UPS 2009 Annual Report Download - page 87

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The accumulated postretirement benefit obligation exceeds plan assets for all of our U.S. postretirement
benefit plans.
Accumulated Other Comprehensive Income
The amounts in AOCI expected to be amortized and recognized as a component of net periodic benefit cost
in 2010 are as follows (in millions):
U.S. Pension Benefits
U.S. Postretirement
Medical Benefits
International Pension
Benefits
Transition obligation ......................... $— $— $—
Prior service cost / (benefit) .................... 172 4 1
Actuarial loss ............................... 78 16 3
$250 $ 20 $ 4
Pension and Postretirement Plan Assets
The applicable benefit plan committees establish investment guidelines and strategies, and regularly monitor
the performance of the funds and portfolio managers. Our investment guidelines address the following items:
governance, general investment beliefs and principles, investment objectives, specific investment goals, process
for determining/maintaining the asset allocation policy, long-term asset allocation, rebalancing, investment
restrictions/prohibited transactions (the use of derivatives and the use of leverage as types of investments are
generally prohibited), portfolio manager structure and diversification (which addresses limits on the amount of
investments held by any one manager to minimize risk), portfolio manager selection criteria, plan evaluation,
portfolio manager performance review and evaluation, and risk management (including various measures used to
evaluate risk tolerance).
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, with prudent exposure to risk; and protect the assets from erosion of
purchasing power; (2) provide investment results that meet or exceed the plans’ actuarially assumed long-term
rate of return; and (3) match the duration of the liabilities and assets of the plans to reduce the potential risk of
large employer contributions being necessary in the future. The plans strive to meet these objectives by
employing portfolio managers to actively manage assets within the guidelines and strategies set forth by the
benefit plan committees. Performance of these managers is compared to applicable benchmarks.
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