First Data 2014 Annual Report Download - page 84
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addition, private equity securities comprise a very small part of the equity allocation. The fixed income allocation is a combination of fixed income
investment strategies designed to contribute to the total rate of return of all plan assets while minimizing risk and supporting the duration of plan liabilities.
The Company's pension plan target allocation for the U.S. plans based on the investment policy as of December 31, 2014 was 40% equity securities and 60%
debt securities.
Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic
asset and liability studies. The general philosophy of the Benefit Committee in setting the allocation percentages for the domestic plan is to adhere to the
appropriate allocation mix necessary to support the underlying plan liabilities as influenced significantly by the demographics of the participants and the
frozen nature of the plan.
The goal of the Board of Trustees of the United Kingdom plan is the acquisition of secure assets of appropriate liquidity, which are expected to generate
income and capital growth to meet, together with new contributions from the Company, the cost of current and future benefits, as set out in the Trust Deed
and Rules. The Trustees, together with the plan’s consultants and actuaries, further design the asset allocation to limit the risk of the assets failing to meet the
liabilities over the long term. The Trustees approach to the investment strategy is to allocate the assets into two pools: 1) Off-risk assets whereby the focus is
risk management, protection, and insurance relative to the liability target invested in, but not limited to, debt, United Kingdom government bonds, and
United Kingdom government index-linked bonds; and 2) On-risk assets whereby the focus is on return generation and taking risk in a controlled manner.
Such assets could include equities, government bonds, high-yield bonds, property, commodities, or hedge funds. The target allocation for this plan is 40%
off-risk assets and 60% on-risk assets.
Financial instruments included in plan assets carried and measured at fair value on a recurring basis are classified in the table
below:
Investments:
Cash and cash equivalents $ 8.7 $ — $ — $ 8.7
Registered investment companies:
Cash management fund 1.0 — — 1.0
Equity funds 64.5 — — 64.5
Fixed income funds
—
266.7
—
266.7
Fixed income securities — 47.9 — 47.9
Private investment funds—redeemable (a) 165.5 440.7 — 606.2
Private investment funds—non-redeemable — — 0.1 0.1
Insurance annuity contracts — — 3.5 3.5
Total investments at fair value $ 239.7 $ 755.3 $ 3.6 $ 998.6
(a) 39% of portfolio is invested in equity index funds, 44% in fixed income investments, 6% in cash and cash equivalents, and 11% in other investments.
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