ManpowerGroup 2011 Annual Report Download - page 71

Notes to Consolidated Financial Statements ManpowerGroup 2011 Annual Report 69
The weighted-average assumptions used in the measurement of the net periodic benefit cost were as follows:
U. S . P l an s Non-U.S. Plans
Yea r Ende d D ece mber 3 1 2011 2010 2009 2011 2010 2009
Discount rate 5.1% 5.7% 6.4% 5.1% 5.5% 5.7%
Expected long-term return on
plan assets 7.0% 7.3% 7.3% 5.3% 5.5% 5.7%
Rate of compensation increase 4.0% 4.0% 4.0% 4.3% 4.5% 4.2%
We determine our assumption for the discount rate to be used for purposes of computing annual service and interest costs
based on an index of high-quality corporate bond yields and matched-funding yield curve analysis as of the end of each
fiscal year. Our overall expected long-term rate of return on U.S. plan assets is 7.0%.
Our overall expected long-term rate of return on our non-U.S. plans varies by country and ranges from 3.5% to 6.1%. For a
majority of our plans, a building block approach has been employed to establish this return. Historical markets are studied
and long-term historical relationships between equity securities and fixed income instruments are preserved consistent
with the widely accepted capital market principle that assets with higher volatility generate a greater return over time.
Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are
determined. The long-term portfolio return is established with proper consideration of diversification and rebalancing. We
also use guaranteed insurance contracts for four of our foreign plans. Peer data and historical returns are reviewed to
check for reasonableness and appropriateness of our expected rate of return.
Projected salary levels utilized in the determination of the projected benefit obligation for the pension plans are based upon
historical experience and the future expectations for each respective country.
Our plans’ investment policies are to optimize the long-term return on plan assets at an acceptable level of risk and to
maintain careful control of the risk level within each asset class. Our long-term objective is to minimize plan expenses and
contributions by outperforming plan liabilities. We have historically used a balanced portfolio strategy based primarily on a
target allocation of equity securities and fixed-income instruments, which vary by location. These target allocations, which
are similar to the 2011 allocations, are determined based on the favorable risk tolerance characteristics of the plan and, at
times, may be adjusted within a specified range to advance our overall objective.
The fair value of our pension plan assets are primarily determined by using market quotes and other relevant information
that is generated by market transactions involving identical or comparable assets. The fair value of our pension plan assets
by asset category was as follows:
U. S . P l an s Non-U.S. Plans
Fair Valu e M easu rem e nts Usi ng Fai r Valu e Measu rem ents Usi ng
December 31,
2011
Quoted Prices
in Ac ti ve
Markets for
Identical
Assets
(L eve l 1)
Significant
Other
Observable
Inputs
(L eve l 2 )
Significant
Unobservable
Inputs
(L ev el 3 )
December 31,
2011
Quoted Prices
in Ac ti ve
Markets for
Identical
Assets
(L eve l 1)
Significant
Other
Observable
Inputs
(L eve l 2 )
Significant
Unobservable
Inputs
(L ev el 3 )
Asset Category
Cash and cash equivalents(1) $ 1.8 $ 1.8 $ – $ – $ 1.5 $ 1.5 $ – $ –
Equity securities:
U.S. companies 15.4 15.4 – – – – – –
International companies – – – – 57.9 57.9 – –
Fixed income securities:
Government bonds(2) 17.5 – 17.5 – – – – –
Corporate bonds – – – – 59.4 – 59.4 –
Guaranteed insurance
contracts – – – – 38.4 – 38.4 –
Other types of investments:
Unitized funds(3) – – – – 87.9 87.9 – –
Real estate funds – – – – 5.3 – 5.3 –
$ 34.7 $ 17.2 $ 17.5 $ – $ 250.4 $ 147.3 $ 103.1 $ –
(1) This category includes a prime obligations money market portfolio.
(2) This category includes U.S. Treasury/Federal agency securities and foreign government securities.
(3) This category includes investments in approximately 80% fixed income securities, 10% equity and 10% cash and cash equivalents.