Prudential 2007 Annual Report Download - page 161

PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
16. EMPLOYEE BENEFIT PLANS (continued)
Pension and postretirement plan asset allocation as of September 30, 2007 and September 30, 2006, are as follows:
Pension Percentage of
Plan Assets as of
September 30
Postretirement Percentage
of Plan Assets as of
September 30
2007 2006 2007 2006
Asset category
U.S. Stocks ............................................................ 13% 27% 42% 77%
International Stocks ..................................................... 1% 7% 6% 10%
Bonds ................................................................ 71% 51% 51% 9%
Short-term Investments .................................................. 1% 0% 1% 2%
Real Estate ............................................................ 5% 6% 0% 2%
Other ................................................................. 9% 9% 0% 0%
Total ................................................................. 100% 100% 100% 100%
The Company, for its domestic pension and postretirement plans, has developed guidelines for asset allocations. As of the
September 30, 2007 measurement date the range of target percentages are as follows:
Pension Investment Policy
Guidelines as of
September 30, 2007
Postretirement Investment
Policy Guidelines as of
September 30, 2007
Minimum Maximum Minimum Maximum
Asset category
U.S. Stocks ............................................. 7% 22% 28% 53%
International Stocks ....................................... 1% 6% 2% 9%
Bonds .................................................. 65% 74% 0% 58%
Short-term Investments .................................... 0% 7% 0% 57%
Real Estate .............................................. 1% 7% 0% 0%
Other .................................................. 0% 9% 0% 0%
Management reviews its investment strategy on an annual basis.
The investment goal of the domestic pension plan assets is to generate an above benchmark return on a diversified portfolio of stocks,
bonds and other investments, while meeting the cash requirements for a pension obligation that includes a traditional formula principally
representing payments to annuitants and a cash balance formula that allows lump sum payments and annuity payments. The pension plan
risk management practices include guidelines for asset concentration, credit rating and liquidity. The pension plan does not invest in
leveraged derivatives. Derivatives such as futures contracts are used to reduce transaction costs and change asset concentration.
The investment goal of the domestic postretirement plan assets is to generate an above benchmark return on a diversified portfolio of
stocks, bonds, and other investments, while meeting the cash requirements for the postretirement obligations that includes a medical benefit
including prescription drugs, a dental benefit and a life benefit. Stocks are used to provide expected growth in assets. Bonds provide
liquidity and income. Short-term investments provide liquidity and allow for defensive asset mixes. The postretirement plans risk
management practices include guidelines for asset concentration, credit rating, liquidity, and tax efficiency. The postretirement plan does
not invest in leveraged derivatives. Derivatives such as futures contracts are used to reduce transaction costs and change asset
concentration.
There were no investments in Prudential Financial Common Stock as of September 30, 2007 or 2006 for either the pension or
postretirement plans. Pension plan assets of $7,185 million and $8,162 million are included in the Company’s separate account assets and
liabilities as of September 30, 2007 and 2006, respectively.
Prudential Financial 2007 Annual Report 159