Ameriprise 2008 Annual Report Download - page 148
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The projected benefit obligation and fair value of plan assets for pension plans with projected benefit obligations that
exceeded the fair value of plan assets were as follows:
December 31, September 30,
2008 2007
(in millions)
Projected benefit obligation $ 348 $ 325
Fair value of plan assets 158 249
The weighted average assumptions used to determine benefit obligations for pension plans were as follows:
2008 2007
Discount rates 6.22% 6.17%
Rates of increase in compensation levels 4.23 4.22
The weighted average assumptions used to determine net periodic benefit cost for pension plans were as follows:
2008 2007 2006
Discount rates 6.17% 5.74% 5.46%
Rates of increase in compensation levels 4.22 4.14 4.41
Expected long term rates of return on assets 8.20 8.21 8.20
In developing the 2008, 2007 and 2006 expected long term rate of return on assets assumption, management evaluated
input from an external consulting firm, including their projection of asset class return expectations and long term inflation
assumptions. The Company also considered the historical returns on the plans’ assets.
The asset allocation for the Company’s pension plans at December 31, 2008 and September 30, 2007, and the target
allocation for 2009, by asset category, are below. Actual allocations will generally be within 5% of these targets.
Percentage of Plan Assets
Target
Allocation December 31, September 30,
2009 2008 2007
Equity securities 73% 66% 73%
Debt securities 21 31 21
Other 6 3 6
Total 100% 100% 100%
The Company invests in an aggregate diversified portfolio to minimize the impact of any adverse or unexpected results from a
security class on the entire portfolio. Diversification is interpreted to include diversification by asset type, performance and risk
characteristics and number of investments. Asset classes and ranges considered appropriate for investment of the plans’
assets are determined by each plan’s investment committee. The asset classes typically include domestic and foreign
equities, emerging market equities, domestic and foreign investment grade and high-yield bonds and domestic real estate.
The Company’s retirement plans expect to make benefit payments to retirees as follows:
(in millions)
2009 $ 45
2010 41
2011 46
2012 45
2013 47
2014-2018 218
The Company expects to contribute $36 million to its pension plans in 2009.
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