Sample Investment Policy Statement For A Defined-Benefit Plan (Page 3 of 3) in pdf

Sample Investment Policy Statement For A Defined-Benefit Plan Page 3

Constraints.



The assets of the Plan shall maintain adequate liquidity to meet required benefit payments to

the Plan’s beneficiaries. The Plan currently and for the foreseeable future has minimal liquidity

requirements.



The Plan’s assets shall be invested consistent with the Plan’s long-term investment horizon.



As a tax-exempt investor, the Plan shall invest its assets with a focus on total return without

distinction made between returns generated from income and returns generated from capital

gains.

4- Review Schedule

The Committee will review investment performance on a quarterly basis. This investment policy

statement will be reviewed annually or more frequently as required by significant changes in laws or

regulations, in the funded status of the Plan, or in capital market conditions.

5- Asset Allocation

The Committee believes that the level of risk assumed by the Plan is largely determined by the Plan’s

strategic asset allocation. The Committee has summarized the factors that should be considered in

determining its long-term asset allocation as follows:



The Plan’s time horizon;



The funded status of the Plan; and



The Company’s financial strength.

In establishing the long-run asset allocation for the Plan, the Committee will consider conservative long-

run capital market expectations for expected return, volatility, and asset class correlations. The Plan’s

strategic asset allocation will be set out by the Committee in a separate strategic asset allocation

document.

6- Rebalancing

The Committee is responsible for the Plan’s asset allocation decisions and will meet to review target

allocations as required based on market conditions, but at least every three years. Until such time as

the Committee changes target allocations, the portfolio must periodically be rebalanced as a result of

market value fluctuations. The Committee has delegated to staff the duty of implementing such

rebalancing. After the Plan has reached its target equity allocation, the equity allocation shall be

rebalanced to its equity target on a quarterly basis using index-based vehicles. Specific investment

manager allocations will be rebalanced back to target on an annual basis. Staff will report rebalancing

activity to the Committee.

Sample Investment Policy Statement For A Defined-Benefit Plan Page 3