Time Warner Cable 2012 Annual Report Download - page 114

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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In developing the expected long-term rate of return on assets, the Company considered the pension portfolio’s
composition, past average rate of earnings, discussions with portfolio managers and the Company’s asset allocation targets.
The weighted-average expected long-term return on plan assets used to determine net periodic benefit cost for the year ended
December 31, 2013 is expected to be 7.50%.
Pension Assets
The assets of the qualified pension plans are held in a master trust in which the qualified pension plans are the only
participating plans (the “Master Trust”). The investment policy for the qualified pension plans is to maximize the long-term
rate of return on plan assets within a prudent level of risk and diversification while maintaining adequate funding levels. The
investment portfolio is a mix of equity and fixed-income securities with the objective of preserving asset values, diversifying
risk and achieving a target investment return. The pension plans’ Investment Committee regularly monitors investment
performance, investment allocation policies and the performance of individual investment managers of the Master Trust and
makes adjustments and changes when necessary. On a periodic basis, the Investment Committee conducts a broad strategic
review of its portfolio construction and investment allocation policies. Neither the Company nor the Investment Committee
manages any assets internally or directly utilizes derivative instruments or hedging; however, the investment mandate of
some investment managers allows the use of derivatives as components of their standard portfolio management strategies.
Pension assets are managed in a balanced portfolio comprised of two major components: an equity portion and a fixed-
income portion. The expected role of the equity investments is to maximize the long-term growth of pension assets, while the
role of fixed-income investments is to provide for more stable periodic returns and potentially provide some protection
against a prolonged decline in the market value of equity investments. The objective within equity investments is to achieve
asset diversity in order to balance return and volatility.
The actual investment allocation of the qualified pension plans by asset category as of December 31, 2012 and 2011 is
as follows:
Target
Allocation
Actual Allocation
as of December 31,
2012 2011
Equity securities .................................................... 65.0% 65.0% 51.8%
Fixed-income securities .............................................. 35.0% 34.6% 46.8%
Other investments ................................................... 0.0% 0.4% 1.4%
The actual investment allocation as of December 31, 2011 differs from the target allocation primarily due to
contributions made in late 2011 temporarily held in short-term fixed-income investments that were invested consistent with
the Company’s investment allocation targets during 2012.
104