Voya 2013 Annual Report Download - page 328

ING U.S., Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
The weighted-average assumptions used in determining net benefit cost were as follows:
Pension Plans Other Postretirement Benefits
2013 2012 2011 2013 2012 2011
Discount rate ................................... 4.05% 4.59% 5.50% 4.05% 4.75% 5.50%
Rate of compensation increase ..................... 4.00% 4.00% 4.00% N/A N/A N/A
Expected rate of return on plan assets ................ 7.50% 7.50% 7.50% N/A N/A N/A
The expected return on plan assets is updated at least annually, taking into consideration the Plan’s asset
allocation, historical returns on the types of assets held in the Retirement Plan’s portfolio of assets (“the Fund”),
and the current economic environment. Based on these factors, it is expected that the Fund’s assets will earn an
average percentage per year over the long term. This estimation is based on an active return on a compound
basis, with a reduction for administrative expenses and non-ING investment manager fees paid from the Fund.
For estimation purposes, it is assumed the long-term asset mix will be consistent with the current mix. Changes
in the asset mix could impact the amount of recorded pension income or expense, the funded status of the Plan,
and the need for future cash contributions.
The annual assumed rate of increase in the per capita cost of covered benefits (i.e. health care cost trend rate) for
the medical rate within the other postretirement benefit plan is 7.75%, decreasing gradually to 7.08% over the
next five years with an ultimate trend rate of 5.0%.
Assumed healthcare cost trend rates may have a significant effect on the amounts reported for healthcare plans. A
one-percentage point change in assumed healthcare cost trend rates would have the following effects:
One Percentage
Point Increase
One Percentage
Point Decrease
Effect on the aggregate of service and interest
cost components ........................ $0.1 $— *
Effect on accumulated postretirement benefit
obligation ............................. 1.1 (0.9)
* Less than $0.1
Plan Assets
The Retirement Plan is the only defined benefit plan with plan assets in a trust. The primary financial objective of
the Retirement Plan is to secure participant retirement benefits. As such, the key objective in the Retirement
Plan’s financial management is to promote stability and, to the extent appropriate, growth in funded status (i.e.
the ratio of market value of assets to liabilities). The investment strategy for the Fund balances the requirement to
generate returns with the need to control risk. The asset mix is recognized as the primary mechanism to influence
the reward and risk structure of the Fund in an effort to accomplish the Retirement Plan’s funding objectives.
Desirable target allocations amongst identified asset classes are set and within each asset class, careful
consideration is given to balancing the portfolio among industry sectors, geographies, interest rate sensitivity,
economic growth, currency and other factors affecting investment returns. The assets are managed by
professional investment firms. They are bound by mandates and are measured against benchmarks. Consideration
is given to balancing security concentration, investment style, and reliance on particular active investment
strategies, among other factors. The Company reviews its asset mix of the Fund on a regular basis. Generally, the
pension committee of the Company will rebalance the Fund’s asset mix to the target mix as individual portfolios
approach their minimum or maximum levels. However, the pension committee has the discretion to deviate from
these ranges or to manage investment performance using different criteria.
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