Goldman Sachs 2004 Annual Report Download - page 99

Download and view the complete annual report

Please find page 99 of the 2004 Goldman Sachs annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

GOLDMAN฀SAC H S ฀ 2004฀ A N N U A L ฀ R E P ORT ฀ ฀ ฀ 9 7
notes฀to฀consolidated฀financial฀statements
GOLDMAN฀SAC H S ฀ 2004฀ A N N U A L ฀ R E P ORT ฀ ฀ ฀ 9 7
The firm’s approach in determining the long-term rate of return
for plan assets is based upon historical financial market rela-
tionships that have existed over time with the presumption that
this trend will generally remain constant in the future.
For measurement purposes, an annual growth rate in the per
capita cost of covered healthcare benefits of 12.53% was
assumed for the fiscal year ending November 2005. The rate
was assumed to decrease ratably to 5.00% for the fiscal year
ending November 2009 and remain at that level thereafter.
The investment approach of the firm’s U.S. and major non-
U.S. defined benefit pension plans involves employing a suffi-
cient level of flexibility to capture investment opportunities as
they occur, while maintaining reasonable parameters to ensure
that prudence and care are exercised in the execution of the
investment programs. The plans employ a total return on
investment approach, whereby a mix, which is broadly similar
to the actual asset allocation as of November 2004, of equity
securities, debt securities and other assets is targeted to maximize
the long-term return on assets for a given level of risk.
Investment risk is measured and monitored on an ongoing
basis by the firm’s Retirement Committee through periodic
portfolio reviews, meetings with investment managers and
annual liability measurements.
The firm will contribute a minimum of $5 million to its pension
plans and $7 million to its postretirement plans in fiscal 2005.
The assumed cost of healthcare has an effect on the amounts reported for the firm’s postretirement plans. A 1% change in the
assumed healthcare cost trend rate would have the following effects:
฀ ฀ 1%฀INCREASE฀ 1%฀DECREASE
(IN฀MILLIONS)฀ 2004฀ 2003฀ 2004฀ 2003
Cost $฀฀5 $฀฀4 $฀฀(4)฀ $฀฀(3)
Obligation 37 33 (29) (26)
The following table sets forth the composition of plan assets for the U.S. and non-U.S. defined benefit pension plans by
asset category:
฀ ฀ AS฀OF฀NOVEMBER
฀ ฀ 2004฀ 2003
฀ ฀U.S.฀ NON-U.S.฀ U.S.฀฀฀ NON-U.S.฀
฀ ฀ ฀ PENSION฀ PENSION฀ PENSION฀ ฀PENSION
Equity securities 66%฀ 66%฀ 61%฀ 70%
Debt securities 22฀ 8฀ 25฀ 11
Other 12฀ 26฀ 14฀ 19
Total 100%฀ 100%฀ 100%฀ 100%
BES฀•฀Phone฀(201)฀635-5240฀฀•฀FAX฀(201)฀635-5199
BPX/S10829฀•฀Flow฀15฀•฀Proof฀12฀•฀2/4/05฀•฀0700