Ford 2007 Annual Report Download - page 112

NOTE 24. RETIREMENT BENEFITS (Continued)
Health Care and Life Insurance. In 2007, we withdrew $1.1 billion from the VEBA as reimbursement for U.S. hourly
retiree health care and life insurance benefit payments. During 2008 we expect to withdraw about $90 million from the
VEBA as reimbursement for U.S. hourly retiree life insurance benefit payments. As part of the MOU, we agreed with the
UAW to not make any further withdrawals from the VEBA for health care benefits after December 31, 2007.
Estimated Future Benefit Payments
The following table presents estimated future gross benefit payments and subsidy receipts related to the Medicare
Prescription Drug Improvement and Modernization Act of 2003 (in millions):
!
!!
!!
!!
! S,.4*(.!V,.,C*'4]
S,.4*(.!V,.,C*'4]S,.4*(.!V,.,C*'4]
S,.4*(.!V,.,C*'4]!
!!
! !
!!
!
!
!!
!!
!!
! c:2:!S1/.4
c:2:!S1/.4c:2:!S1/.4
c:2:!S1/.4!
!!
! 6(.
6(.6(.
6(._
__
_c:2:!S1/.4
c:2:!S1/.4c:2:!S1/.4
c:2:!S1/.4!
!!
! d(31DX*D,!NSUV
d(31DX*D,!NSUVd(31DX*D,!NSUV
d(31DX*D,!NSUV!
!!
!
!
!!
!!
!!
! W3(44!V,.,C*'!
W3(44!V,.,C*'!W3(44!V,.,C*'!
W3(44!V,.,C*'!
S/Q),.'4
S/Q),.'4S/Q),.'4
S/Q),.'4!
!!
!
W3(44!V,.,C*'!
W3(44!V,.,C*'!W3(44!V,.,C*'!
W3(44!V,.,C*'!
S/Q),.'4
S/Q),.'4S/Q),.'4
S/Q),.'4!
!!
!
W3(44!V,.,C*'!
W3(44!V,.,C*'!W3(44!V,.,C*'!
W3(44!V,.,C*'!
S/Q),.'4
S/Q),.'4S/Q),.'4
S/Q),.'4!
!!
!
2&L4*DQ!
2&L4*DQ!2&L4*DQ!
2&L4*DQ!
\,0,*E'4
\,0,*E'4\,0,*E'4
\,0,*E'4!
!!
!
"##?:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ;!!!!!!!!!!!<=JG#! ;!!!!!!!!!!!G=@G#! ;!!!!!!!!!!!G=?"#! !;!!!!!!!!!!!!8$#9!
"##J:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ! <=?@#! ! G=>?#! ! G=J##! ! 8$#9!
"#G#:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ! <=$$#! ! G=@##! ! G=JG#! ! 8?#9!
"#GG:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ! <=F"#! ! G=@"#! ! G=J@#! ! 8?#9!
"#G":::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ! <=@<#! ! G=@@#! ! G=J?#! ! 8J#9!
"#G<!_!"#G$::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ! ! GF=<J#! ! ?=G<#! ! G#=>##! ! 8@F#9!
hhhhhhh!
]!!!UR01&D,4!`/K&/3!/.D!B/.D!\(+,3:!
Plan Asset Information
Pension. Our investment strategy for pension assets has a long-term horizon, in keeping with the long-term nature of
the liabilities. Our prior target pension asset allocations disclosed in our 2006 Form 10-K Report were about 70% equity
investments and 30% fixed income investments, with less than one percent in alternative investments (such as private
equity). In July 2007, to reduce the volatility of the value of our U.S. pension assets relative to U.S. pension liabilities, we
revised our investment strategy to reduce the proportion of equity investments and increase the proportion of assets in
fixed income and alternative investments. Specifically, we disclosed a revised target asset allocation for year-end 2007 of
about 50% public equity investments, 45% fixed income investments, and up to 5% alternative investments. The target
asset allocation for Ford U.K. plans is about 65% public equity investments and 35% fixed income investments.
In order to reduce the volatility of the value of our U.S. pension assets relative to U.S. pension liabilities, we have
made further changes to our investment strategy to reduce the proportion of public equity investments and increase the
proportion of assets in alternative investments. Our new target asset allocation, which we expect to reach within the next
five years, is about 30% public equity investments, 45% fixed income investments, and up to 25% alternative investments
(e.g., private equity, real estate, and hedge funds).
All assets are externally managed and most assets are actively managed. Ford securities comprised less than five
percent of the total market value of our assets in major worldwide plans (including U.S., U.K., Canada, Germany, Sweden,
Netherlands, Belgium, and Australia) during 2007 and 2006.
Public equity and fixed income investment managers are permitted to use derivatives as efficient substitutes for
traditional securities and to manage exposure to foreign exchange and interest rate risks. Interest rate and foreign
currency derivative instruments are used for the purpose of hedging changes in the fair value of assets that result from
interest rate changes and currency fluctuations. Interest rate derivatives are also used to adjust portfolio duration.
Derivatives may not be used to leverage or to alter the economic exposure to an asset class outside the scope of the
mandate to which an investment manager has been appointed.
Alternative investment managers are permitted to employ leverage (including through the use of derivatives or other
tools) that may alter economic exposure.
Notes to the Financial Statements
110 Ford Motor Company | 2007 Annual Report