ManpowerGroup 2014 Annual Report Download - page 80

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78
Notes to Consolidated Financial Statements
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 2014 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 values 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, except for the insurance contract that is
measured at the present value of expected future benefit payments using the Deutsche National Bank interest curve. The
fair value of our pension plan assets by asset category was as follows:
United States Plans Non-United States Plans
Fair Value Measurements Using Fair Value Measurements Using
December 31,
2014
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
December 31,
2014
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Asset Category
Cash and cash
equivalents
(1)
$ 1.0 $ 1.0 $ $— $ 0.3 $ 0.3 $ $
Equity securities:
United States
companies 15.6 15.6 — —
International companies — 19.1 19.1
Fixed income securities:
Government bonds
(2)
24.0 — 24.0 45.3 45.3
Corporate bonds — 62.5 62.5
Guaranteed insurance
contracts — — 42.0 42.0 —
Annuity contract — — 35.5 35.5 —
Other types of
investments:
Unitized funds
(3)
— 31.5 31.5
Insurance contract — — 104.9 — — 104.9
Real estate funds 8.0 8.0
$40.6 $16.6 $24.0 $— $349.1 $158.7 $85.5 $104.9
(1) This category includes a prime obligations money market portfolio.
(2) This category includes United States Treasury/Federal agency securities and foreign government securities.
(3) This category includes investments in approximately 70% equity securities, 20% fixed income securities and 10% cash.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
in millions, except share and per share data