September 5, 2006

 

Mr. Ken Raschke

 

Ken:

 

I am responding to your email correspondence of Friday, August 11, 2006 on behalf or John Hickey and Collette Chilton.  You asked:

 

  1. The announced change in asset allocations in the represented plan to 50/50, as announced, reflects a more conservative investment portfolio but was not fully explicit – Does this allocation change apply to ONLY the represented plan Assets in the Master Trust?

 

During the quarter ended June 30, 2006, Lucent reduced the allocation to equities in the Master Pension Trust from approximately 75% equities/ 25% fixed income to about 50% equities/ 50% fixed income.  You are correct:

    • this does reflect a more conservative asset allocation; and
    • the shift in asset allocation from equities to fixed income securities related to the occupational pension (i.e. represented) plans.

 

The assets in this pension plan are currently well in excess of the liabilities and the plan fiduciaries, acting in consultation with advice from an independent external asset allocation advisor, determined that the higher allocation to fixed income securities would be in the best interest of plan participants.

 

  1. In order to clearly differentiate and disclose this (represented) asset allocation from the different risk profile of the LRIP, will LRIP assets be stripped from the current Master Trust and managed separately in a new LRIP Trust?

 

Lucent Technologies has disclosed publicly the reduction in the allocation to equities in the Master Pension Trust and that this shift in asset allocation from equities to fixed income related to the occupational pension plan.  The assets of the LRIP will continue to be held in the Lucent Master Pension Trust and, of course, will be separately reported on the Form 5500 for that plan.

 

3.     What will be the new asset allocation profile of LRIP assets?

 

Lucent Technologies disclosed publicly that the shift in asset allocation from equities to fixed income securities related to the occupational plans.  The allocation of the LRIP assets remain at approximately 75% equities/25% fixed income.

 

Mary Lou Ambrus

Lucent Technologies

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