UPS 2006 Annual Report Download - page 83

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Plan Asset Investment Policy
The asset allocation for our U.S. pension and other postretirement plans as of September 30, 2006 and 2005
and the target allocation as of September 30, 2006, by asset category, are as follows:
Weighted Average
Target Allocation
2006
Percentage of
Plan Assets at
September 30,
2006 2005
Equity securities ....................................... 55%-65% 61.5% 62.1%
Debt securities ........................................ 20%-30% 26.5% 25.9%
Real estate / other ...................................... 10%-15% 12.0% 12.0%
Total ................................................ 100.0% 100.0%
Equity securities include UPS Class A shares of common stock in the amounts of $440 (2.8% of total plan
assets) and $423 million (3.4% of total plan assets), as of September 30, 2006 and 2005, respectively.
The applicable benefit plan committees establish investment guidelines and strategies, and regularly monitor
the performance of the funds and portfolio managers. Our investment strategy with respect to pension assets is to
invest the assets in accordance with applicable laws and regulations. The long-term primary objectives for our
pension assets are to (1) provide for a reasonable amount of long-term growth of capital, without undue exposure
to risk; and protect the assets from erosion of purchasing power, and (2) provide investment results that meet or
exceed the plans’ actuarially assumed long-term rate of return.
Expected Cash Flows
Information about expected cash flows for the pension and postretirement benefit plans is as follows (in
millions):
U.S.
Pension Benefits
U.S. Postretirement
Medical Benefits
International Pension
Benefits
Employer Contributions:
2007 (expected) to plan trusts ..................... $ 461 $ 72 $48
2007 (expected) to plan participants ................ 19 52 2
Expected Benefit Payments:
2007 ..................................... $ 340 $ 138 $ 9
2008 ..................................... 404 148 10
2009 ..................................... 440 160 11
2010 ..................................... 486 174 12
2011 ..................................... 537 189 14
2012-2016................................ 3,679 1,175 93
Expected benefit payments for pensions will be primarily paid from plan trusts. Expected benefit payments
for postretirement benefits will be paid from plan trusts and corporate assets. Our funding policy for U.S. plans is
to contribute amounts annually that are at least equal to the amounts required by applicable laws and regulations,
or to directly fund payments to plan participants, as applicable. International plans will be funded in accordance
with local regulations. We have also guaranteed our obligations for certain international pension plans up to a
maximum amount of $118 million. Additional discretionary contributions will be made when deemed
appropriate to meet the long-term obligations of the plans.
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