Sample Investment Policy Statement For A Defined-Benefit Plan Page 2


However, investment managers shall respect and observe the specific limitations,
guidelines, attitudes, and philosophies stated herein and within any implementation guidelines, or as
expressed in any written amendments. Investment managers are expected to communicate, in writing,
any developments that may affect the Plan’s portfolio to the Committee within five business days of
occurrence. Examples of such events include, but are not limited to, the following:
A significant change in investment philosophy;
A change in the ownership structure of the firm;
A loss of one or more key management personnel; and
Any occurrence that might potentially affect the management, professionalism, integrity, or
financial position of the firm.
Bank custodian. The bank trustee/custodian(s) will hold all cash and securities (except for those held in
commingled funds and mutual funds) and will regularly summarize these holdings for the Committee’s
review. In addition, a bank or trust depository arrangement will be used to accept and hold cash prior to
allocating it to the investment manager and to invest such cash in liquid, interest-bearing instruments.
3- Investment Goals and Objectives
The Plan’s overall investment objective is to fund benefits to Plan beneficiaries through a carefully
planned and well-executed investment program.
Return objectives.
The overall return objective is to achieve a return sufficient to achieve funding adequacy on an inflation-
adjusted basis. Funding adequacy is achieved when the market value of assets is at least equal to the
Plan’s projected benefit obligation as defined in Statement of Financial Accounting Standards
No. 87, as calculated by the Plan’s actuary. The Plan has a total return objective of 7.5 percent per year.
In addition, the Plan has the following broad objectives:
The assets of the Plan shall be invested to maximize returns for the level of risk taken.
The Plan shall strive to achieve a return that exceeds the return of benchmarks composed of
various established indexes for each category of investment, in which the weights of the indexes
represent the expected allocation of the Plan’s investments over a three- to five-year time
Risk objectives.
The assets of the Plan shall be diversified to minimize the risk of large losses within any one
asset class, investment type, industry or sector distributions, maturity date, or geographic
location, which could seriously impair the Plan’s ability to achieve its funding and long-term
investment objectives.
The Plan’s assets shall be invested such that the risk that the market value of assets falls below
105 percent of the Plan’s projected benefit obligation in a given year is 10 percent or less.


00 votes

Related Articles

Related forms

Related Categories

Parent category: Legal
Page of 3