DIRECTV 2009 Annual Report Download - page 117

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Assumptions
Weighted-average assumptions used to determine benefit obligations at December 31:
Other
Pension Postretirement
Benefits Benefits
2009 2008 2009 2008
Discount rate—Qualified Plans .............................. 5.64% 6.06% 5.21% 5.88%
Discount rate—Non-Qualified Plans .......................... 5.63% 6.04% — —
Rate of compensation increase .............................. 4.00% 4.00% 4.00% 4.00%
Weighted-average assumptions used to determine net periodic benefit cost for the years ended
December 31:
Other
Postretirement
Pension Benefits Benefits
2009 2008 2007 2009 2008 2007
Discount rate—Qualified Plan ................... 6.06% 6.22% 5.67% 5.88% 5.76% 5.43%
Discount rate—Non-Qualified Plans ............... 6.04% 6.24% 5.69% — — —
Expected long-term return on plan assets ........... 8.25% 8.75% 8.75% — — —
Rate of compensation increase ................... 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
We base our expected long-term return on plan assets assumption on a periodic review and
modeling of the plans’ asset allocation and liability structure over a long-term horizon. Expectations of
returns for each asset class are the most important of the assumptions used in the review and modeling
and are based on comprehensive reviews of historical data and economic/financial market theory.
The following table provides assumed health care costs trend rates:
2009 2008
Health care cost trend rate assumed for next year ............................ 8.00% 8.00%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) ........ 5.00% 5.00%
Year that trend rate reaches the ultimate trend rate .......................... 2017 2015
Plan Assets
Our investment policy includes various guidelines and procedures designed to ensure we invest
assets in a manner necessary to meet expected future benefits earned by participants. The investment
guidelines consider a broad range of economic conditions. Central to the policy are target allocation
ranges by major asset categories. The target allocations for plan assets are 40% to 56% equity
securities, 24% to 40% debt securities, 0% to 10% real estate and 0% to 10% of other types of
investments.
The objectives of the target allocations are to maintain investment portfolios that diversify risk
through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’
actuarial assumptions, and achieve asset returns that are competitive with like institutions employing
similar investment strategies.
105