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## NOTES TO THE FINANCIAL STATEMENTS 

## NOTE 22. Retirement Benefits (Continued) 

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A one percentage point increase/(decrease) in the assumed health care cost trend rate would increase/(decrease) the postretirement health care benefit obligation by approximately $5.2 billion/$(4.2) billion and the service and interest component of health care expense by $330 million/$(260) million. The actual retiree health care cost trend for 2004 was 9%. 

## Plan Contributions 

Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations, and union agreements. We do from time to time make contributions beyond those legally required. 

Pension. In 2004, we made over $2.3 billion of cash contributions to our funded pension plans. During 2005, we expect to contribute $2.8 billion to our worldwide pension plans, including about $300 million of benefit payments paid directly by the Company in respect of unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. pension plans in 2005. We also do not expect to be required to pay any variable-rate premiums for our major plans to the Pension Benefit Guaranty Corporation in 2005. 

Health Care and Life Insurance. In 2004, we contributed $2.8 billion to our previously established VEBA for U.S. hourly retiree health care and life insurance benefits. During 2005, we expect to contribute $200 million to the VEBA. 

## Estimated Future Benefit Payments 

The following table presents estimated future gross benefit payments and subsidy receipts related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (in millions): 

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## Plan Asset Information 

Pension. Our investment strategy for pension assets has a long-term horizon and is tolerant of return volatility, in keeping with the long-term nature of the liabilities. The target asset allocation for our major plans worldwide generally is 70% equities, 30% fixed income. The present allocation to alternative investments (e.g., private equity) is below 1%. All assets are externally managed and investment managers have discretion to invest globally within their respective mandates. A diverse array of investment processes within asset classes reduces volatility. Most assets are actively managed; manager skill and broad mandates have generally produced long-term returns in excess of common market indices. Ford securities comprised less than one-half of one percent of the value of our worldwide pension plan assets during 2004 and 2003. 

