3M, St. Paul, Minn., is lowering the assumed rate of return for its $8.4 billion pension plan to 8.75% in 2005, from 9%, according to a 10-K filing. The company noted that actual return was slightly more than 13% in 2004 and 18% in 2003. The average annual return on plan assets was 11.7% over the past 10 years and 12.5% over 25 years.
The filing also noted slight changes in the plan's target asset allocation in 2005. Domestic equity will drop to 44% from 46% the prior year; international equity will drop to 15% from 17%; fixed income will increase to 28% from 27%; private equity will jump to 13% from 9%; and cash was dropped to zero from 1% in 2003.
Dennis Duerst, director of pensions, did not respond to a request for an interview.
3M contributed $300 million to its U.S. pension plan in the third quarter last year, according to the 10-K filing. There is no required minimum pension contribution obligation in 2005, but the company does expect to contribute between $100 million and $400 million to its worldwide international pension plans and about $150 million to its post-retirement plans. The exact size of the 2005 contribution "could vary significantly depending on the U.S. plans' funding status as of the 2005 measurement date and the anticipated tax deductibility of the contribution," according to the filing.