NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2012 is as follows: validated using a simulation model that incorporates yield curves, credit spreads and risk premiums to project long-term prospective returns. The plan’s investment management objectives include maintaining an adequate level of diversification, to reduce interest rate and market risk, and to provide adequate liquidity to meet immediate and future benefit payment requirements. The overall investment strategy targets a mix of 65% growth seeking assets and 35% income generating assets using a wide diversification of asset types, fund strategies and investment managers. The growth seeking allocation consists of global public equities in developed and emerging countries, private equity, real estate and balanced market risk strategies. Within public equities, 9% of the portfolio is an enhanced equity strategy that invests in publicly traded equity and fixed income securities, derivatives and foreign currency. Investments in private equity are primarily via limited partnership interests in buy-out strategies with smaller allocations in distressed debt funds. The real estate strategy is principally concentrated in directly held U.S. core investments with some smaller investments in international, value-added and opportunistic strategies. Within the income generating assets, the fixed income portfolio consists of a broadly diversified portfolio of corporate bonds, global government bonds and U.S. Treasury STRIPS. These investments are designed to hedge 40% of the interest rate sensitivity of the pension plan liabilities. In determining the expected return on plan assets, we consider the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes, and economic and other indicators of future performance. In addition, we may consult with and consider the opinions of financial and other professionals in developing appropriate capital market assumptions. Return projections are also Major assumptions used in determining the benefit obligation and net cost for pension plans are presented in the following table as weighted-averages: 2011 ANNUAL REPORT 73 BENEFIT OBLIGATION NET COST 2011 2010 2011 2010 2009 Discount rate 4.7% 5.4% 5.4% 5.9% 6.1% Salary scale 4.3% 4.4% 4.4% 4.4% 4.4% Expected return on plan assets — — 7.9% 8.0% 8.2% (Dollars in millions) Net actuarial loss $722 Prior service credit (12) Transition obligation 1 $ 711