Jack In The Box 2014 Annual Report Download - page 71
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For measurement purposes, the weighted-average assumed health care cost trend rates for our postretirement health plans were as follows for each fiscal year:
Healthcare cost trend rate for next year:
Participants under age 65
8.25%
8.50%
8.50%
Participants age 65 or older
7.75%
8.00%
8.00%
Rate to which the cost trend rate is assumed to decline:
Participants under age 65 (1)
4.50%
4.80% / 4.90%
4.50%
Participants age 65 or older (1)
4.50%
4.80% / 4.90%
4.50%
Year the rate reaches the ultimate trend rate:
Participants under age 65 (1)
2030
2038 / 2045
2029
Participants age 65 or older (1)
2028
2037 / 2045
2027
____________________________
(1) In fiscal 2013, rates and years are stated for the two post retirement health plans sponsored by the Company. In fiscal 2014 and 2012, rates and years were the same for both
plans.
The assumed healthcare cost trend rate represents our estimate of the annual rates of change in the costs of the healthcare benefits currently provided by our
postretirement plans. The healthcare cost trend rate implicitly considers estimates of healthcare inflation, changes in healthcare utilization and delivery
patterns, technological advances and changes in the health status of the plan participants. The healthcare cost trend rate assumption has a significant effect
on the amounts reported. For example, a 1.0% change in the assumed healthcare cost trend rate would have the following effect on the 2014 net periodic
benefit cost and end of year PBO (in thousands):
Total interest and service cost
$ 206
$ (176)
Postretirement benefit obligation
$ 3,231
$ (2,765)
Plan assets — Our investment philosophy is to (1) protect the corpus of the fund; (2) establish investment objectives that will allow the market value to
exceed the present value of the vested and unvested liabilities over time; while (3) obtaining adequate investment returns to protect benefits promised to the
participants and their beneficiaries. Our asset allocation strategy utilizes multiple investment managers in order to maximize the plan’s return while
minimizing risk. We regularly monitor our asset allocation, and senior financial management and the Finance Committee of the Board of Directors review
performance results at least semi-annually. We continually review our target asset allocation for our Qualified Plan and when changes are made, we reallocate
our plan assets over a period of time, as deemed appropriate by senior financial management, to achieve our target asset allocation. Our plan asset allocation
at the end of fiscal 2014 and target allocations were as follows:
Domestic equity
21%
23%
12%
32%
International equity
21
22
12
32
Core fixed funds
34
32
27
37
Real return bonds
3
4
—
10
Alternative investments
4
4
—
10
Real estate
9
7
—
10
High yield
4
4
—
10
Commodities
4
4
—
10
100%
100%
F-27