Jack In The Box 2012 Annual Report Download - page 63

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Healthcare cost trend rate for next year:
Participants under age 65
8.50%
7.70%
7.75%
Participants age 65 or older
8.00%
7.00%
7.25%
Rate to which the cost trend rate is assumed to decline:
Participants under age 65
4.50%
5.10%
4.50%
Participants age 65 or older
4.50%
4.50%
4.50%
Year the rate reaches the ultimate trend rate:
Participants under age 65
2029
2040
2028
Participants age 65 or older
2027
2028
2028
The assumed healthcare cost trend rate represents our estimate of the annual rates of change in the costs of the healthcare benefits currently provided by our
postretirement plans. The healthcare cost trend rate implicitly considers estimates of healthcare inflation, changes in healthcare utilization and delivery
patterns, technological advances and changes in the health status of the plan participants. The healthcare cost trend rate assumption has a significant effect on
the amounts reported. For example, a 1.0% change in the assumed healthcare cost trend rate would have the following effect ( in thousands):




Total interest and service cost
$210
$(180)
Postretirement benefit obligation
$4,754
$(4,065)
Plan assets — Our investment philosophy is to (1) protect the corpus of the fund; (2) establish investment objectives that will allow the market value to
exceed the present value of the vested and unvested liabilities over time; while (3) obtaining adequate investment returns to protect benefits promised to the
participants and their beneficiaries. Our asset allocation strategy utilizes multiple investment managers in order to maximize the plan’s return while minimizing
risk. We regularly monitor our asset allocation, and senior financial management and the Finance Committee of the Board of Directors review performance
results at least semi-annually. In August 2012, we adjusted our target asset allocation for our Qualified Plan and we plan to reallocate our plan assets over a
period of time, as deemed appropriate by senior financial management, to achieve our target asset allocation. Our plan asset allocation at the end of fiscal 2012
and target allocations were as follows:
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


Large cap equity
24%
20%
15%
25%
Small cap equity
14
5
—
10
International equity
18
25
15
35
Core fixed funds
26
25
20
30
Real return bonds
5
3
—
10
Alternative investments
5
5
—
10
Real estate
8
8
—
10
High yield
—
5
—
10
Commodities
—
4
—
10
100%
100%
F-23