National Oilwell Varco 2011 Annual Report Download - page 88

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Index to Financial Statements
Defined Benefit Pension Plans
Assumed long-term rates of return on plan assets, discount rates and rates of compensation increases vary for the different plans according to the local economic conditions.
The assumption rates used for benefit obligations are as follows:
Years Ended December 31,
2011 2010
Discount rate:
United States plan 4.58% 4.95%
International plans 4.50% -5.60% 5.25% -5.50%
Salary increase:
United States plan N/A N/A
International plans 2.5% - 4.00% 2.50% -4.33%
The assumption rates used for net periodic benefit costs are as follows:
Years Ended December 31,
2011 2010 2009
Discount rate:
United States plan 4.95% 5.26% 6.23%
International plans 5.25% -5.65% 5.25% -5.75% 5.75% -6.50%
Salary increase:
United States plan N/A N/A N/A
International plans 2.00% -4.33% 2.50% -4.25% 2.50% -4.50%
Expected return on assets:
United States plan 5.50% -6.50% 7.50% 7.75%
International plans 4.50% -7.06% 6.00% -6.85% 6.00% -6.85%
In determining the overall expected long-term rate of return for plan assets, the Company takes into consideration the historical experience as well as future expectations of the
asset mix involved. As different investments yield different returns, each asset category is reviewed individually and then weighted for significance in relation to the total
portfolio.
The majority of our plans have projected benefit obligations in excess of plan assets.
The Company expects to pay future benefit amounts on its defined benefit plans of $30 million for each of the next five years and aggregate payments of $308 million.
Plan Assets
The Company and its investment advisers collaboratively reviewed market opportunities using historic and statistical data, as well as the actuarial valuation reports for the
plans, to ensure that the levels of acceptable return and risk are well-defined and monitored. Currently, the Companyî‚€s management believes that there are no significant
concentrations of risk associated with plan assets. Our pension investment strategy worldwide prohibits a direct investment in our own stock.
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