Tecumseh Products 2012 Annual Report Download - page 48

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47
Weighted-average assumptions used to determine net periodic benefit costs for the years ended December 31:
Pension Benefits Other Benefits
2012 2011 2012 2011
U.S.-Based Plans:
Discount rate ................................................................. 4.00% 5.25% 4.00% 5.25%
Expected long-term return on plan assets ..................... 6.00% 5.90% N/A N/A
Rate of compensation increase...................................... 4.25% 4.25% N/A N/A
Europe-Based Plans:
Discount rate ................................................................. 3.80% 3.80% N/A N/A
Expected long-term return on plan assets ..................... N/A N/A N/A N/A
Rate of compensation increase...................................... 3.00% 3.00% N/A N/A
India-Based Plans:
Discount rate ................................................................. 8.60% 8.60% N/A N/A
Expected long-term return on plan assets ..................... 9.40% 9.40% N/A N/A
Rate of compensation increase...................................... 6.00% 6.00% N/A N/A
The expected long-term return on assets was determined for each class of assets in which the plan is invested based on
consultation with the company's investment advisers. That information is combined with the target asset allocation, where
applicable, to determine our best estimate of future returns.
Assumed health care cost trend rates, at December 31, 2012 and 2011:
2012 2011
Health care cost trend rate assumed for next year .......................................................... N/A 8.4%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)........... N/A 5.0%
Year that the rate reaches the ultimate trend rate............................................................ N/A 2019
Plan Assets
Our primary investment objectives are 1) preservation of principal, 2) minimizing the volatility of our assets and liabilities from
changes in interest rates and market conditions, and 3) providing liquidity to meet benefit payments and expenses. Our
portfolio consists of fixed income obligations rated investment grade, i.e. “Baa3/BBB” or better by Moody’s or Standard &
Poor’s, respectively, and international and domestic equities.