Chevron 2014 Annual Report Download - page 66

Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts
The effects of fair value measurements using significant unobservable inputs on changes in Level 3 plan assets are outlined
below:
Fixed Income
Corporate Mortgage-Backed Securities Real Estate Other Total
Total at December 31, 2012 $ 31 $ 2 $ 1,290 $ 57 $ 1,380
Actual Return on Plan Assets:
Assets held at the reporting date (9) — 90 — 81
Assets sold during the period — — 3 — 3
Purchases, Sales and Settlements 1 — 176 — 177
Transfers in and/or out of Level 3 — — — — —
Total at December 31, 2013 $ 23 $ 2 $ 1,559 $ 57 $ 1,641
Actual Return on Plan Assets:
Assets held at the reporting date — — 115 — 115
Assets sold during the period — — 20 — 20
Purchases, Sales and Settlements (1) (2) (1) — (4)
Transfers in and/or out of Level 3 —————
Total at December 31, 2014 $ 22 $ — $ 1,693 $ 57 $ 1,772
The primary investment objectives of the pension plans are to achieve the highest rate of total return within prudent levels of
risk and liquidity, to diversify and mitigate potential downside risk associated with the investments, and to provide adequate
liquidity for benefit payments and portfolio management.
The company’s U.S. and U.K. pension plans comprise 91 percent of the total pension assets. Both the U.S. and U.K. plans
have an Investment Committee that regularly meets during the year to review the asset holdings and their returns. To assess
the plans’ investment performance, long-term asset allocation policy benchmarks have been established.
For the primary U.S. pension plan, the company’s Benefit Plan Investment Committee has established the following
approved asset allocation ranges: Equities 40–70 percent, Fixed Income and Cash 20–60 percent, Real Estate 0–15 percent,
and Other 0–5 percent. For the U.K. pension plan, the U.K. Board of Trustees has established the following asset allocation
guidelines, which are reviewed regularly: Equities 30-50 percent, Fixed Income and Cash 35–65 percent and Real Estate 5-
15 percent. The other significant international pension plans also have established maximum and minimum asset allocation
ranges that vary by plan. Actual asset allocation within approved ranges is based on a variety of current economic and market
conditions and consideration of specific asset class risk. To mitigate concentration and other risks, assets are invested across
multiple asset classes with active investment managers and passive index funds.
The company does not prefund its OPEB obligations.
Cash Contributions and Benefit Payments In 2014, the company contributed $99 and $293 to its U.S. and international
pension plans, respectively. In 2015, the company expects contributions to be approximately $350 to its U.S. plan and $250
to its international pension plans. Actual contribution amounts are dependent upon investment returns, changes in pension
obligations, regulatory environments and other economic factors. Additional funding may ultimately be required if
investment returns are insufficient to offset increases in plan obligations.
The company anticipates paying other postretirement benefits of approximately $198 in 2015; $200 was paid in 2014.
The following benefit payments, which include estimated future service, are expected to be paid by the company in the next
10 years:
Pension Benefits Other
U.S. Int’l. Benefits
2015 $ 1,398 $ 225 $ 198
2016 $ 1,346 $ 315 $ 203
2017 $ 1,347 $ 322 $ 207
2018 $ 1,340 $ 355 $ 212
2019 $ 1,319 $ 374 $ 216
2020-2024 $ 5,966 $ 2,004 $ 1,113
64 Chevron Corporation 2014 Annual Report