ADP 2011 Annual Report Download - page 62

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The components of net pension costs were as follows:
The net actuarial loss, prior service cost and transition obligation for the defined benefit pension plans that are included in
accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost are $276.0
million, $1.0 million and $7.8 million, respectively, at June 30, 2011. The estimated net actuarial loss, prior service cost, and transition
obligation for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net
periodic pension cost over the next fiscal year are $13.7 million, $0.2 million, and $1.1 million, respectively, at June 30, 2011.
Assumptions used to determine the actuarial present value of benefit obligations were:
Assumptions used to determine the net pension expense generally were:
The discount rate is based upon published rates for high
-
quality fixed
-
income investments that produce cash flows that approximate
the timing and amount of expected future benefit payments.
The expected long
-
term rate of return on assets is determined based on historical and expected future rates of return on plan assets
considering the target asset mix and the long
-
term investment strategy.
Plan Assets
The Company
’
s pension plans
’
asset allocations at June 30, 2011 and 2010 by asset category were as follows:
The Company
’
s pension plans
’
asset investment strategy is designed to ensure prudent management of assets, consistent with
long
-
term return objectives and the prompt fulfillment of all pension plan obligations. The investment strategy and asset mix were
developed in coordination with an asset liability study conducted by external consultants to maximize the funded ratio with the least
amount of volatility.
62
Years ended June 30,
2011
2010
2009
Service cost
-
benefits earned
during the period
$
52.5
$
47.6
$
46.2
Interest cost on projected benefits
56.6
59.1
56.7
Expected return on plan assets
(88.5
)
(76.5
)
(70.3
)
Amortization of losses
20.1
4.5
1.2
$
40.7
$
34.7
$
33.8
Years ended June 30,
2011
2010
Discount rate
5.40
%
5.25
%
Increase in compensation levels
4.00
%
5.50
%
Years ended June 30,
2011
2010
2009
Discount rate
5.25
%
6.80
%
6.95
%
Expected long
-
term rate of return on assets
7.25
%
7.25
%
7.25
%
Increase in compensation levels
5.50
%
5.50
%
5.50
%
2011
2010
United States Fixed Income Securities
38
%
37
%
United States Equity Securities
41
%
42
%
International Securities
21
%
21
%
Total
100
%
100
%