MetLife 2011 Annual Report Download - page 220

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
policies are oriented toward (i) maximizing the assets of the non-U.S. pension plans funded status; (ii) minimizing the volatility of the assets of the
non-U.S. pension plans funded status; (iii) generating asset returns that exceed liability increases; and (iv) targeting rates of return in excess of a custom
benchmark and industry standards over appropriate reference time periods. These goals are expected to be met through identifying appropriate and
diversified asset classes and allocations, ensuring adequate liquidity to pay benefits and expenses when due and controlling the costs of administering
and managing the non-U.S. pension plans’ investments. Independent investment consultants are periodically used to evaluate the investment risk of the
non-U.S. pension plans’ assets relative to liabilities, analyze the economic and portfolio impact of various asset allocations and management strategies
and recommend asset allocations.
Derivative contracts may be used to reduce investment risk, to manage duration and to replicate the risk/return profile of an asset or asset class.
Derivatives may not be used to leverage a portfolio in any manner, such as to magnify exposure to an asset, asset class, interest rates or any other
financial variable. Derivatives are also prohibited for use in creating exposures to securities, currencies, indices or any other financial variable that are
otherwise restricted.
The table below summarizes the actual weighted average allocation of the fair value of total plan assets by asset class at December 31 for the years
indicated and the approved target allocation by major asset class as of December 31, 2011 for the plans:
Defined Benefit Plan Other Postretirement Plans
Target
Actual Allocation
Target
Actual Allocation
2011 2010 2011 2010
Asset Class:
Fixed maturity securities:
Foreign bonds .............................................. 52% 45% 100% 100%
Total fixed maturity securities ................................. 61% 52% 45% 100% 100% 100%
Equity securities:
Common stock — domestic ................................... —% 2% —% —%
Common stock — foreign ..................................... 23 24 — —
Total equity securities ....................................... 27% 23% 26% —% —% —%
Alternative securities:
Money market securities ...................................... —% 6% —% —%
Short-term investments ....................................... 3 3 — —
Other invested assets ........................................ 22 20 — —
Total alternative securities .................................... 12% 25% 29% —% —% —%
Total assets ............................................ 100% 100% 100% 100%
Expected Future Contributions and Benefit Payments
It is the Subsidiaries’ practice to make contributions to the U.S. qualified pension plan to comply with minimum funding requirements of ERISA. In
accordance with such practice, no contributions were required for 2012. The Subsidiaries expect to make discretionary contributions to the qualified
pension plan of $205 million in 2012. For information on employer contributions, see “— Obligations, Funded Status and Net Periodic Benefit Costs.”
Benefit payments due under the U.S. non-qualified pension plans are primarily funded from the Subsidiaries’ general assets as they become due
under the provision of the plans, therefore benefit payments equal employer contributions. The U.S. Subsidiaries expect to make contributions of $88
million to fund the benefit payments in 2012.
U.S. and non-U.S. postretirement benefits are either: (i) not vested under law; (ii) a non-funded obligation of the Subsidiaries; or (iii) both. Current
regulations do not require funding for these benefits. The Subsidiaries use their general assets, net of participant’s contributions, to pay postretirement
medical claims as they come due in lieu of utilizing any plan assets. The U.S. Subsidiaries expect to make contributions of $75 million towards benefit
obligations in 2012 to pay postretirement medical claims.
As noted previously, the Subsidiaries no longer expect to receive the RDS under the Medicare Modernization Act of 2003 to partially offset payment
of such benefits. Instead, the gross benefit payments that will be made under the PDP will already reflect subsidies.
Gross benefit payments for the next 10 years, which reflect expected future service where appropriate, are expected to be as follows:
Pension Benefits Other Postretirement Benefits
U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans
(In millions)
2012 ..................................................... $ 448 $ 38 $109 $ 3
2013 ..................................................... $ 424 $ 41 $111 $ 3
2014 ..................................................... $ 456 $ 45 $114 $ 3
2015 ..................................................... $ 457 $ 50 $117 $ 3
2016 ..................................................... $ 474 $ 58 $118 $ 3
2017-2021 ................................................ $2,687 $322 $605 $14
216 MetLife, Inc.