AbbVie 2014 Annual Report Download - page 93

13NOV201221352027
The following table summarizes the change in the value of plan assets that are measured using
significant unobservable inputs (Level 3):
(in millions) 2014 2013
Balance as of January 1 $411 $ 33
Actual return on plan assets on hand at year end 21 4
Assumption of level 3 assets — 372
Purchases, sales and settlements, net 42 2
Balance as of December 31 $474 $411
The investment mix of equity securities, fixed income and other asset allocation strategies is based
upon achieving a desired return, balancing higher return, more volatile equity securities, and lower return,
less volatile fixed income securities. Investment allocations are established for each plan and are generally
made across a range of markets, industry sectors, capitalization sizes, and in the case of fixed income
securities, maturities and credit quality. The target investment allocations for the AbbVie Pension Plan is
50% in equity securities, 20% in fixed income securities and 30% in asset allocation strategies and other
holdings. There are no known significant concentrations of risk in the plan assets of the AbbVie Pension
Plan or any other plans’ assets.
The plans’ expected return on assets, as shown above, is based on management’s expectations of
long-term average rates of return to be achieved by the underlying investment portfolios. In establishing
this assumption, management considers historical and expected returns for the asset classes in which the
plans are invested, as well as current economic and capital market conditions.
Expected Pension and Other Post-Employment Payments
Other
Defined post-employment
(in millions) benefit plans plans
2015 $ 161 $ 10
2016 170 12
2017 180 14
2018 192 15
2019 204 17
2020 to 2024 1,239 115
The above table reflects total benefit payments expected to be paid to participants, which includes
payments funded from company assets as well as paid from the plans.
Other
Prior to the separation, AbbVie employees also participated in the Abbott Laboratories Stock
Retirement Plan, which was Abbott’s principal defined contribution plan. AbbVie recorded expense of
$67 million in 2012 related to this plan. In connection with the separation, AbbVie established the AbbVie
Savings Plan, which is AbbVie’s principal defined contribution plan, with substantially the same terms as the
Abbott Laboratories Stock Retirement Plan. AbbVie employees who were eligible to participate in the
Abbott Laboratories Stock Retirement Plan on December 31, 2012 automatically became eligible for the
AbbVie Savings Plan. AbbVie recorded expense of $67 million in 2014 and $62 million in 2013 related to
this plan.
AbbVie provides certain other post-employment benefits, primarily salary continuation plans, to
qualifying employees and accrues for the related cost over the service lives of the employees.
2014 Form 10-K 87