First Data 2008 Annual Report Download - page 175
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FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assumptions
The weighted-average rate assumptions used in the measurement of the Company's benefit obligation are as follows:
Successor Predecessor
December 31,
2008
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Discount rate 6.52% 5.98% 5.95%
Rate of compensation increase* 3.76% 4.09% 4.09%
The weighted-average rate assumptions used in the measurement of the Company's net cost are as follows:
Successor Predecessor
Year ended
December 31,
2008
Period from
September 25
through
December 31,
2007
Period from
January 1
through
September 24,
2007
Year ended
December 31,
2006
Discount rate 5.94% 5.83% 5.36% 5.09%
Expected long-term return on plan assets 6.84% 7.07% 6.75% 6.96%
Rate of compensation increase* 3.82% 3.95% 3.82% 3.62%
* Applies only to plans in the UK, Germany, Greece and Austria.
Assumptions for the U.S. plans and the foreign plans are comparable in all of the above periods. The Company employs a building block approach in
determining the long-term rate of return for plan assets with proper consideration of diversification and re-balancing. Historical markets are studied and long-
term historical relationships between equities and fixed-income securities are preserved consistent with the widely accepted capital market principle that
assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates are evaluated before long-
term capital market assumptions are determined. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
Plan Assets
The Company's pension plan asset allocation at December 31, 2008 and 2007, and target allocation based on the investment policy are as follows:
Percentage of Plan Assets
at Measurement Date
Asset Category 2008 2007
Equity securities 50.5% 60.8%
Debt securities 49.1% 38.5%
Other 0.4% 0.7%
Total 100.0% 100.0%
Asset Category
Target
allocation
U.S. plans
Target
allocation
Foreign plans
Equity securities 30% 60%
Debt securities 68% 40%
Other 0-2% 0%
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