Employee and Agent Benefits

12 Months Ended

Dec. 31, 2011

Employee and Agent Benefits

Employee and Agent Benefits

11. Employee and Agent Benefits

        We have defined benefit pension plans covering substantially all of our U.S. employees and certain agents. Some of these plans provide supplemental pension benefits to employees and agents with salaries and/or pension benefits in excess of the qualified plan limits imposed by federal tax law. The employees and agents are generally first eligible for the pension plans when they reach age 21. For plan participants employed prior to January 1, 2002, the pension benefits are based on the greater of a final average pay benefit or a cash balance benefit. The final average pay benefit is based on the years of service and generally the employee's or agent's average annual compensation during the last five years of employment. Partial benefit accrual of final average pay benefits is recognized from first eligibility until retirement based on attained service divided by potential service to age 65 with a minimum of 35 years of potential service. The cash balance portion of the plan started on January 1, 2002. An employee's account is credited with an amount based on the employee's salary, age and service. These credits accrue with interest. For plan participants hired on and after January 1, 2002, only the cash balance plan applies. Our policy is to fund the cost of providing pension benefits in the years that the employees and agents are providing service to us. Our funding policy for the qualified defined benefit plan is to contribute an amount annually at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act ("ERISA"), and, generally, not greater than the maximum amount that can be deducted for federal income tax purposes. Our funding policy for the nonqualified benefit plan is to fund the plan in the years that the employees are providing service, taking into account the funded status of the trust. While we designate assets to cover the computed liability of the nonqualified plan, the assets are not included as part of the asset balances presented in this footnote as they do not qualify as plan assets in accordance with U.S. GAAP.

        We also provide certain health care, life insurance and long-term care benefits for retired employees. Subsidized retiree health benefits are provided for employees hired prior to January 1, 2002. Employees hired after December 31, 2001, have access to retiree health benefits but it is intended that they pay for the full cost of the coverage. The health care plans are contributory with participants' contributions adjusted annually. The contributions are based on the number of years of service and age at retirement for those hired prior to January 1, 2002, who retired prior to January 1, 2011. For employees hired prior to January 1, 2002, who retired on or after January 1, 2011, the contributions are 60% of the expected cost. As part of the substantive plan, the retiree health contributions are assumed to be adjusted in the future as claim levels change. The life insurance plans are contributory for a small group of previously grandfathered participants that have elected supplemental coverage and dependent coverage.

        Covered employees are first eligible for the health and life postretirement benefits when they reach age 57 and have completed ten years of service with us. Retiree long-term care benefits are provided for employees whose retirement was effective prior to July 1, 2000. Our policy is to fund the cost of providing retiree benefits in the years that the employees are providing service, taking into account the funded status of the trust.

Obligations and Funded Status

        The plans' combined funded status, reconciled to amounts recognized in the consolidated statements of financial position and consolidated statements of operations, was as follows:

	Pension benefits						Other postretirement benefits
	December 31,						December 31,
	2011			2010			2011			2010
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	(1,933.8	)	$	(1,797.4	)	$	(162.6	)	$	(360.1	)
Service cost		(44.0	)		(45.6	)		(1.2	)		(8.8	)
Interest cost		(108.5	)		(105.7	)		(8.9	)		(18.1	)
Actuarial gain (loss)		(151.3	)		(59.6	)		2.6			62.5
Participant contributions		—			—			(6.4	)		(6.0	)
Benefits paid		73.6			70.2			13.9			15.3
Amount recognized due to special events		—			—			(0.4	)		(0.2	)
Plan amendment		—			—			—			153.6
Early retiree reinsurance program reimbursement		—			—			(1.2	)		—
Other		5.6			4.3			(0.9	)		(0.8	)
Benefit obligation at end of year	$	(2,158.4	)	$	(1,933.8	)	$	(165.1	)	$	(162.6	)
Change in plan assets
Fair value of plan assets at beginning of year	$	1,417.7		$	1,250.3		$	471.7		$	421.5
Actual return on plan assets		4.1			181.1			1.3			58.1
Employer contribution		80.8			56.5			1.1			1.4
Participant contributions		—			—			6.4			6.0
Benefits paid		(73.6	)		(70.2	)		(13.9	)		(15.3	)
Fair value of plan assets at end of year	$	1,429.0		$	1,417.7		$	466.6		$	471.7
Amount recognized in statement of financial position
Other assets	$	—		$	—		$	301.7		$	309.4
Other liabilities		(729.4	)		(516.1	)		(0.2	)		(0.3	)
Total	$	(729.4	)	$	(516.1	)	$	301.5		$	309.1
Amount recognized in accumulated other comprehensive (income) loss
Total net actuarial loss	$	660.0		$	469.7		$	40.1		$	10.2
Prior service benefit		(30.5	)		(41.6	)		(114.1	)		(148.8	)
Pre-tax accumulated other comprehensive (income) loss	$	629.5		$	428.1		$	(74.0	)	$	(138.6	)

        The accumulated benefit obligation for all defined benefit pension plans was $2,027.8 million and $1,811.7 million at December 31, 2011 and 2010, respectively.

        Employer contributions to the pension plans include contributions made directly to the qualified pension plan assets and contributions from corporate assets to pay nonqualified pension benefits. Benefits paid from the pension plans include both qualified and nonqualified plan benefits. Nonqualified pension plan assets are not included as part of the asset balances presented in this footnote. The nonqualified pension plan assets are held in Rabbi trusts for the benefit of all nonqualified plan participants. The assets held in a Rabbi trust are available to satisfy the claims of general creditors only in the event of bankruptcy. Therefore, these assets are fully consolidated in our consolidated statements of financial position and are not reflected in our funded status as they do not qualify as plan assets under U.S. GAAP. The market value of assets held in these trusts was $281.2 million and $265.3 million as of December 31, 2011 and 2010, respectively.

Pension Plan Changes and Plan Gains/Losses

        On January 1, 2010, benefits under the Principal Pension Plan were frozen for certain participants.

        For the year ended December 31, 2011, the pension plans had a loss primarily due to a decrease in the discount rate and less than expected asset returns. The net result was an actuarial loss for the year ended December 31, 2011. For the year ended December 31, 2010, the pension plans had a loss primarily due to a decrease in the discount rate and a change in the mortality assumption. The plans also had a gain resulting from greater than expected asset returns. The net result was an actuarial loss for the year ended December 31, 2010.

Other Postretirement Plan Changes and Plan Gains/Losses

        On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Medicare Modernization Act") was signed into law. The Medicare Modernization Act introduced a prescription drug benefit under Medicare ("Medicare Part D") as well as a federal subsidy to sponsors of retiree medical benefit plans. During each of the years ended December 31, 2011, 2010 and 2009, the Medicare subsidies we received and accrued for were $0.9 million, $0.8 million and $0.8 million, respectively.

        An actuarial gain occurred during 2011 for the other postretirement benefit plans. This was due to a decrease in the claim cost assumptions and greater than expected increase in the medical premium equivalents. This was partially offset by the decrease in the discount rate. An actuarial gain occurred during 2010 for the other postretirement benefit plans. This was due to a decrease in the trend and claim cost assumptions and greater than expected increase in the medical premium equivalents. This was partially offset by the decrease in the discount rate.

Impact of Amendment to Retiree Health Benefits

        In September 2010, an amendment to retiree health benefits was announced. This amendment, which is effective for individuals retiring on or after January 1, 2011, resulted in a plan remeasurement as of September 30, 2010. Under this amendment, the company-paid subsidy for pre-Medicare-eligible coverage will be 40% and the cost of coverage for Medicare-eligible retirees (or their dependents) will no longer be subsidized. Prior to amendment, the subsidy calculation was complex and varied based on age and service with the company at the time of retirement. In addition to the changes for individuals retiring on or after January 1, 2011, the plan was simplified to a single consolidated plan design, the coordination with Medicare was changed for certain post-1984 retirees and the method for determining the premium equivalent rate was changed to be based solely on retiree experience. For the remeasurement of the retiree health benefits as of September 30, 2010, the assumptions used were a 5.40% discount rate to determine the benefit obligation; a 7.25% weighted-average expected long-term return on plan assets used to determine the net periodic benefit cost; and a health care cost initial trend rate of 9.5% pre-Medicare and 9.0% post-Medicare, decreasing to an ultimate rate of 5.0% in the year 2022. The plan amendment resulted in a $153.6 million reduction to the accumulated postretirement benefit obligation as of September 30, 2010. The plan amendment and remeasurement resulted in a $14.0 million reduction in the 2010 net periodic postretirement benefit cost, which was reflected in the fourth quarter of 2010.

Impact from Exit of Group Medical Insurance Business

        On September 30, 2010, we announced our decision to exit the group medical insurance business and entered into an agreement with United Healthcare Services, Inc. to renew medical insurance coverage for our customers as the business transitions. Our exit from the group medical insurance business resulted in a curtailment associated with the pension and other postretirement benefits of the impacted employees. We have determined that the curtailment will result in a gain, which was recognized quarterly in our consolidated financial statements as impacted employees were terminated. In the fourth quarter of 2010, the curtailment gain recognized was $0.9 million for the pension benefits and $2.6 million for the other postretirement benefits from the accelerated recognition of the existing prior service benefits. Also in the fourth quarter of 2010, the recognition of terminations resulted in a $0.2 million increase in the accumulated postretirement benefit obligation resulting from losses associated with individuals who were retirement eligible at termination exceeding the gains associated with those individuals who were not retirement eligible at termination. For the year ended December 31, 2011, the curtailment gain recognized was $1.4 million for the pension benefits and $5.1 million for the other postretirement benefits, respectively, from the accelerated recognition of the existing prior service benefits.

Information for Pension Plans With an Accumulated Benefit Obligation in Excess of Plan Assets

        For 2011 and 2010, both the qualified and nonqualified plans had accumulated benefit obligations in excess of plan assets. As noted previously, the nonqualified plans have assets that are deposited in trusts that fail to meet the U.S. GAAP requirements to be included in plan assets; however, these assets are included in our consolidated statements of financial position.

	December 31,
	2011		2010
	(in millions)
Projected benefit obligation	$	2,158.4	$	1,933.8
Accumulated benefit obligation		2,027.8		1,811.7
Fair value of plan assets		1,429.0		1,417.7

Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation in Excess of Plan Assets

	December 31,
	2011		2010
	(in millions)
Accumulated postretirement benefit obligation	$	1.5	$	1.5
Fair value of plan assets		1.3		1.4

Components of Net Periodic Benefit Cost

	Pension benefits									Other postretirement benefits
	For the year ended December 31,
	2011			2010			2009			2011			2010			2009
	(in millions)
Service cost	$	44.0		$	45.6		$	51.4		$	1.2		$	8.8		$	11.3
Interest cost		108.5			105.7			100.8			8.9			18.1			19.7
Expected return on plan assets		(114.4	)		(98.4	)		(79.5	)		(34.1	)		(30.6	)		(25.9	)
Amortization of prior service benefit		(9.7	)		(10.1	)		(7.7	)		(29.3	)		(9.1	)		(2.1	)
Recognized net actuarial loss		65.7			67.6			92.6			0.4			4.1			9.3
Amount recognized due to special events		(1.4	)		(0.9	)		—			(5.1	)		(2.6	)		—
Net periodic benefit cost (income)	$	92.7		$	109.5		$	157.6		$	(58.0	)	$	(11.3	)	$	12.3

        The pension plans' actuarial gains and losses are amortized using a straight-line amortization method over the average remaining service period of plan participants. For the qualified pension plan, gains and losses are amortized without use of the 10% allowable corridor. For the nonqualified pension plans and other postretirement benefit plans, the corridors allowed are used.

	Pension benefits						Other postretirement benefits
	For the year ended December 31,
	2011			2010			2011			2010
	(in millions)
Other changes recognized in accumulated other comprehensive (income) loss
Net actuarial (gain) loss	$	256.0		$	(27.5	)	$	30.6		$	(89.8	)
Prior service benefit		—			—			—			(153.7	)
Amortization of net loss		(65.7	)		(67.6	)		(0.7	)		(4.1	)
Amortization of prior service benefit		11.1			11.0			34.7			11.7
Total recognized in pre-tax accumulated other comprehensive (income) loss	$	201.4		$	(84.1	)	$	64.6		$	(235.9	)
Total recognized in net periodic benefit cost and pre-tax accumulated other comprehensive (income) loss	$	294.1		$	25.4		$	6.6		$	(247.2	)

        Net actuarial (gain) loss and net prior service cost benefit have been recognized in AOCI.

        The estimated net actuarial (gain) loss and prior service cost (benefit) that will be amortized from AOCI into net periodic benefit cost for the pension benefits during the 2012 fiscal year are $90.8 million and $(9.4) million, respectively. The estimated net actuarial (gain) loss and prior service cost (benefit) for the postretirement benefits that will be amortized from AOCI into net periodic benefit cost during the 2012 fiscal year are $0.9 million and $(28.6) million, respectively.

Assumptions

Weighted-average assumptions used to determine benefit obligations as disclosed under the Obligations and Funded Status section

	Pension benefits						Other postretirement benefits
	For the year ended December 31,
	2011			2010			2011			2010
Discount rate		5.15	%		5.65	%		5.15	%		5.65	%
Rate of compensation increase		5.00	%		5.00	%		5.00	%		5.00	%

Weighted-average assumptions used to determine net periodic benefit cost

	Pension benefits									Other postretirement benefits
	For the year ended December 31,
	2011			2010			2009			2011			2010			2009
Discount rate		5.65	%		6.00	%		6.00	%		5.65	%		6.00	%		6.00	%
Expected long-term return on plan assets		8.00	%		8.00	%		8.00	%		7.30	%		7.30	%		7.30	%
Rate of compensation increase		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%		5.00	%

        For the pension benefits, the discount rate is determined by projecting future benefit payments inherent in the projected benefit obligation and discounting those cash flows using a spot yield curve for high quality corporate bonds. The plans' expected benefit payments are discounted to determine a present value using the yield curve and the discount rate is the level rate that produces the same present value. The expected return on plan assets is the long-term rate we expect to be earned based on the plans' investment strategy. Historical and expected future returns of multiple asset classes were analyzed to develop a risk free rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk free real rate of return and the associated risk premium. A weighted average rate was developed based on those overall rates and the target asset allocation of the plans.

        For other postretirement benefits, the 7.3% expected long-term return on plan assets for 2011 is based on the weighted average expected long-term asset returns for the medical, life and long-term care plans. The expected long-term rates for the medical, life and long-term care plans are 7.25%, 7.75% and 5.85%, respectively.

Assumed Health Care Cost Trend Rates

	December 31,
	2011			2010
Health care cost trend rate assumed for next year under age 65		9.5	%		9.5	%
Health care cost trend rate assumed for next year age 65 and over		9.0	%		9.0	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		5.0	%		5.0	%
Year that the rate reaches the ultimate trend rate		2023			2022

        Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	1-percentage- point increase			1-percentage- point decrease
	(in millions)
Effect on total of service cost and interest cost components	$	0.6		$	(0.6	)
Effect on accumulated postretirement benefit obligation		(9.4	)		8.2

Pension Plan and Other Postretirement Benefit Plan Assets

        Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels.

• •

  Level 1 — Fair values are based on unadjusted quoted prices in active markets for identical assets. Our Level 1 assets include cash, fixed income investment funds and exchange traded equity securities.

  •

  Level 2 — Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly. Our Level 2 assets primarily include fixed income and equity investment funds and real estate investments.

  •

  Level 3 — Fair values are based on significant unobservable inputs for the asset. Our Level 3 assets include a Principal Life general account investment.

        Our pension plan assets consist of investments in separate accounts. Net asset value ("NAV") of the separate accounts is calculated in a manner consistent with U.S. GAAP for investment companies and is determinative of their fair value. Several of the separate accounts invest in publicly quoted mutual funds or actively managed stocks. The fair value of the underlying mutual funds or stock is used to determine the NAV of the separate account, which is not publicly quoted. Some of the separate accounts also invest in fixed income securities. The fair value of the underlying securities is based on quoted prices of similar assets and used to determine the NAV of the separate account. One separate account invests directly in commercial real estate properties. In 2010, this was categorized as Level 3, as the fund had restrictions on redemption of NAV at the measurement date. In 2011, the withdrawal limitations associated with this separate account were removed and the investments were being redeemed at NAV at the measurement date. Therefore, the fair value of the separate account is based on NAV and is considered a Level 2 asset in 2011.

        Our other postretirement benefit plan assets consist of cash, investments in fixed income security portfolios and investments in equity security portfolios. Because of the nature of cash, its carrying amount approximates fair value. The fair value of fixed income investment funds, U.S. equity portfolios and international equity portfolios is based on quoted prices in active markets for identical assets. The fair value of the Principal Life general account investment is the amount the plan would receive if withdrawing funds from this participating contract. The amount that would be received is calculated using a cash-out factor based on an associated pool of general account fixed income securities. The cash-out factor is a ratio of the asset investment value of these securities to asset book value. As the investment values change, the cash-out factor is adjusted, impacting the amount the plan receives at measurement date. To determine investment value for each category of assets, we project cash flows. This is done using contractual provisions for the assets, with adjustment for expected prepayments and call provisions. Projected cash flows are discounted to present value for each asset category. Interest rates for discounting are based on current rates on similar new assets in the general account based on asset strategy.

Pension Plan Assets

        The fair value of the qualified pension plan's assets by asset category as of the most recent measurement date is as follows:

	As of December 31, 2011
	Assets/ (liabilities) measured at fair value		Fair value hierarchy level
			Level 1		Level 2		Level 3
	(in millions)
Asset category
U.S. large cap equity portfolios (1)	$	593.6	$	—	$	593.6	$	—
U.S. small/mid cap equity portfolios (2)		139.0		—		139.0		—
International equity portfolios (3)		216.5		—		216.5		—
Fixed income security portfolios (4)		347.8		—		347.8		—
Real estate investment portfolios:
Real estate investment trusts (5)		37.4		—		37.4		—
Direct real estate investments (6)		94.7		—		94.7		—
Total	$	1,429.0	$	—	$	1,429.0	$	—

	As of December 31, 2010
			Fair value hierarchy level
	Assets/(liabilities) measured at fair value
			Level 1		Level 2		Level 3
	(in millions)
Asset category
U.S. large cap equity portfolios (1)	$	580.9	$	—	$	580.9	$	—
U.S. small/mid cap equity portfolios (2)		143.5		—		143.5		—
International equity portfolios (3)		241.7		—		241.7		—
Fixed income security portfolios (4)		331.5		—		331.5		—
Real estate investment portfolios:
Real estate investment trusts (5)		35.4		—		35.4		—
Direct real estate investments (6)		84.7		—		—		84.7
Total	$	1,417.7	$	—	$	1,333.0	$	84.7

(1)

The portfolios invest primarily in publicly traded equity securities of large U.S. companies.

(2)

The portfolios invest primarily in publicly traded equity securities of mid-sized and small U.S. companies.

(3)

The portfolios invest primarily in publicly traded equity securities of non-U.S. companies.

(4)

The portfolios invest in various fixed income securities, primarily of U.S. origin. These include, but are not limited to, corporate bonds, mortgage-backed securities, commercial mortgage-backed securities, U.S. Treasury securities, agency securities, asset-backed securities and collateralized mortgage obligations.

(5)

The portfolio invests primarily in publicly traded securities of U.S. equity real estate investment trusts.

(6)

The portfolio invests primarily in U.S. commercial real estate properties.

        The reconciliation for all assets measured at fair value using significant unobservable inputs (Level 3) is as follows:

	For the year ended December 31, 2011
			Actual return gains (losses) on plan assets
	Beginning asset balance as of December 31, 2010		Relating to assets still held at the reporting date		Relating to assets sold during the period		Purchases, sales and settlements		Transfers into Level 3		Transfers out of Level 3			Ending asset balance as of December 31, 2011
			(in millions)
Asset category
Direct real estate investments	$	84.7	$	1.6	$	—	$	1.0	$	—	$	(87.3	)	$	—
Total	$	84.7	$	1.6	$	—	$	1.0	$	—	$	(87.3	)	$	—

	For the year ended December 31, 2010
			Actual return gains (losses) on plan assets
	Beginning asset balance as of December 31, 2009		Relating to assets still held at the reporting date		Relating to assets sold during the period		Purchases, sales and settlements		Transfers in (out) of Level 3		Ending asset balance as of December 31, 2010
	(in millions)
Asset category
Direct real estate investments	$	54.0	$	10.7	$	—	$	20.0	$	—	$	84.7
Total	$	54.0	$	10.7	$	—	$	20.0	$	—	$	84.7

        We have established an investment policy that provides the investment objectives and guidelines for the pension plan. Our investment strategy is to achieve the following:

• •

  Obtain a reasonable long-term return consistent with the level of risk assumed and at a cost of operation within prudent levels. Performance benchmarks are monitored.

  •

  Ensure sufficient liquidity to meet the emerging benefit liabilities for the plan.

  •

  Provide for diversification of assets in an effort to avoid the risk of large losses and maximize the investment return to the pension plan consistent with market and economic risk.

        In administering the qualified pension plan's asset allocation strategy, we consider the projected liability stream of benefit payments, the relationship between current and projected assets of the plan and the projected actuarial liabilities streams, the historical performance of capital markets adjusted for the perception of future short- and long-term capital market performance and the perception of future economic conditions.

        According to our investment policy, the target asset allocation for the qualified plan is:

Asset category	Target allocation
U.S. equity portfolios		35% – 60%
International equity portfolios		5% – 20%
Fixed income security portfolios		20% – 40%
Real estate investment portfolios		3% – 10%

Other Postretirement Benefit Plan Assets

        The fair value of the other postretirement benefit plans' assets by asset category as of the most recent measurement date is as follows:

	As of December 31, 2011
	Assets/ (liabilities) measured at fair value		Fair value hierarchy level
			Level 1		Level 2		Level 3
	(in millions)
Asset category
Cash and cash equivalents	$	1.8	$	1.8	$	—	$	—
Fixed income security portfolios:
Fixed income investment funds (1)		153.0		153.0		—		—
Principal Life general account investment (2)		42.5		—		—		42.5
U.S. equity portfolios (3)		225.3		184.1		41.2		—
International equity portfolios (4)		44.0		33.6		10.4		—
Total	$	466.6	$	372.5	$	51.6	$	42.5

	As of December 31, 2010
	Assets/ (liabilities) measured at fair value		Fair value hierarchy level
			Level 1		Level 2		Level 3
	(in millions)
Asset category
Cash and cash equivalents	$	1.3	$	1.3	$	—	$	—
Fixed income security portfolios:
Fixed income investment funds (1)		143.5		143.5		—		—
Principal Life general account investment (2)		44.5		—		—		44.5
U.S. equity portfolios (3)		232.2		190.0		42.2		—
International equity portfolios (4)		50.2		38.3		11.9		—
Total	$	471.7	$	373.1	$	54.1	$	44.5

(1)

The portfolios invest in various fixed income securities, primarily of U.S. origin. These include, but are not limited to, corporate bonds, mortgage-backed securities, commercial mortgage-backed securities, U.S. Treasury securities, agency securities, asset-backed securities and collateralized mortgage obligations.

(2)

The general account is invested in various fixed income securities.

(3)

The portfolios invest primarily in publicly traded equity securities of large U.S. companies.

(4)

The portfolios invest primarily in publicly traded equity securities of non-U.S. companies.

        As of December 31, 2011 and 2010, respectively, $51.6 million and $54.1 million of assets in the U.S. equity and international equity portfolios were included in a trust owned life insurance contract.

        The reconciliation for all assets measured at fair value using significant unobservable inputs (Level 3) is as follows:

	For the year ended December 31, 2011
			Actual return gains (losses) on plan assets
	Beginning asset balance as of December 31, 2010
			Relating to assets still held at the reporting date		Relating to assets sold during the period		Purchases, sales and settlements			Transfers into Level 3		Transfers out of Level 3		Ending asset balance as of December 31, 2011
			(in millions)
Asset category
Principal Life general account investment	$	44.5	$	3.0	$	—	$	(5.0	)	$	—	$	—	$	42.5
Total	$	44.5	$	3.0	$	—	$	(5.0	)	$	—	$	—	$	42.5

	For the year ended December 31, 2010
			Actual return gains (losses) on plan assets
	Beginning asset balance as of December 31, 2009
			Relating to assets still held at the reporting date		Relating to assets sold during the period		Purchases, sales and settlements			Transfers in (out) of Level 3		Ending asset balance as of December 31, 2010
	(in millions)
Asset category
Principal Life general account investment	$	45.5	$	4.3	$	—	$	(5.3	)	$	—	$	44.5
Total	$	45.5	$	4.3	$	—	$	(5.3	)	$	—	$	44.5

        According to our investment policy, the target asset allocation for the other postretirement benefit plans is:

Asset category	Target allocation
U.S. equity portfolios		45% – 65%
International equity portfolios		5% – 15%
Fixed income security portfolios		30% – 50%

        The investment strategies and policies for the other postretirement benefit plans are similar to those employed by the qualified pension plan.

Contributions

        Our funding policy for the qualified pension plan is to fund the plan annually in an amount at least equal to the minimum annual contribution required under ERISA and, generally, not greater than the maximum amount that can be deducted for federal income tax purposes. We do not anticipate contributions will be needed to satisfy the minimum funding requirements of ERISA for our qualified plan. At this time, it is too early to estimate the amount that may be contributed, but it is possible that we may fund the plans in 2012 in the range of $75-$125 million. This includes funding for both our qualified and nonqualified pension plans. While we designate assets to cover the computed liability of the nonqualified plan, the assets are not included as part of the asset balances presented in this footnote as they do not qualify as plan assets in accordance with U.S. GAAP. We may contribute to our other postretirement benefit plans in 2012 pending future analysis.

Estimated Future Benefit Payments

        The estimated future benefit payments, which reflect expected future service, and the expected amount of subsidy receipts under Medicare Part D are:

	Pension benefits		Other postretirement benefits (gross benefit payments, including prescription drug benefits)		Amount of Medicare Part D subsidy receipts
	(in millions)
Year ending December 31:
2012	$	83.2	$	20.1	$	0.9
2013		92.0		21.1		1.0
2014		96.0		22.2		1.1
2015		101.4		23.0		1.1
2016		107.4		23.9		1.2
2017-2021		632.5		127.9		6.6

        The above table reflects the total estimated future benefits to be paid from the plan, including both our share of the benefit cost and the participants' share of the cost, which is funded by their contributions to the plan.

        The assumptions used in calculating the estimated future benefit payments are the same as those used to measure the benefit obligation for the year ended December 31, 2011.

        The information that follows shows supplemental information for our defined benefit pension plans. Certain key summary data is shown separately for qualified and nonqualified plans.

	For the year ended December 31,
	2011									2010
	Qualified plan			Nonqualified plans			Total			Qualified plan			Nonqualified plans			Total
	(in millions)
Amount recognized in statement of financial position
Other assets	$	—		$	—		$	—		$	—		$	—		$	—
Other liabilities		(405.9	)		(323.5	)		(729.4	)		(210.8	)		(305.3	)		(516.1	)
Total	$	(405.9	)	$	(323.5	)	$	(729.4	)	$	(210.8	)	$	(305.3	)	$	(516.1	)
Amount recognized in accumulated other comprehensive loss
Total net actuarial loss	$	586.3		$	73.7		$	660.0		$	404.1		$	65.6		$	469.7
Prior service cost benefit		(19.2	)		(11.3	)		(30.5	)		(26.6	)		(15.0	)		(41.6	)
Total pre-tax accumulated other comprehensive loss	$	567.1		$	62.4		$	629.5		$	377.5		$	50.6		$	428.1
Components of net periodic benefit cost
Service cost	$	39.3		$	4.7		$	44.0		$	39.3		$	6.3		$	45.6
Interest cost		91.7			16.8			108.5			88.2			17.5			105.7
Expected return on plan assets		(114.4	)		—			(114.4	)		(98.4	)		—			(98.4	)
Amortization of prior service cost benefit		(6.5	)		(3.2	)		(9.7	)		(6.6	)		(3.5	)		(10.1	)
Recognized net actuarial loss		61.1			4.6			65.7			62.5			5.1			67.6
Amount recognized due to special events		(0.9	)		(0.5	)		(1.4	)		(0.6	)		(0.3	)		(0.9	)
Net periodic benefit cost	$	70.3		$	22.4		$	92.7		$	84.4		$	25.1		$	109.5
Other changes recognized in accumulated other comprehensive (income) loss
Net actuarial (gain) loss	$	243.3		$	12.7		$	256.0		$	(28.4	)	$	0.9		$	(27.5	)
Prior service benefit		—			—			—			—			—			—
Amortization of net loss		(61.1	)		(4.6	)		(65.7	)		(62.5	)		(5.1	)		(67.6	)
Amortization of prior service cost benefit		7.3			3.8			11.1			7.3			3.7			11.0
Total recognized in pre-tax accumulated other comprehensive (income) loss	$	189.5		$	11.9		$	201.4		$	(83.6	)	$	(0.5	)	$	(84.1	)
Total recognized in net periodic benefit cost and pre-tax accumulated other comprehensive loss	$	259.8		$	34.3		$	294.1		$	0.8		$	24.6		$	25.4

        In addition, we have defined contribution plans that are generally available to all U.S. employees and agents. Eligible participants could not contribute more than $16,500 of their compensation to the plans in 2011. Effective January 1, 2006, we made several changes to the retirement programs. In general, the pension and supplemental executive retirement plan benefit formulas were reduced, and the 401(k) matching contribution was increased. Employees who were ages 47 or older with at least ten years of service on December 31, 2005, could elect to retain the prior benefit provisions and forgo receipt of the additional matching contributions. The employees who elected to retain the prior benefit provisions are referred to as "Grandfathered Choice Participants." We match the Grandfathered Choice Participant's contribution at a 50% contribution rate up to a maximum contribution of 3% of the participant's compensation. For all other participants, we match the participant's contributions at a 75% contribution rate up to a maximum of 6% of the participant's compensation. The defined contribution plans allow employees to choose among various investment options, including our common stock. We contributed $36.3 million, $35.7 million and $33.9 million in 2011, 2010 and 2009, respectively, to our qualified defined contribution plans.

        We also have nonqualified deferred compensation plans available to select employees and agents that allow them to defer compensation amounts in excess of limits imposed by federal tax law with respect to the qualified plans. In 2011, we matched the Grandfathered Choice Participant's deferral at a 50% match deferral rate up to a maximum matching deferral of 3% of the participant's compensation. For all other participants, we matched the participant's deferral at a 75% match deferral rate up to a maximum matching deferral of 6% of the participant's compensation. We contributed $3.5 million, $2.8 million and $4.6 million in 2011, 2010 and 2009, respectively, to our nonqualified deferred compensation plans.