GE 2011 Annual Report Download - page 105

GE 2011 ANNUAL REPORT 103
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PLAN ASSETS
The fair value of the classes of the pension plans’ investments is
presented below. The inputs and valuation techniques used to
measure the fair value of the assets are consistently applied and
described in Note 1.
FAIR VALUE OF PLAN ASSETS
Principal pension plans Other pension plans
(In millions) 2011 2010 2011 2010
Balance at January 1 $44,801 $42,097 $7,803 $6,919
Actual gain on plan assets 88 5,280 227 749
Employer contributions 201 183 713 573
Participant contributions 167 166 37 33
Benefits paid (3,120) (2,925) (424) (421)
Acquisitions (dispositions)
and other—net ——101 41
Exchange rate adjustments ——(76) (91)
Balance at December 31 $42,137 $44,801 $8,381 $7,803
ASSET ALLOCATION
Principal pension plans
Other pension plans
(weighted average)
2011
Target
allocation
2011
Actual
allocation
2011
Target
allocation
2011
Actual
allocation
Equity securities 34–74% (a) 45% (b) 47% 56%
Debt securities
(including cash equivalents) 10–40 27 33 33
Private equities 5–15 16 2 2
Real estate 4–14 8 6 4
Other 1–14 4 12 5
(a) Target allocations were 17–37% for both U.S. equity securities and non-U.S.
equity securities.
(b) Actual allocations were 26% for U.S. equity securities and 19% for non-U.S.
equity securities.
Plan fi duciaries of the GE Pension Plan set investment policies and
strategies for the GE Pension Trust and oversee its investment
allocation, which includes selecting investment managers, com-
missioning periodic asset-liability studies and setting long-term
strategic targets. Long-term strategic investment objectives take
into consideration a number of factors, including the funded
status of the plan, a balance between risk and return and the
plan’s liquidity needs. Target allocation percentages are estab-
lished at an asset class level by plan fi duciaries. Target allocation
ranges are guidelines, not limitations, and occasionally plan
fi duciaries will approve allocations above or below a target range.
Plan fi duciaries monitor the GE Pension Plan’s liquidity position
in order to meet the near term benefi t payment and other cash
needs. The GE Pension Plan holds short-term debt securities to
meet its liquidity needs.
GE Pension Trust assets are invested subject to the following
additional guidelines:
• Short-term securities must generally be rated A-1/P-1 or
better, except for 15% of such securities that may be rated
A-2/P-2 and other short-term securities as may be approved
by the plan fi duciaries.
• Real estate investments may not exceed 25% of total assets.
• Investments in restricted securities (excluding real estate invest-
ments) that are not freely tradable may not exceed 30% of total
assets (actual was 21% of trust assets at December 31, 2011).
According to statute, the aggregate holdings of all qualifying
employer securities (e.g., GE common stock) and qualifying
employer real property may not exceed 10% of the fair value of trust
assets at the time of purchase. GE securities represented 3.8%
and 3.6% of trust assets at year-end 2011 and 2010, respectively.
The GE Pension Plan has a broadly diversifi ed portfolio of
investments in equities, fi xed income, private equities, real estate
and hedge funds; these investments are both U.S. and non-U.S. in
nature. As of December 31, 2011, no one sector concentration of
assets exceeded 15% of total GE Pension Plan assets.
The following tables present GE Pension Plan investments
measured at fair value.
December 31, 2011 (In millions) Level 1 Level 2 Level 3 Total
EQUITY SECURITIES
U.S. equity securities $10,645 $ 191 $ — $10,836
Non-U.S. equity
securities 7,360 644 — 8,004
DEBT SECURITIES
Fixed income and
cash investment funds — 2,057 62 2,119
U.S. corporate (a) — 2,126 3 2,129
Residential mortgage-
backed — 1,276 5 1,281
U.S. government and
federal agency — 3,872 — 3,872
Other debt securities (b) — 1,566 146 1,712
PRIVATE EQUITIES (c) — — 6,786 6,786
REAL ESTATE (c) — — 3,274 3,274
OTHER INVESTMENTS (d) — — 1,709 1,709
TOTAL INVESTMENTS $18,005 $11,732 $11,985 $41,722
CASH AND OTHER 415
TOTAL ASSETS $42,137
December 31, 2010 (In millions) Level 1 Level 2 Level 3 Total
EQUITY SECURITIES
U.S. equity securities $11,388 $ 195 $ — $11,583
Non-U.S. equity
securities 9,662 801 — 10,463
DEBT SECURITIES
Fixed income and cash
investment funds — 2,712 65 2,777
U.S. corporate (a) — 2,377 5 2,382
Residential mortgage-
backed — 1,225 21 1,246
U.S. government and
federal agency — 3,192 — 3,192
Other debt securities (b) — 1,578 283 1,861
PRIVATE EQUITIES
(c) — — 6,014 6,014
REAL ESTATE
(c) — — 3,373 3,373
OTHER INVESTMENTS
(d) — 53 1,687 1,740
TOTAL INVESTMENTS $21,050 $12,133 $11,448 $44,631
CASH AND OTHER 170
TOTAL ASSETS $44,801
(a) Primarily represented investment grade bonds of U.S. issuers from diverse
industries.
(b) Primarily represented investments in non-U.S. corporate bonds and commercial
mortgage-backed securities.
(c) Included direct investments and investment funds.
(d) Substantially all represented hedge fund investments.