Mondelez 2013 Annual Report Download - page 101

Table of Contents
In the U.S., our investment strategy is based on our expectation that equity securities will outperform fixed-income securities over
the long term. We attempt to maintain our target asset allocation by rebalancing between asset classes as we make contributions
and monthly benefit payments. Due to the nature and timing of our expected pension liabilities, we target an allocation of
approximately 60% of our plan assets in equity securities and approximately 40% in fixed-income securities. The strategy uses
indexed U.S. equity securities, actively managed and indexed international equity securities and actively managed U.S. investment
grade fixed-income securities (which constitute 95% or more of fixed-income securities) with lesser allocations to high yield fixed-
income securities. At December 31, 2013, we had a higher allocation to fixed income due to a voluntary $163 million contribution
that was made on December 27, 2013 and temporarily invested in a short-term fixed income investment at year-end. In the first
quarter of 2014, we strategically reduced the risk level of the investment portfolio relative to the liabilities of our plans by lowering
our target allocation to equity securities to 50% and increasing the fixed-income allocation target to 50%.
For the plans outside the U.S., the investment strategy is subject to local regulations and the asset / liability profiles of the plans in
each individual country. These specific circumstances result in a level of equity exposure that is typically less than the U.S. plans. In
aggregate, the asset allocation targets of our non-U.S. plans are broadly characterized as a mix of approximately 35% equity
securities, approximately 50% fixed-income securities and approximately 15% other alternative securities. Our investment strategy
for our largest non-U.S. plan, which comprises 49% of our non-U.S. pension assets, is designed to balance risk and return by
diversifying across a wide range of return-seeking and liability matching assets, invested in a range of both active and passive
mandates. We target an allocation of approximately 20% in equity securities, 16% credit, 10% private markets, 16% other
diversifying assets, and 38% liability matching assets. The strategy uses actively managed and indexed global developed and
emerging market equities, actively managed global investment grade and alternative credit, global private equity and real estate,
other diversifying assets including hedge funds, and other liability matching assets including a buy-in annuity policy. During 2013,
the level of diversification was strategically increased by reducing the plan’s equity exposure by approximately 10% and investing
the majority of the proceeds in hedge funds and other diversifying assets, as shown above in the increase in net purchases in Level
3 assets during December 31, 2013.
Employer Contributions:
In 2013, we contributed $178 million to our U.S. pension plans and $330 million to our non-U.S. pension plans. In addition,
employees contributed $20 million to our non-U.S. plans. Of our 2013 pension contributions, $163 million was voluntary. We make
contributions to our U.S. and non-U.S. pension plans primarily to the extent that they are tax deductible and do not generate an
excise tax liability.
In 2014, we estimate that our pension contributions will be $10 million to our U.S. plans and $309 million to our non-U.S. plans
based on current tax laws. Of the total 2014 pension contributions, none is expected to be voluntary. Our actual contributions may
be different due to many factors, including changes in tax and other benefit laws, significant differences between expected and
actual pension asset performance or interest rates, or other factors.
Future Benefit Payments:
The estimated future benefit payments from our pension plans at December 31, 2013 were (in millions):
Multiemployer Pension Plans:
We made contributions to multiemployer pension plans of $32 million in 2013, $30 million in 2012 and $32 million in 2011. These
plans provide pension benefits to retirees under certain collective bargaining agreements. The following is the only individually
significant multiemployer plan we participate in as of December 31, 2013:
94
Year ending:
2014
2015
2016
2017
2018
2019
-
2023
U.S. Plans
$
71
$
72
$
83
$
95
$
105
$
597
Non
-
U.S. Plans
$
409
$
410
$
416
$
435
$
441
$
2,383
Expiration Date
Pension
FIP / RP
of Collective
-
EIN / Pension
Protection Act
Status Pending /
Surcharge
Bargaining
Pension Fund
Plan Number
Zone Status
Implemented
Imposed
Agreements
Bakery and Confectionery
Union and Industry International
Pension Fund
526118572
Red
Implemented
Yes
2/29/2016