Goldman Sachs 2003 Annual Report Download - page 95

The assumed cost of healthcare has an effect on the amounts reported for the firm’s postretirement plans. A 1% change
in the assumed healthcare cost trend rate would have the following effects:
1% INCREASE 1% DECREASE
(IN MILLIONS) 2003 2002 2003 2002
Cost $ 4 $3 $ (3) $ (2)
Obligation 33 25 (26) (22)
Notes to Consolidated Financial Statements
GOLDMAN SACHS 2003 ANNUAL REPORT 93
The firm’s approach in determining the long-term rate of
return for plan assets is based upon historical financial
market relationships that have existed over time with the
presumption that this trend will generally remain con-
stant in the future.
The following table sets forth the composition of plan
assets for the U.S. defined benefit pension plans by asset
category:
AS OF NOVEMBER
2003 2002
Equity securities 61% 66%
Debt securities 25 19
Other 14 15
Total 100% 100%
The investment approach of the firm’s U.S. defined bene-
fit pension plans involves employing a sufficient level of
flexibility to capture investment opportunities as they
occur, while maintaining reasonable parameters to ensure
that prudence and care are exercised in the execution of
the investment program. The plans employ a total return
on investment approach, whereby a mix, which is
broadly similar to the actual asset allocation as of
November 2003, of equity securities, debt securities and
other assets is targeted to maximize the long-term return
on assets for a given level of risk. Investment risk is meas-
ured and monitored on an ongoing basis by the firm’s
Retirement Committee through periodic portfolio
reviews, meetings with investment managers and annual
liability measurements.
The firm does not expect to be required to contribute to
its U.S. pension plans in fiscal 2004, but does expect to
contribute $6 million to its unfunded postretirement ben-
efit plan in the form of benefit payments in fiscal 2004.
The following table sets forth amounts of benefits proj-
ected to be paid from the firm’s U.S. defined benefit
pension and postretirement plans and reflects
expected future service, where appropriate:
U.S. POST-
(IN MILLIONS) PENSION RETIREMENT
2004 $4 $6
2005 57
2006 57
2007 68
2008 78
2009-2013 50 45
Defined Contribution Plans
The firm contributes to employer-sponsored U.S. and
non-U.S. defined contribution plans. The firm’s contribu-
tion to these plans was $199 million, $154 million and
$193 million for the years ended November 2003,
November 2002 and November 2001, respectively.
The firm has also established a nonqualified defined con-
tribution plan (the Plan) for certain senior employees.
Shares of common stock contributed to the Plan and out-
standing as of November 2003 were 4.2 million. The
shares of common stock will vest and generally be dis-
tributable to the participant on specified future dates if
the participant satisfies certain conditions and the partic-
ipant’s employment with the firm has not been termi-
nated, with certain exceptions for terminations of
employment due to death or a change in control.
Dividends on the underlying shares of common stock are
paid currently to the participants. Forfeited shares remain
in the Plan and are reallocated to other participants.
Contributions to the Plan are expensed on the date of
grant. Plan expense was immaterial for the years ended
November 2003, November 2002 and November 2001.
For measurement purposes, an annual growth rate in the
per capita cost of covered healthcare benefits of 14%
was assumed for the fiscal year ending November 2004.
The rate was assumed to decrease ratably to 5% for the
fiscal year ending November 2010 and remain at that
level thereafter.