Pfizer 2015 Annual Report Download - page 110

Notes to Consolidated Financial Statements
Pfizer Inc. and Subsidiary Companies
2015 Financial Report
109
Global plan assets are managed with the objective of generating returns that will enable the plans to meet their future obligations, while
seeking to minimize net periodic benefit costs and cash contributions over the long-term. We utilize long-term asset allocation ranges in the
management of our plans’ invested assets. Our long-term return expectations are developed based on a diversified, global investment strategy
that takes into account historical experience, as well as the impact of portfolio diversification, active portfolio management, and our view of
current and future economic and financial market conditions. As market conditions and other factors change, we may adjust our targets
accordingly and our asset allocations may vary from the target allocations.
Our long-term asset allocation ranges reflect our asset class return expectations and tolerance for investment risk within the context of the
respective plans’ long-term benefit obligations. These ranges are supported by analysis that incorporates historical and expected returns by
asset class, as well as volatilities and correlations across asset classes and our liability profile.
The investment managers of certain commingled funds and private equity funds may be permitted to use derivative securities as described in
each respective investment management, subscription, partnership or other governing agreement.
E. Cash Flows
It is our practice to fund amounts for our qualified pension plans that are at least sufficient to meet the minimum requirements set forth in
applicable employee benefit laws and local tax laws.
The following table provides the expected future cash flow information related to our benefit plans:
Pension Plans
(MILLIONS OF DOLLARS) U.S. Qualified
U.S. Supplemental
(Non-Qualified) International
Postretirement
Plans
Expected employer contributions:
2016(a) $1,000 $126 $170 $(9)
Expected benefit payments:
2016 $ 1,000 $126 $350 $198
2017 1,655 121 348 205
2018 985 125 352 208
2019 947 110 359 208
2020 959 114 370 207
2021–2025 4,517 512 1,959 1,001
(a) For the U.S. qualified plans, the $1.0 billion voluntary contribution was paid in January 2016. For the U.S. postretirement plans, the Internal Revenue Code 401
(h) reimbursement in January 2016 totaling $198 million is expected to exceed the payments.
The table reflects the total U.S. and international plan benefits projected to be paid from the plans or from our general assets under the current
actuarial assumptions used for the calculation of the benefit obligation and, therefore, actual benefit payments may differ from projected
benefit payments.
F. Defined Contribution Plans
We have defined contribution plans in the U.S. and several other countries. For the majority of the U.S. defined contribution plans, employees
may contribute a portion of their salaries and bonuses to the plans, and we match, in cash, a portion of the employee contributions. Beginning
on January 1, 2011, for newly hired non-union employees, rehires and transfers to the U.S. or Puerto Rico, we no longer offer a defined benefit
pension plan and, instead, offer a retirement savings contribution (RSC) in the defined contribution plan. Beginning on January 1, 2018, all
non-union employees in those U.S. and Puerto Rico defined benefit plans will receive the RSC in the defined contribution plans. The RSC
enhanced benefit consists of a non-contributory employer contribution (that is, not dependent upon the participant making a contribution)
determined based on each employee’s eligible compensation, age and years of service. We recorded charges related to the employer
contributions to global defined contribution plans of $287 million in 2015, $278 million in 2014 and $266 million in 2013.