Union Pacific 2006 Annual Report Download - page 67

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Cash Contributions
The following table details our cash contributions for the years ended December 31, 2006 and 2005, and the
expected contributions for 2007:
Pension
Millions of Dollars Qualified Non-qualified OPEB
2005 .......................................................... $ - $ 9 $34
2006 .......................................................... 150 9 31
2007 .......................................................... - 12 27
In 2006, the Pension Protection Act of 2006 (the Act) was signed into law. The Act changes the method of
valuing assets and liabilities for funding purposes, as well as the timing of required contributions. Our pension
plans continue to meet all funding requirements and we do not expect the Act to significantly impact our results
of operations, financial condition, or liquidity.
Our policy with respect to funding the qualified plans is to fund at least the minimum required by the Act
and not more than the maximum amount deductible for tax purposes. All contributions made to the qualified
pension plans in 2006 were voluntary and were made with cash generated from operations. In 2006, we
voluntarily contributed $50 million in January and $100 million in December to the qualified pension plan. At
December 31, 2006, our qualified pension plans were fully funded. No required contributions are expected in
2007.
The OPEB plans are not funded and are not subject to any minimum regulatory funding requirements.
Benefit payments for each year represent claims paid for medical and life insurance, and we anticipate our 2007
OPEB payments will be made from cash generated from operations.
Benefit Payments
The following table details expected benefit payments for the years 2007 though 2016:
Millions of Dollars Pension OPEB
2007 ....................................................................... $124 $ 27
2008 ....................................................................... 126 28
2009 ....................................................................... 129 29
2010 ....................................................................... 133 30
2011 ....................................................................... 139 31
Years 2012 – 2016 ............................................................ 776 152
Asset Allocation Strategy
Our pension plan asset allocation at December 31, 2006 and 2005, and target allocation for 2007, are as follows:
Target
Allocation
2007
Percentage of
Plan Assets
December 31,
2006 2005
Equity securities ................................................. 60%to70% 70% 75%
Debt securities .................................................. 20%to30% 26 24
Real estate ...................................................... 4%to6% 21
Commodities ................................................... 4%to6% 2-
Total .......................................................... 100% 100%
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