Boeing Co, Chicago, expects to contribute $750 million to its U.S. defined benefit plans this year and warned it might be required to make higher contributions in future years, according to the company’s 10-K report released Friday.
The company did not project an amount beyond this year. It contributed $1.542 billion last year.
Its defined benefit assets increased 3.5% to $58.1 billion for the year ended Dec. 31, while projected benefit obligations fell 9.5% to $68.6 billion for a funding ratio of 85%.
The company raised its discount rate for valuing pension obligations to 4.8% in 2013 from 3.8% in 2012, while it kept its actuarial assumed rate of return at 7.5%.
Boeing’s actual return on its pension investments in 2013 was 6%, or a $3.3 billion return on defined benefit assets, falling short of the 7.5% assumed return, or $3.8 billion it expected.
Spokesman Charles Bickers, in an e-mail explained that equities did well, while fixed income was affected by higher interest rates. “Since the expected return is a long-term average, there will be years with returns higher and lower than that (assumed) number,” Mr. Bickers said.
Boeing kept its actual and target asset allocations for its defined benefit plans as of Dec. 31 the same as a year earlier. Its actual allocation was 49% fixed income, 29% global equity, 8% combined real estate and real assets, 5% each in private equity and hedge funds, and 4% global strategies. Its target was 47% fixed income, 26% global equity, 11% combined real estate and real assets, 6% each in private equity and hedge funds, and 4% global strategies.
The company last year contributed $742 million to its 401(k) plans, which had $35.8 billion in assets.
