CHS 2013 Annual Report Download - page 47

We provide defined life insurance and health care bene- • maintenance of a broad diversification across asset
fits for certain retired employees and Board of Directors classes and among investment managers
participants. The plan is contributory based on years of • focus on long-term return objectives
service and family status, with retiree contributions
adjusted annually. Asset allocation targets promote optimal expected
return and volatility characteristics given the long-term
We have other contributory defined contribution plans time horizon for fulfilling the obligations of the pension
covering substantially all employees. Total contributions plans. During fiscal year 2013, the CHS pension plans’
by us to these plans were $22.9 million, $20.6 million and investment policy strategy was adjusted so that liabili-
$18.6 million, for the years ended August 31, 2013, 2012 ties match assets, which was accomplished through
and 2011, respectively. changes to the asset portfolio mix to reduce volatility
and de-risk the plan. Thus, the plans’ target allocation
We voluntarily contributed $23.8 million to qualified pen- percentages were changed from 65% in fiscal 2012 to
sion plans in fiscal 2013. Based on the funded status of the 50% in fiscal 2013 for fixed income securities, and from
qualified pension plans as of August 31, 2013, we do not 35% in fiscal 2012 to 50% in fiscal 2013 for equity securi-
anticipate having to contribute to these plans in fiscal ties. An annual analysis of the risk versus the return of
2014, although we may voluntarily elect to do so. We the investment portfolio is conducted to justify the
expect to pay $6.0 million to participants of the non- expected long-term rate of return assumption. We gen-
qualified pension and postretirement benefit plans during erally use long-term historical return information for the
fiscal 2014. targeted asset mix identified in asset and liability
studies. Adjustments are made to the expected long-
Our retiree benefit payments which reflect expected term rate of return assumption, when deemed neces-
future service are anticipated to be paid as follows: sary, based upon revised expectations of future invest-
ment performance of the overall investment markets.
NON-
QUALIFIED QUALIFIED OTHER BENEFITS
PENSION PENSION The discount rate reflects the rate at which the associ-
(DOLLARS IN THOUSANDS) BENEFITS BENEFITS GROSS MEDICARE D
ated benefits could be effectively settled as of the mea-
2014 $33,704 $ 3,051 $ 2,919 $ 200 surement date. In estimating this rate, we look at rates of
2015 42,350 896 3,107 200 return on fixed-income investments of similar duration
2016 45,894 799 3,382 200 to the liabilities in the plans that receive high, invest-
2017 47,406 4,609 3,405 200 ment-grade ratings by recognized ratings agencies.
2018 49,812 2,628 3,555 200
The investment portfolio contains a diversified portfolio
2019-2023 282,842 18,637 19,329 800
of investment categories, including domestic and inter-
national equities, fixed-income securities and real estate.
We have trusts that hold the assets for the defined ben- Securities are also diversified in terms of domestic and
efit plans. CHS and NCRA have qualified plan commit- international securities, short and long-term securities,
tees that set investment guidelines with the assistance growth and value equities, large and small cap stocks, as
of external consultants. Investment objectives for the well as active and passive management styles.
plans’ assets are as follows:
The committees believe that with prudent risk tolerance
• optimization of the long-term returns on plan assets and asset diversification, the plans should be able to
at an acceptable level of risk meet pension obligations in the future.
52 CHS 2013
TEN: Benefit Plans, continued