(15) Retirement Benefits
The principal retirement plan for employees is the Walgreen Profit-Sharing Retirement Trust, to which both the Company and participating employees contribute. The Company's contribution, which has historically related to FIFO earnings before interest and taxes and a portion of which is in the form of a guaranteed match, is determined annually at the discretion of the Board of Directors. The profit-sharing provision was $342 million in fiscal 2013, $283 million in fiscal 2012 and $382 million in fiscal 2011. The Company's contributions were $262 million in fiscal 2013, $372 million in fiscal 2012 and $322 million in fiscal 2011.
The Company provides certain health insurance benefits for retired employees who meet eligibility requirements, including age, years of service and date of hire. The costs of these benefits are accrued over the service life of the employee. In fiscal 2012, the Company amended its prescription drug program for certain Medicare-eligible retirees to a group-based Company-sponsored Medicare Part D program, or employer group waiver program, effective January 1, 2013. The Company's postretirement health benefit plan is not funded.
Components of net periodic benefit costs (in millions):
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Amortization of actuarial loss | | | | | | | | | | | | |
Amortization of prior service cost | | | | ) | | | | ) | | | | ) |
Total postretirement benefit cost | | | | | | | | | | | | |
Change in benefit obligation (in millions):
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Benefit obligation at September 1 | | | | | | | | |
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Participants' contributions | | | | | | | | |
Benefit obligation at August 31 | | | | | | | | |
Change in plan assets (in millions):
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Plan assets at fair value at September 1 | | | | | | | | |
Participants' contributions | | | | | | | | |
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Plan assets at fair value at August 31 | | | | | | | | |
Funded status (in millions):
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Unrecognized actuarial gain | | | | | | | | |
Unrecognized prior service cost | | | | | | | | |
Accrued benefit cost at August 31 | | | | ) | | | | ) |
Amounts recognized in the Consolidated Balance Sheets (in millions):
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Current liabilities (present value of expected 2014 net benefit payments) | | | | ) | | | | ) |
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Net liability recognized at August 31 | | | | ) | | | | ) |
Amounts recognized in accumulated other comprehensive (income) loss (in millions):
Amounts expected to be recognized as components of net periodic costs for fiscal year 2014 (in millions):
The measurement date used to determine postretirement benefits is August 31.
The discount rate assumption used to compute the postretirement benefit obligation at year-end was 5.20% for 2013 and 4.15% for 2012. The discount rate assumption used to determine net periodic benefit cost was 4.15%, 5.40% and 4.95% for fiscal years ending 2013, 2012 and 2011, respectively. The consumer price index assumption used to compute the postretirement benefit obligation was 2.00% for 2013 and 2012.
Future benefit costs were estimated assuming medical costs would increase at a 7.00% annual rate, gradually decreasing to 5.25% over the next nine years and then remaining at a 5.25% annual growth rate thereafter. A one percentage point change in the assumed medical cost trend rate would have the following effects (in millions):
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Effect on service and interest cost | | | | ) | | | | |
Effect on postretirement obligation | | | | ) | | | | |
Estimated future federal subsidies are immaterial for all periods presented. Future benefit payments are as follows (in millions):
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