CHS 2014 Annual Report Download - page 50

We have other contributory defined contribution plans Asset allocation targets promote optimal expected
covering substantially all employees. Total contributions return and volatility characteristics given the long-term
by us to these plans were $24.6 million, $22.9 million and time horizon for fulfilling the obligations of the pension
$20.6 million, for the years ended August 31, 2014, 2013 plans. During fiscal 2013, the CHS pension plans’ invest-
and 2012, respectively. ment policy strategy was adjusted so that liabilities
match assets, which was accomplished through
We voluntarily contributed $25.7 million to qualified changes to the asset portfolio mix to reduce volatility
pension plans in fiscal 2014. Based on the funded status and de-risk the plan. Thus, the plans’ target allocation
of the qualified pension plans as of August 31, 2014, we percentages were changed to 50% in fiscal 2013 for
do not believe we will be required to contribute to these fixed income securities, and 50% in fiscal 2013 for equity
plans in fiscal 2015, although we may voluntarily elect to securities. An annual analysis of the risk versus the
do so. We expect to pay $6.0 million to participants of return of the investment portfolio is conducted to justify
the non-qualified pension and postretirement benefit the expected long-term rate of return assumption. We
plans during fiscal 2015. generally use long-term historical return information for
the targeted asset mix identified in asset and liability
Our retiree benefit payments which reflect expected studies. Adjustments are made to the expected long-
future service are anticipated to be paid as follows: term rate of return assumption, when deemed neces-
sary, based upon revised expectations of future invest-
NON-
QUALIFIED QUALIFIED OTHER BENEFITS ment performance of the overall investment markets.
(DOLLARS IN PENSION PENSION
THOUSANDS) BENEFITS BENEFITS GROSS MEDICARE D
2015 $ 35,797 $ 3,222 $ 2,787 $ 100 The discount rate reflects the rate at which the associ-
ated benefits could be effectively settled as of the mea-
2016 44,287 721 2,911 100
surement date. In estimating this rate, we look at rates of
2017 49,495 3,474 3,085 100
return on fixed-income investments of similar duration to
2018 49,844 1,461 3,222 100 the liabilities in the plans that receive high, investment-
2019 52,956 5,575 3,280 100 grade ratings by recognized ratings agencies.
2020–2024 295,700 23,145 18,101 500
The investment portfolio contains a diversified portfolio
We have trusts that hold the assets for the defined of investment categories, including domestic and inter-
benefit plans. CHS and NCRA have qualified plan com- national equities, fixed-income securities and real estate.
mittees that set investment guidelines with the assis- Securities are also diversified in terms of domestic and
tance of external consultants. Investment objectives for international securities, short and long-term securities,
the plans’ assets are as follows: growth and value equities, large and small cap stocks, as
well as active and passive management styles.
• Optimization of the long-term returns on plan assets
at an acceptable level of risk The committees believe that with prudent risk tolerance
• Maintenance of a broad diversification across asset and asset diversification, the plans should be able to
classes and among investment managers meet pension obligations in the future.
• Focus on long-term return objectives
48 CHS 2014
TEN: Benefit Plans, continued