Company: PCG-PB
Filing Date: 2025-02-13
Form Type: 10-K
Source: 0001004980-25-000010
Chunk: 207

Company: PG&E Corp
Filing Date: 2025-02-13
Form: 10-K
Item: Item 8
Chunk 207
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 benefits was based on a yield curve developed from market data of over approximately 858 Aa-grade non-callable bonds at December 31, 2024.  This yield curve has discount rates that vary based on the duration of the obligations.  The estimated future cash flows for the pension benefits and other benefit obligations were matched to the corresponding rates on the yield curve to derive a weighted average discount rate.Investment Policies and StrategiesThe financial position of PG&E Corporation’s and the Utility’s funded status is the difference between the fair value of plan assets and projected benefit obligations.  Volatility in funded status occurs when asset values change differently from liability values and can result in fluctuations in costs in financial reporting, as well as the amount of minimum contributions required under the Employee Retirement Income Security Act of 1974, as amended.  PG&E Corporation’s and the Utility’s investment policies and strategies are designed to increase the ratio of trust assets to plan liabilities at an acceptable level of funded status volatility.The trusts’ asset allocations are meant to manage volatility, reduce costs, and diversify its holdings.  Interest rate, credit, and equity risk are the key determinants of PG&E Corporation’s and the Utility’s funded status volatility.  In addition to affecting the trusts’ fixed income portfolio market values, interest rate changes also influence liability valuations as discount rates move with current bond yields.  To manage volatility, PG&E Corporation’s and the Utility’s trusts hold significant allocations in long maturity fixed-income investments.  Although they contribute to funded status volatility, equity investments are held to reduce long-term funding costs due to their higher expected return.  Real assets and absolute return investments are held to diversify the trust’s holdings in equity and fixed-income investments by exhibiting returns with low correlation to the direction of these markets.  Real assets include global real estate investment trusts (“REITS”), global listed infrastructure equities, and private real estate funds.  Absolute return investments include hedge fund portfolios.Derivative instruments such as equity index futures are used to meet target equity exposure.  Derivative instruments, such as equity index futures and U.S. treasury futures, are also used to rebalance the allocation between fixed income and equity of the pension’s portfolio.  Foreign currency exchange contracts are used to hedge a portion of the non-U.S. dollar exposure of global equity investments.

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The target asset allocation percentages for major categories of trust assets for pension and other benefit plans are as follows:  Pension PlanPBOP Plans 202520242023202520242023Global equity