part iI / item 8 A one-percentage-point change in assumed health care cost trend rates would have the following effects: The weighted-average assumptions used to determine net periodic benefit cost are as follows: The long term expected rate of return on plan assets assumptions were determined by the Company with input from independent investment consultants and plan actuaries, utilizing asset pricing models and considering historical returns. The discount rates used by the Company for valuing pension liabilities are based on a review of high quality corporate bond yields with maturities approximating the remaining life of the projected benefit obligations. In the U.S. Plan, the 8.25% expected rate of return on assets assumption for 2012 reflected a long-term asset allocation target comprised of an asset allocation range of 25%-75% equity secu- rities, 15%-35% fixed income securities, 10%-35% alternative assets, and 0%-10% cash. As of December 31, 2012, the actual asset allocation for the U.S. plan was 54% equity securities, 25% fixed income securities, 21% alternative assets, and 0% cash and cash equivalents. The Company periodically reviews the Plan’s long- term rate of return assumptions to ensure they are in line with prevailing long-term market outlooks. Accordingly, the expected rate of return on assets assumption for the U.S. Plan has been reduced to 7.75% beginning in 2013. For the non-U.S. Plans, the 7.00% expected rate of return on assets assumption for 2012 reflected a weighted average of the long-term asset allocation targets for our various international plans. As of December 31, 2012, the actual weighted average asset allocation for the non-U.S. plans was 45% equity securities, 48% fixed income securities, 5% alternative assets/other, and 2% cash and cash equivalents. The assumed health care cost trend rates are as follows: Assumed health care cost trend rates have a significant effect on the amounts reported for the Company’s health care plans. The Company’s pension investment committees and trustees, as applicable, exercise reasonable care, skill and caution in making investment decisions. Independent investment consultants are retained to assist in executing the plans’ investment strategies. A number of factors are evaluated in determining if an investment strategy will be implemented in the Company’s pension trusts. These factors include, but are not limited to, investment style, investment risk, investment manager performance and costs. The primary investment objective of the Company’s various pen- sion trusts is to maximize the value of plan assets, focusing on capi- tal preservation, current income and long-term growth of capital and income. The plans’ assets are typically invested in a broad range of equity securities, fixed income securities, alternative assets and cash instruments. The company’s investment strategies across its pension plans worldwide results in a global target asset allocation range of 35%-75% equity securities, 20%-50% fixed income securities, 0%-20% alternative assets, and 0%-10% money market, as noted in the table above. Equity securities include investments in large-cap, mid-cap, and small-cap companies located in both developed countries and emerging markets around the world. Fixed income securities include government bonds of various countries, corporate bonds that are primarily investment-grade, and mortgage-backed secu- rities. Alternative assets include investments in hedge funds with a wide variety of strategies. The Company periodically reviews investment managers and their performance in relation to the plans’ investment objectives. The Company expects its pension trust investments to meet or exceed their predetermined benchmark indices, net of fees. Generally, however, the Company realizes that investment strategies should be given a full market cycle, normally over a three to five-year time period, to achieve stated objectives. Equity securities include Crane Co. common stock, which repre- sents 4% and 5% of plan assets at December 31, 2012 and 2011, respectively. 47 Pension Benefits Postretirement Benefits December 31, 2012 2011 2010 2012 2011 2010 U.S. Plans: Discount rate 5.00% 5.80% 6.10% 4.25% 4.25% 5.30% Expected rate of return on plan assets 8.25% 8.25% 8.25% Rate of compensation increase 3.50% 3.50% 3.65% Non-U.S. Plans: Discount rate 4.56% 5.40% 5.76% Expected rate of return on plan assets 7.00% 7.01% 7.13% Rate of compensation increase 3.89% 3.74% 3.72% (in thousands) One Percentage Point Increase One Percentage Point (Decrease) Effect on total of service and interest cost components $37 $ (34) Effect on postretirement benefit obligation $711 $(655) Plan Assets The Company’s pension plan target allocations and weighted- average asset allocations by asset category are as follows: December 31, 2012 2011 Health care cost trend rate assumed for next year 7.50% 8.00% Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.75% 4.75% Year that the rate reaches the ultimate trend rate 2019 2019 Actual Allocation Asset Category December 31, Target Allocation 2012 2011 Equity securities 35%-75% 49% 48% Fixed income securities 20%-50% 37% 35% Alternative assets/Other 0%-20% 13% 12% Money market 0%-10% 1% 5%