Albertsons 2008 Annual Report Download - page 104

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SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Contributions
The Company expects to contribute $26 to its pension plans and $12 to its postretirement benefit plans in fiscal
2009. The Company’s funding policy for the defined benefit pension plans is to contribute the minimum
contribution allowed under the Employee Retirement Income Security Act of 1974, with consideration given to
contributing larger amounts in order to be exempt from Pension Benefit Guaranty Corporation variable rate
premiums or participant notices of underfunding. The Company will recognize contributions in accordance with
applicable regulations, with consideration given to recognition for the earliest plan year permitted.
Pension Plan Assets
Plan assets are held in trust and invested in separately managed accounts and other commingled investment
vehicles holding domestic and international equity securities, domestic fixed income securities and other
investment classes.
The Company employs a total return approach whereby a mix of equities and fixed income investments are used
to maximize the long-term return of plan assets for a prudent level of risk. Alternative investments, including
hedge funds, private equity and real estate, may also be used judiciously to enhance risk-adjusted long-term
returns while improving portfolio diversification. The overall investment strategy and policy have been
developed based on the need to satisfy the long-term liabilities of the Company’s pension plans. Risk
management is accomplished through diversification across asset classes, multiple investment manager portfolios
and both general and portfolio-specific investment guidelines. Risk tolerance is established through careful
consideration of the plan liabilities, plan funded status and the Company’s financial condition. This asset
allocation policy mix is reviewed annually and actual versus target allocations are monitored regularly and
rebalanced on an as-needed basis.
Plan assets are invested using a combination of active and passive investment strategies. Passive strategies invest
in broad sectors of the market primarily through the use of indexing. Indexing is an investment management
approach based on investing in exactly the same securities, in the same proportions, as an index, such as the S&P
500. Active strategies employ multiple investment management firms. Managers within each asset class cover a
range of investment styles and approaches and are combined in a way that controls for capitalization, and style
biases (equities) and interest rate exposures (fixed income) versus benchmark indices while focusing primarily on
security selection as a means to add value. Monitoring activities to evaluate performance against targets and
measure investment risk take place on an ongoing basis through annual liability measurements, periodic asset/
liability studies and quarterly investment portfolio reviews.
The asset allocation guidelines and the actual allocation of pension plan assets are as follows:
Asset Category
Target Allocation
Ranges
Plan Assets
2008
Plan Assets
2007
Domestic Equity 45.0% - 70.0% 50.9% 52.5%
International Equity 7.0% - 20.0% 16.9% 17.7%
Domestic Fixed Income 25.0% - 35.0% 31.7% 29.5%
Cash and Other 0.0% - 15.0% 0.5% 0.3%
Total 100.0% 100.0%
F-38