Pitney Bowes 2009 Annual Report Download - page 103

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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
85
The target allocation for 2010 and the asset allocation for the U.S. pension plan at December 31, 2009 and 2008, by asset category, are
as follows:
Target
Allocation
Percentage of Plan Assets at
December 31,
Asset category 2010 2009 2008
U.S. equities 37% 35% 33%
Non-U.S. equities 19% 19% 17%
Fixed income 32% 38% 39%
Real estate 5% 4% 7%
Private equity 7% 4% 4%
Total 100% 100% 100%
The long-term asset allocation targets we use to manage the investment portfolio are based on the broad asset categories shown above.
The plan asset categories presented in the fair value hierarchy are subsets of the broad asset categories.
Foreign Pension Plans’ Investment Strategy
Our foreign pension plan assets are managed by outside investment managers and monitored regularly by local trustees, in conjunction
with our corporate personnel. The investment strategies adopted by our foreign plans vary by country and plan, with each strategy
tailored to achieve the expected rate of return within an acceptable or appropriate level of risk, depending upon the liability profile of
plan participants, local funding requirements, investment markets and restrictions. Our largest foreign pension plan is the U.K. plan,
which represents 75% of the non-U.S. pension assets. The U.K. pension plan’s investment strategy supports the objectives of the
fund, which are to maximize returns within reasonable and prudent levels of risk, to achieve and maintain full funding of the
accumulated benefit obligations and the actuarial liabilities, and to earn a nominal rate of return of at least 7.25%. The fund has
established a strategic asset allocation policy to achieve these objectives. Investments are diversified across asset classes and within
each class to minimize the risk of large losses and are periodically rebalanced. Derivatives, such as swaps, options, forwards and
futures contracts may be used for market exposure, to alter risk/return characteristics and to manage foreign currency exposure. We
do not have any significant concentrations of credit risk within the plan assets. The pension plans’ liabilities, investment objectives
and investment managers are reviewed periodically.
The target allocation for 2010 and the asset allocation for the U.K. pension plan at December 31, 2009 and 2008, by asset category,
are as follows:
Target
Allocation
Percentage of Plan Assets at
December 31,
Asset category 2010 2009 2008
U.K. equities 32% 35% 34%
Non-U.K. equities 33% 32% 29%
Fixed income 35% 32% 33%
Cash -% 1% 4%
Total 100% 100% 100%
The long-term asset allocation targets we use to manage the investment portfolio are based on the broad asset categories shown above.
The plan asset categories presented in the fair value hierarchy are subsets of the broad asset categories.
The fair value of the U.K. plan assets was $312 million and $234 million at December 31, 2009 and 2008, respectively, and the
expected long-term rate of return on these plan assets was 7.50% and 7.25% in 2009 and 2008, respectively.