General Motors 2015 Annual Report Download - page 85
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Table of Contents
U.S. defined benefit pension plans are increasingly designed to satisfy the competing objectives of improving funded positions (market value of assets equal
to or greater than the present value of the liabilities) and mitigating the possibility of a deterioration in funded status.
Derivatives may be used to provide cost effective solutions for rebalancing investment portfolios, increasing or decreasing exposure to various asset classes
and for mitigating risks, primarily interest rate and currency risks. Equity and fixed income managers are permitted to utilize derivatives as efficient
substitutes for traditional physical securities. Interest rate derivatives may be used to adjust portfolio duration to align with a plan's targeted investment
policy. Alternative investment managers are permitted to employ leverage, including through the use of derivatives, which may alter economic exposure.
In December 2015 an investment policy study was completed for the U.S. pension plans. The study resulted in new target asset allocations being approved
for the U.S. pension plans with resulting changes to the expected long-term rate of return on assets. The weighted-average long-term rate of return on assets
decreased from 6.4% at December 31, 2014 to 6.3% at December 31, 2015. The expected long-term rate of return on plan assets used in determining pension
expense for non-U.S. plans is determined in a similar manner to the U.S. plans.
The following table summarizes the target allocations by asset category for U.S. and non-U.S. defined benefit pension plans:
Equity 14%
21%
16%
27%
Debt 62%
50%
60%
47%
Other(a) 24%
29%
24%
26%
Total 100%
100%
100%
100%
__________
(a) Primarily includes private equity, real estate and absolute return strategies which mainly consist of hedge funds.
The following tables summarize the fair value of U.S. and non-U.S. defined benefit pension plan assets by asset class (dollars in millions):
Common and preferred stocks $ 7,637
$ 18
$ 8
$ 7,663
$ 10,033
$ 30
$ 3
$ 10,066
Government and agency debt securities(a) —
14,318
—
14,318
—
16,143
—
16,143
Corporate and other debt securities —
22,963
1
22,964
—
22,725
83
22,808
Other investments, net 466
130
472
1,068
662
(180)
711
1,193
Net plan assets subject to leveling $ 8,103
$ 37,429
$ 481
46,013
$ 10,695
$ 38,718
$ 797
50,210
Investment funds
6,321
6,172
Private equity and debt investments
4,529
5,347
Real estate investments
3,828
3,525
Total plan assets measured at net asset value
14,678
15,044
Other plan assets, net(b)
381
569
$ 61,072
$ 65,823
81