PACCAR 2009 Annual Report Download - page 57

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Employee Benefit Plans: PACCAR has several defined benefit pension plans, which cover a majority of its employees.
The Company evaluates its actuarial assumptions on an annual basis and considers changes based upon market
conditions and other factors.
The Company funds its pensions in accordance with applicable employee benefit and tax laws. The Company
contributed $173.4 to its pension plans in 2009 and $63.9 in 2008. The Company expects to contribute in the range
of $25.0 to $75.0 to its pension plans in 2010 of which $10.3 is estimated to satisfy minimum funding requirements.
Annual benefits expected to be paid beginning January 1, 2010, are $55.6, $58.8, $64.9, $68.7, $75.8 and for the five
years thereafter, a total of $433.6.
Plan assets are invested in global equity and debt securities through professional investment managers with the
objective to achieve targeted risk adjusted returns and maintain liquidity sufficient to fund current benefit payments.
Typically, each defined benefit plan has an investment policy that includes a target for asset mix including maximum
and minimum ranges for allocation percentages by investment category. The actual allocation of assets may vary at
times based upon rebalancing policies and other factors. The Company periodically assesses the target asset mix by
evaluating external sources of information regarding the long-term historical return, volatilities and expected future
returns for each investment category. In addition, the long-term rates of return assumptions for pension accounting
are reviewed annually to ensure they are appropriate. Target asset mix and forecast long-term returns by asset
category are considered in determining the assumed long-term rates of return, although historical returns realized
are given some consideration.
The following information details the allocation of plan assets by investment type. See Note Q for definitions of fair
value levels.
At December 31, 2009 target level 1 level 2 total
Equity Funds:
U.S. equity funds $ 29.2 $ 374.2 $ 403.4
Global equity funds 311.4 311.4
Total equity funds 50-70% 29.2 685.6 714.8
Fixed Income Funds:
U.S. fixed income funds 303.2 109.3 412.5
Non U.S. fixed income funds 13.8 102.4 116.2
Total fixed income funds 30-50% 317.0 211.7 528.7
Cash and other 5.6 27.2 32.8
Total plan assets $ 351.8 $ 924.5 $ 1,276.3
The following additional data relates to all pension plans of the Company, except for certain multi-employer and
foreign-insured plans:
At December 31, 2009 2008
Weighted Average Assumptions:
Discount rate 5.9% 6.2%
Rate of increase in future compensation levels 3.9% 4.3%
Assumed long-term rate of return on plan assets 7.4% 7.4%
54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007 (currencies in millions)