GE 2012 Annual Report Download - page 105

GE 2012 ANNUAL REPORT 103
notes to consolidated financial statements
PLANS WITH ASSETS LESS THAN ABO
December 31 (In millions) 2012 2011
Funded plans with assets less than ABO
Plan assets $53,276 $49,284
Accumulated benefit obligations 66,069 61,582
Projected benefit obligations 69,234 64,879
Unfunded plans (a)
Accumulated benefit obligations 5,390 4,563
Projected benefit obligations 6,828 6,161
(a) Primarily related to the GE Supplementary Pension Plan.
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) 2012 2011 2012 2011
Balance at January 1 $42,137 $44,801 $8,381 $7,803
Actual gain on plan assets 4,854 88 720 227
Employer contributions 642 201 737 713
Participant contributions 157 167 16 37
Benefits paid (3,052) (3,120) (425) (424)
Acquisitions (dispositions)/
other—net ———101
Exchange rate adjustments ——273 (76)
Balance at December 31 $44,738 $42,137 $9,702 $8,381
ASSET ALLOCATION
Principal
pension plans
Other pension plans
(weighted average)
2012
Target
allocation
2012
Actual
allocation
2012
Target
allocation
2012
Actual
allocation
Equity securities 32–72% (a) 44% (b) 47% 55%
Debt securities
(including cash equivalents) 10–40 30 33 34
Private equities 5–15 15 2 1
Real estate 4–14 7 6 5
Other 1–16 4 12 5
(a) Target allocations were 16–36% for both U.S. equity securities and non-U.S.
equity securities.
(b) Actual allocations were 25% for U.S. equity securities and 19% for non-U.S.
equity securities.
Plan fiduciaries 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 sta-
tus of the plan, a balance between risk and return and the plan’s
liquidity needs. Target allocation percentages are established at
an asset class level by plan fiduciaries. Target allocation ranges
are guidelines, not limitations, and occasionally plan fiduciaries
will approve allocations above or below a target range.
Plan fiduciaries monitor the GE Pension Plan’s liquidity posi-
tion in order to meet the near term benefit 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:
Þ 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 fiduciaries.
Þ Real estate investments may not exceed 25% of total assets.
Þ Investments in restricted securities (excluding real estate invest-
ments) that are not freely tradable may not exceed 30% of total
assets (actual was 19% of trust assets at December 31, 2012).
According to statute, the aggregate holdings of all qualifying
employer securities (e.g., GE common stock) and qualify-
ing employer real property may not exceed 10% of the fair value of
trust assets at the time of purchase. GE securities represented 4.2%
and 3.8% of trust assets at year-end 2012 and 2011, respectively.
The GE Pension Plan has a broadly diversified portfolio of
investments in equities, fixed income, private equities, real estate
and hedge funds; these investments are both U.S. and non-U.S. in
nature. As of December 31, 2012, U.S. government direct and indi-
rect obligations represented 18% of total GE Pension Plan assets.
No other sector concentration of assets exceeded 15% of total
GE Pension Plan assets.