Aetna 2013 Annual Report Download - page 126

Annual Report- Page 120
The actual and target asset allocations of the OPEB plans used at December 31, 2013 and 2012 presented as a
percentage of total plan assets, were as follows:
Target Target
(Millions) 2013 Allocation 2012 Allocation
Equity securities 10% 5-15% 10% 5-15%
Debt securities 84% 80-90% 85% 80-90%
Real estate/other 6% 0-10% 5% 0-10%
The Aetna Pension Plan invests in a diversified mix of assets intended to maximize long-term returns while
recognizing the need for adequate liquidity to meet ongoing benefit and administrative obligations. The risk of
unexpected investment and actuarial outcomes is regularly evaluated. This evaluation is performed through
forecasting and assessing ranges of investment outcomes over short- and long-term horizons, and by assessing the
Aetna Pension Plan's liability characteristics, our financial condition and our future potential obligations from both
the pension and general corporate perspectives. Complementary investment styles and techniques are utilized by
multiple professional investment firms to further improve portfolio and operational risk characteristics. Public and
private equity investments are used primarily to increase overall plan returns. Real estate investments are viewed
favorably for their diversification benefits and above-average dividend generation. Fixed income investments
provide diversification benefits and liability hedging attributes that are desirable, especially in falling interest rate
environments.
At December 31, 2013, target investment allocations for the Aetna Pension Plan were: 38% in equity securities, 48%
in debt securities, 7% in real estate, 4% in private equity limited partnerships and 3% in hedge funds. Actual asset
allocations may differ from target allocations due to tactical decisions to overweight or underweight certain assets or
as a result of normal fluctuations in asset values. Asset allocations are consistent with stated investment policies and,
as a general rule, periodically rebalanced back to target asset allocations. Asset allocations and investment
performance are formally reviewed periodically throughout the year by the plan's Benefit Finance Committee.
Forecasting of asset and liability growth is performed at least annually.
We have several benefit plans for retired employees currently supported by the OPEB plan assets. OPEB plan assets
are directly and indirectly invested in a diversified mix of traditional asset classes, primarily high-quality fixed
income securities.
Our expected return on plan assets assumption is based on many factors, including forecasted capital market real
returns over a long-term horizon, forecasted inflation rates, historical compounded asset returns and patterns and
correlations on those returns. Expectations for modest increases in interest rates, normal inflation trends and average
capital market real returns led us to an expected return on the pension plan assets assumption of 7.00% for 2013 and
7.50% for both 2012 and 2011, and an expected return on OPEB plan assets assumption of 4.10%, 4.25% and 5.50%
for 2013, 2012 and 2011, respectively. We regularly review actual asset allocations and periodically rebalance our
investments to the mid-point of our targeted allocation ranges when we consider it appropriate.
401(k) Plan
Our employees are eligible to participate in a defined contribution retirement savings plan under which designated
contributions may be invested in our common stock or certain other investments (the “Aetna 401(k) Plan”). In
addition, former Coventry employees continued to be eligible to participate in the Coventry 401(k) plan during 2013,
however, as of January 1, 2014, they are eligible to participate in the Aetna 401(k) Plan. Our 401(k) contribution to
the Aetna 401(k) Plan provides for a match of 100% of up to 6% of the eligible pay contributed by the employee.
Contributions to the Coventry 401(k) plan provided a match of 100% of up to 3% and 50% of the second 3% of the
eligible pay contributed by the employee. During 2013, 2012 and 2011, we made $148 million, $117 million and
$114 million, respectively, in aggregate of matching contributions to the our 401(k) plans. 2013 matching
contributions include contributions made to Coventry employees after the acquisition date. The matching
contributions are made in cash and invested according to each participant's investment elections. The plan trustees
held approximately 9 million shares, in aggregate, of our common stock for plan participants at December 31, 2013.