Ameriprise 2014 Annual Report Download - page 184

The accumulated benefit obligation for all pension plans as of December 31, 2014 and 2013 was $702 million and
$605 million, respectively. The accumulated benefit obligation and fair value of plan assets for pension plans with
accumulated benefit obligations that exceeded the fair value of plan assets were as follows:
December 31,
2014 2013
(in millions)
Accumulated benefit obligation $ 582 $ 514
Fair value of plan assets 449 418
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,
2014 2013
(in millions)
Projected benefit obligation $ 628 $ 554
Fair value of plan assets 449 418
The weighted average assumptions used to determine benefit obligations for pension plans were as follows:
2014 2013
Discount rates 3.44% 4.06%
Rates of increase in compensation levels 4.35 4.38
The weighted average assumptions used to determine net periodic benefit cost for pension plans were as follows:
2014 2013 2012
Discount rates 4.06% 3.45% 4.15%
Rates of increase in compensation levels 4.38 4.36 4.27
Expected long-term rates of return on assets 7.58 7.62 7.69
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 65% equity securities and 35% debt securities and AVC assets which are allocated at the discretion of the
individual. Actual allocations will generally be within 5% of these targets. At December 31, 2014, there were no significant
holdings of any single issuer and the exposure to derivative instruments was not significant.
165