Ameriprise 2012 Annual Report Download - page 177

The weighted average assumptions used to determine benefit obligations for pension plans were as follows:
2012 2011
Discount rates 3.45% 4.15%
Rates of increase in compensation levels 4.36 4.27
The weighted average assumptions used to determine net periodic benefit cost for pension plans were as follows:
2012 2011 2010
Discount rates 4.15% 4.75% 5.28%
Rates of increase in compensation levels 4.27 4.25 4.22
Expected long-term rates of return on assets 7.69 8.00 8.00
In developing the expected long-term rate of return on assets, 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 historical returns on the plans’ assets. Discount rates are based on yields available on high-quality corporate
bonds that would generate cash flows necessary to pay the benefits when due.
The Company’s pension plans’ assets are invested 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. When appropriate and
consistent with the objectives of the plans, derivative instruments may be used to mitigate risk or provide further
diversification, subject to the investment policies of the plans. Asset classes and ranges considered appropriate for
investment of the plans’ assets are determined by each plan’s investment committee. The target allocations are 70%
equity securities, 20% debt securities and 10% all other types of investments, except for the assets in pooled pension
funds which are 80% equity securities, 15% debt securities, and 5% all other types of investments. Actual allocations will
generally be within 5% of these targets. At December 31, 2012, there were no significant holdings of any single issuer and
the exposure to derivative instruments was not significant.
The following tables present the Company’s pension plan assets measured at fair value on a recurring basis:
December 31, 2012
Asset Category Level 1 Level 2 Level 3 Total
(in millions)
Equity securities:
U.S. large cap stocks $ 89 $ 14 $ — $ 103
U.S. small cap stocks 43 1 — 44
Non-U.S. large cap stocks 17 30 — 47
Emerging markets 13 20 — 33
Debt securities:
U.S. investment grade bonds 20 12 — 32
U.S. high yield bonds — 20 — 20
Non-U.S. investment grade bonds — 15 — 15
Real estate investment trusts — — 12 12
Hedge funds — — 18 18
Pooled pension funds — 104 — 104
Cash equivalents 9 — — 9
Total $ 191 $ 216 $ 30 $ 437
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