Eversource 2014 Annual Report Download - page 94

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 Pension and PBOP funds are held in external trusts. Trust assets, including accumulated earnings,
must be used exclusively for Pension and PBOP payments. NU's investment strategy for its Pension and PBOP Plans is to maximize the long-term
rates of return on these plans'assets within an acceptable level of risk. The investment strategy for each asset category includes a diversification of
asset types, fund strategies and fund managers and establishes target asset allocations that are routinely reviewed and periodically rebalanced. PBOP
assets are comprised of assets held in the PBOP Plans as well as specific assets within the defined benefit pension plan trust (401(h) assets). The
investment policy and strategy of the 401(h) assets is consistent with those of the defined benefit pension plans. NU's expected long-term rates of
return on Pension and PBOP Plan assets are based on target asset allocation assumptions and related expected long-term rates of return. In
developing its expected long-term rate of return assumptions for the Pension and PBOP Plans, NU evaluated input from consultants, as well as long-
term inflation assumptions and historical returns. For the year ended December 31, 2014, management has assumed long-term rates of return of 8.25
percent for the Pension and PBOP Plan assets. These long-term rates of return are based on the assumed rates of return for the target asset allocations
as follows:
As of December 31, 2014 and 2013
Pension and Tax-Exempt PBOP Plans
Target Asset Allocation Assumed Rate of Return
Equity Securities:
United States 24% 9%
International 10% 9%
Emerging Markets 6% 10%
Private Equity 10% 13%
Debt Securities:
Fixed Income 15% 5%
High Yield Fixed Income 9% 7.5%
Emerging Markets Debt 6% 7.5%
Real Estate and Other Assets 9% 7.5%
Hedge Funds 11% 7%
The Taxable PBOP Plans have a target asset allocation of 70 percent equity securities and 30 percent fixed income securities.
The following table presents, by asset category, the Pension and PBOP Plan assets recorded at fair value on a recurring basis by the level in which
they are classified within the fair value hierarchy:
NU Pension Plans
Fair Value Measurements as of December 31,
 2014 2013
Asset Category: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Equity Securities
(1)
$414.7 $1,035.0 $292.2 $1,741.9 $326.8 $1,172.1 $255.5 $1,754.4
Private Equity 18.8 - 367.9 386.7 96.4 - 300.3 396.7
Fixed Income
(2)
10.2561.4 722.0 1,293.6 11.6 605.1 589.5 1,206.2
Real Estate and Other Assets - 132.0 265.8 397.8 - 88.2 288.5 376.7
Hedge Funds - 20.0 475.0 495.0 - - 416.9 416.9
Total Master Trust Assets $443.7 $1,748.4 $2,122.9 $4,315.0 $434.8 $1,865.4 $1,850.7 $4,150.9
Less: 401(h) PBOP Assets
(3)
(188.5)
(165.0)
Total Pension Assets $4,126.5 $3,985.9
NU PBOP Plans
Fair Value Measurements as of December 31,
 2014 2013
Asset Category: Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Cash and Cash Equivalents $ - $ - $ - $ - $11.1 $ - $ - $11.1
Equity Securities
(1)
104.1 172.8 75.1 352.0 110.3 176.8 69.1 356.2
Private Equity - - 24.9 24.9 - - 17.9 17.9
Fixed Income
(2)
16.1 110.0 78.3 204.4 - 119.7 51.5 171.2
Real Estate and Other Assets 19.4 15.0 34.4 - 14.2 33.9 48.1
Hedge Funds - 58.4 58.4 - - 57.0 57.0
Total $120.2 $302.2 $251.7 $674.1 $121.4 $310.7 $229.4 $661.5
Add: 401(h) PBOP Assets
(3)
188.5 165.0
Total PBOP Assets $862.6 $826.5
(1) United States, International and Emerging Markets equity securities classified as Level 2 include investments in commingled funds. Level 3
investments include hedge funds that are overlayed with equity index swaps and futures contracts and funds invested in equities that have
redemption restrictions.
(2) Fixed Income investments classified as Level 3 investments include fixed income funds that invest in a variety of opportunistic fixed income
strategies, and hedge funds that are overlayed with fixed income futures.
(3) The assets of the Pension Plans include a 401(h) account that has been allocated to provide health and welfare postretirement benefits under the
PBOP Plans.
Effective January 1, 2013, the NSTAR Pension Plan assets were transferred into the NUSCO Pension Plan master trust. The NUSCO Pension Plan is
entitled to approximately 66 percent of each asset category in the master trust, the NSTAR Pension Plan is entitled to approximately 30 percent of
each asset category in the master trust and the 401(h) plans are entitled to approximately four percent of each asset category in the master trust. For
the years ended December 31, 2014 and 2013 the NUSCO Pension Plan was entitled to $2,803.6 million and $2,750.4 million respectively and the