3M 2010 Annual Report Download - page 87

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81
obligation for its U.S. plans in 2011. Therefore, the amount of the anticipated discretionary contribution could vary
significantly depending on the U.S. plans’ funded status and the anticipated tax deductibility of the contribution.
Future contributions will also depend on market conditions, interest rates and other factors.
As noted above, effective January 1, 2010, the Company made modifications to its postretirement health plan to limit
the amount of inflation it will cover to three percent per year; the remaining inflation will be passed on to plan
participants.
Future Pension and Postretirement Benefit Payments
The following table provides the estimated pension and postretirement benefit payments that are payable from the
plans to participants, and also provides the Medicare subsidy receipts expected to be received.
Qualified and Non-qualified
Pension Benefits
Postretirement
Medicare
Subsidy
(Millions)
United States
International
Benefits
Receipts
2011 Benefit Payments ......................................
$
697
$
194
$
130
$
13
2012 Benefit Payments ......................................
716
204
133
14
2013 Benefit Payments ......................................
734
214
130
—
2014 Benefit Payments ......................................
754
224
139
—
2015 Benefit Payments ......................................
776
238
136
—
Following five years ............................................
4,208
1,378
751
—
Plan Asset Management
3M’s investment strategy for its pension and postretirement plans is to manage the funds on a going-concern basis.
The primary goal of the funds is to meet the obligations as required. The secondary goal is to earn the highest rate of
return possible, without jeopardizing its primary goal, and without subjecting the Company to an undue amount of
contribution rate volatility. Fund returns are used to help finance present and future obligations to the extent possible
within actuarially determined funding limits and tax-determined asset limits, thus reducing the level of contributions
3M must make. The investment strategy has used long duration cash and derivative instruments to offset
approximately 50 percent of the interest rate sensitivity of U.S. pension liabilities. In addition, credit risk is managed
through mandates for public securities and maximum issuer limits that are established and monitored on a regular
basis.
During 2009, $600 million of 3M common stock was contributed to the principal U.S. qualified pension plan. All of the
3M shares contributed to the U.S. pension plan were sold before 2009 year end by an independent fiduciary to the
plan. Normally, 3M does not buy or sell any of its own stock as a direct investment for its pension and other
postretirement benefit funds. However, due to external investment management of the funds, the plans may indirectly
buy, sell or hold 3M stock. The aggregate amount of the shares would not be considered to be material relative to the
aggregate fund percentages.
The discussion that follows references the fair value measurements of certain assets in terms of levels 1, 2 and 3.
See Note 13 for descriptions of these levels.