |
