SEC Filings


10-K
CUMMINS INC filed this Form 10-K on 02/11/2019
Entire Document
 

Components of Net Periodic Pension Cost
The following table presents the net periodic pension cost under our plans for the years ended December 31:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
In millions
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Service cost
 
$
120

 
$
107

 
$
90

 
$
29

 
$
26

 
$
21

Interest cost
 
98

 
106

 
109

 
41

 
40

 
50

Expected return on plan assets
 
(196
)
 
(204
)
 
(201
)
 
(69
)
 
(70
)
 
(71
)
Amortization of prior service cost
 
1

 

 

 

 

 

Recognized net actuarial loss
 
33

 
37

 
29

 
29

 
40

 
15

Net periodic pension cost
 
$
56

 
$
46

 
$
27

 
$
30

 
$
36

 
$
15


Other changes in benefit obligations and plan assets recognized in other comprehensive loss (income) for the years ended December 31 were as follows:
In millions
 
2018
 
2017
 
2016
Recognized net actuarial loss
 
$
(62
)
 
$
(77
)
 
$
(44
)
Incurred actuarial loss (gain)
 
91

 
(40
)
 
107

Foreign exchange translation adjustments
 
(5
)
 
30

 
(28
)
Total recognized in other comprehensive loss (income)
 
$
24

 
$
(87
)
 
$
35

 
 
 
 
 
 
 
Total recognized in net periodic pension cost and other comprehensive loss (income)
 
$
110

 
$
(5
)
 
$
77


Assumptions
The table below presents various assumptions used in determining the PBO for each year and reflects weighted-average percentages for the various plans as follows:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
 
 
2018
 
2017
 
2018
 
2017
Discount rate
 
4.36
%
 
3.66
%
 
2.80
%
 
2.55
%
Cash balance crediting rate
 
4.03
%
 
4.27
%
 

 

Compensation increase rate
 
3.00
%
 
2.99
%
 
3.75
%
 
3.75
%

The table below presents various assumptions used in determining the net periodic pension cost and reflects weighted-average percentages for the various plans as follows:
 
 
Qualified and Non-Qualified Pension Plans
 
 
U.S. Plans
 
U.K. Plans
 
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Discount rate
 
3.66
%
 
4.12
%
 
4.47
%
 
2.55
%
 
2.70
%
 
3.95
%
Expected return on plan assets
 
6.50
%
 
7.25
%
 
7.50
%
 
4.00
%
 
4.50
%
 
4.70
%
Compensation increase rate
 
3.00
%
 
4.87
%
 
4.87
%
 
3.75
%
 
3.75
%
 
3.75
%

Plan Assets
Our investment policies in the U.S. and U.K. provide for the rebalancing of assets to maintain our long-term strategic asset allocation. We are committed to this long-term strategy and do not attempt to time the market given empirical evidence that asset allocation is more critical than individual asset or investment manager selection. Rebalancing of the assets has and continues to occur. The rebalancing is critical to having the proper weighting of assets to achieve the expected total portfolio returns. We believe that our portfolio is highly diversified and does not have any significant exposure to concentration risk. The plan assets for our defined benefit pension plans do not include any of our common stock.

94