Under certain circumstances, we also provide accruable benefits to former or inactive employees in the United States, Canada, and Mexico, and members of our Board of Directors, including severance and certain other benefits payable upon death. We recognize an obligation for any of these benefits that vest or accumulate with service. Postemployment benefits that do not vest or accumulate with service (such as severance based solely on annual pay rather than years of service) are charged to expense when incurred. Our postemployment benefit plans are unfunded.

Our expected rate of return on plan assets is determined by our asset allocation, our historical long-term investment performance, our estimate of future long-term returns by asset class (using input from our actuaries, investment services, and investment managers), and long-term inflation assumptions. We review this assumption annually for each plan, however, our annual investment performance for one particular year does not, by itself, significantly influence our evaluation.

The investment objective for our defined benefit pension and other postretirement benefit plans is to secure the benefit obligations to participants at a reasonable cost to us. Our goal is to optimize the long-term return on plan assets at a moderate level of risk. The defined benefit pension and other postretirement portfolios are broadly diversified across asset classes. Within asset classes, the portfolios are further diversified across investment styles and investment organizations. For the defined benefit pension and other postretirement benefit plans, the long-term investment policy allocations are: 30 percent to equities in the United States; 20 percent to international equities; 10 percent to private equities; 30 percent to fixed income; and 10 percent to real assets (real estate, energy, and timber). The actual allocations to these asset classes may vary tactically around the long-term policy allocations based on relative market valuations.

Our discount rate assumptions are determined annually as of the last day of our fiscal year for our defined benefit pension, other postretirement, and postemployment benefit plan obligations. We also use the same discount rates to determine defined benefit pension, other postretirement, and postemployment benefit plan income and expense for the following fiscal year. We work with our actuaries to determine the timing and amount of expected future cash outflows to plan participants and, using the top quartile of AA-rated corporate bond yields, to develop a forward interest rate curve, including a margin to that index based on our credit risk. This forward interest rate curve is applied to our expected future cash outflows to determine our discount rate assumptions.

We have defined benefit pension plans covering most United States, Canadian, and United Kingdom employees. Benefits for salaried employees are based on length of service and final average compensation. Benefits for hourly employees include various monthly amounts for each year of credited service. Our funding policy is consistent with the requirements of applicable laws. We made $200.0 million of voluntary contributions to our principal domestic plans in fiscal 2011. We do not expect to be required to make any contributions in fiscal 2012. Our principal domestic retirement plan covering salaried employees has a provision that any excess pension assets would be allocated to active participants if the plan is terminated within five years of a change in control.

We also sponsor plans that provide health care benefits to the majority of our United States and Canadian retirees. The salaried health care benefit plan is contributory, with retiree contributions based on years of service. We make decisions to fund related trusts for certain employees and retirees on an annual basis. We did not make voluntary contributions to these plans in fiscal 2011 or fiscal 2010.

We review our health care cost trend rates annually. Our review is based on data we collect about our health care claims experience and information provided by our actuaries. This information includes recent plan experience, plan design, overall industry experience and projections, and assumptions used by other similar organizations. Our initial health care cost trend rate is adjusted as necessary to remain consistent with this review, recent experiences, and short-term expectations. Our initial health care cost trend rate assumption is 8.5 percent for all retirees. Rates are graded down annually until the ultimate trend rate of 5.2 percent is reached in 2019 for all retirees. The trend rates are applicable for calculations only if the retirees' benefits increase as a result of health care inflation. The ultimate trend rate is adjusted annually, as necessary, to approximate the current economic view on the rate of long-term inflation plus an appropriate health care cost premium. Assumed trend rates for health care costs have an important effect on the amounts reported for the other postretirement benefit plans.

A one percentage point change in the health care cost trend rate would have the following effects:

In Millions		One Percentage Point Increase		One Percentage Point Decrease
Effect on the aggregate of the service and interest cost components in fiscal 2012	$	6.2	$	(5.4)
Effect on the other postretirement accumulated benefit obligation as of May 29, 2011		82.4		(73.6)

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the Act) was signed into law in March 2010. The Act codifies health care reforms with staggered effective dates from 2010 to 2018. Estimates of the future impacts of several of the Act's provisions are incorporated into our postretirement benefit liability including the elimination of lifetime maximums and the imposition of an excise tax on high cost health plans. These changes resulted in a $24.0 million increase in our postretirement benefit liability in fiscal 2010.

We use our fiscal year end as the measurement date for our defined benefit pension and other postretirement benefit plans.

Summarized financial information about defined benefit pension, other postretirement, and postemployment benefits plans is presented below:

		Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Postemployment Benefit Plans
		Fiscal Year				Fiscal Year				Fiscal Year
In Millions		2011		2010		2011		2010		2011		2010
Change in Plan Assets:
Fair value at beginning of year	$	3,529.8	$	3,157.8	$	284.3	$	235.6
Actual return on assets		688.9		535.9		60.7		41.0
Employer contributions		220.7		17.1		0.1		0.1
Plan participant contributions		4.1		3.5		11.8		11.3
Benefits payments		(188.2)		(182.6)		(3.1)		(3.7)
Foreign currency		8.7		(1.9)		-		-
Fair value at end of year	$	4,264.0	$	3,529.8	$	353.8	$	284.3
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year	$	4,030.0	$	3,167.3	$	1,060.6	$	852.0	$	130.3	$	112.5
Service cost		101.4		70.9		18.7		12.9		8.0		7.2
Interest cost		230.9		230.3		60.1		61.6		5.1		5.6
Plan amendment		-		25.8		(35.3)		7.5		-		-
Curtailment/other		-		-		-		-		4.2		10.6
Plan participant contributions		4.1		3.5		11.8		11.3		-		-
Medicare Part D reimbursements		-		-		4.5		4.7		-		-
Actuarial loss (gain)		271.2		716.4		2.0		168.1		(0.5)		11.8
Benefits payments		(188.2)		(182.6)		(56.9)		(57.5)		(16.1)		(17.6)
Foreign currency		9.0		(1.6)		0.3		-		0.3		0.2
Projected benefit obligation at end of year	$	4,458.4	$	4,030.0	$	1,065.8	$	1,060.6	$	131.3	$	130.3
Plan assets less than benefit obligation as of fiscal year end	$	(194.4)	$	(500.2)	$	(712.0)	$	(776.3)	$	(131.3)	$	(130.3)

The accumulated benefit obligation for all defined benefit pension plans was $3,991.6 million as of May 29, 2011, and $3,620.3 million as of May 30, 2010.

Amounts recognized in AOCI as of May 29, 2011, and May 30, 2010, are as follows:

		Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Postemployment Benefit Plans				Total
		Fiscal Year			Fiscal Year				Fiscal Year				Fiscal Year
In Millions		2011		2010		2011		2010		2011		2010		2011		2010
Net actuarial loss	$	(1,313.9)	$	(1,369.9)	$	(181.3)	$	(225.2)	$	(14.3)	$	(15.9)	$	(1,509.5)	$	(1,611.0)
Prior service (costs) credits		(35.8)		(41.3)		20.7		1.0		(5.6)		(7.2)		(20.7)		(47.5)
Amounts recorded in accumulated other comprehensive loss	$	(1,349.7)	$	(1,411.2)	$	(160.6)	$	(224.2)	$	(19.9)	$	(23.1)	$	(1,530.2)	$	(1,658.5)

Plans with accumulated benefit obligations in excess of plan assets are as follows:

		Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Postemployment Benefit Plans
		Fiscal Year				Fiscal Year				Fiscal Year
In Millions		2011		2010		2011		2010		2011		2010
Projected benefit obligation	$	335.1	$	299.6	$	-	$	-	$	-	$	-
Accumulated benefit obligation		280.6		252.5		1,065.8		1,060.6		131.3		130.3
Plan assets at fair value		9.0		17.3		353.8		284.3		-		-

		Defined Benefit Pension Plans						Other Postretirement Benefit Plans						Postemployment Benefit Plans
		Fiscal Year						Fiscal Year						Fiscal Year
In Millions		2011		2010		2009		2011		2010		2009		2011		2010		2009
Service cost	$	101.4	$	70.9	$	76.5	$	18.7	$	12.9	$	14.2	$	8.0	$	7.2	$	6.5
Interest cost		230.9		230.3		215.4		60.1		61.6		61.2		5.1		5.7		4.9
Expected return on plan assets		(408.5)		(400.1)		(385.8)		(33.2)		(29.2)		(30.0)		-		-		-
Amortization of losses		81.4		8.4		7.8		14.4		2.0		7.2		2.1		1.0		1.0
Amortization of prior service costs (credits)		9.0		6.9		7.4		(0.6)		(1.6)		(1.4)		2.4		2.4		2.2
Other adjustments		-		-		-		-		-		-		4.2		10.6		8.4
Net expense (income)	$	14.2	$	(83.6)	$	(78.7)	$	59.4	$	45.7	$	51.2	$	21.8	$	26.9	$	23.0

We expect to recognize the following amounts in net periodic benefit expense (income) in fiscal 2012:

Weighted-average assumptions used to determine fiscal year-end benefit obligations are as follows:

	Defined Benefit Pension Plans				Other Postretirement Benefit Plans				Postemployment Benefit Plans
	Fiscal Year				Fiscal Year				Fiscal Year
	2011		2010		2011		2010		2011		2010
Discount rate	5.45	%	5.85	%	5.35	%	5.80	%	4.77	%	5.12	%
Rate of salary increases	4.92		4.93		-		-		4.92		4.93

Weighted-average assumptions used to determine fiscal year net periodic benefit expense (income) are as follows:

	Defined Benefit Pension Plans						Other Postretirement Benefit Plans						Postemployment Benefit Plans
	Fiscal Year						Fiscal Year						Fiscal Year
	2011		2010		2009		2011		2010		2009		2011		2010		2009
Discount rate	5.85	%	7.49	%	6.88	%	5.80	%	7.45	%	6.90	%	5.12	%	7.06	%	6.64	%
Rate of salary increases	4.93		4.92		4.93		-		-		-		4.93		4.93		4.93
Expected long-term rate of return on plan assets	9.53		9.55		9.55		9.33		9.33		9.35		-		-		-

We categorize plan assets with a three level fair value hierarchy as described in Note 7. The fair values of our pension and postretirement benefit plans assets at May 29, 2011 and May 30, 2010, by asset category were as follows:

	May 29, 2011
In Millions		Level 1		Level 2		Level 3		Total Assets
Fair value measurement of pension plan assets:
Equity (a)	$	1,052.5	$	900.2	$	568.5	$	2,521.2
Fixed income (b)		794.7		174.4		0.2		969.3
Real asset investments (c)		113.0		95.2		356.9		565.1
Other investments (d)		-		52.2		0.3		52.5
Cash and accruals		155.9		-		-		155.9
Total fair value measurement of pension plan assets	$	2,116.1	$	1,222.0	$	925.9	$	4,264.0

Fair value measurement of postretirement benefit plan assets:
Equity (a)	$	13.5	$	131.0	$	26.3	$	170.8
Fixed income (b)		1.8		55.9		0.2		57.9
Real asset investments (c)		-		7.2		13.6		20.8
Other investments (d)		-		83.9		-		83.9
Cash and accruals		20.4		-		-		20.4
Fair value measurement of postretirement benefit plan assets	$	35.7	$	278.0	$	40.1	$	353.8

	May 30, 2010
In Millions		Level 1		Level 2		Level 3		Total Assets
Fair value measurement of pension plan assets:
Equity (a)	$	744.5		716.6		512.8	$	1,973.9
Fixed income (b)		700.0		206.0		3.9		909.9
Real asset investments (c)		72.4		75.8		298.7		446.9
Other investments (d)		-		39.9		0.3		40.2
Cash and accruals		158.9		-		-		158.9
Total fair value measurement of pension plan assets	$	1,675.8	$	1,038.3	$	815.7	$	3,529.8

Fair value measurement of postretirement benefit plan assets:
Equity (a)	$	10.1		81.4		25.7		117.2
Fixed income (b)		1.1		46.1		1.7		48.9
Real asset investments (c)		0.1		3.7		14.6		18.4
Other investments (d)		-		71.4		-		71.4
Cash and accruals		28.4		-		-		28.4
Fair value measurement of postretirement benefit plan assets	$	39.7	$	202.6	$	42.0	$	284.3

(a) Primarily publicly traded common stock and private equity partnerships for purposes of total return and to maintain equity exposure consistent with policy allocations. Investments include: i) United States and international equity securities, mutual funds and equity futures valued at closing prices from national exchanges; and ii) commingled funds, privately held securities and private equity partnerships valued at unit values or net asset values provided by the investment managers, which are based on the fair value of the underlying investments. Various methods are used to determine fair values and may include the cost of the investment, most recent financing, and expected cash flows. For some of these investments, realization of the estimated fair value is dependent upon transactions between willing sellers and buyers.

(b) Primarily government and corporate debt securities for purposes of total return and managing fixed income exposure to policy allocations. Investments include: i) fixed income securities and bond futures generally valued at closing prices from national exchanges, fixed income pricing models and/or independent financial analysts; and ii) fixed commingled funds valued at unit values provided by the investment managers, which are based on the fair value of the underlying investments.

(c) Publicly traded common stock and limited partnerships in the energy and real estate sectors for purposes of total return. Investments include: i) energy and real estate securities generally valued at closing prices from national exchanges; and ii) commingled funds, private securities, and limited partnerships valued at unit values or net asset values provided by the investment managers, which are generally based on the fair value of the underlying investments.

(d) Global balanced fund of equity, fixed income and real estate securities for purposes of meeting Canadian pension plan asset allocation policies and insurance and annuity contracts for purposes of providing a stable stream of income for retirees and to fund postretirement medical benefits. Fair values are derived from unit values provided by the investment managers, which are generally based on the fair value of the underlying investments and contract fair values from the providers.

The following table is a roll forward of the Level 3 investments of our pension and postretirement benefit plan assets during the years ended May 29, 2011 and May 30, 2010:

	Fiscal 2011
In Millions		Balance as of May 30, 2010		Transfers In/(Out)		Purchases, Sales Issuances, and Settlements (Net)		Net Gain		Balance as of May 29, 2011
Pension benefit plan assets:
Equity	$	512.8	$	2.4	$	(48.1)	$	101.4	$	568.5
Fixed income		3.9		(0.9)		(4.3)		1.5		0.2
Real asset investments		298.7		-		16.0		42.2		356.9
Other investments		0.3		-		-		-		0.3
Fair value activity of pension level 3 plan assets	$	815.7	$	1.5	$	(36.4)	$	145.1	$	925.9

Postretirement benefit plan assets:
Equity	$	25.7	$	-	$	(3.7)	$	4.3	$	26.3
Fixed income		1.7		-		(1.5)		-		0.2
Real asset investments		14.6		-		(2.2)		1.2		13.6
Fair value activity of postretirement benefit level 3 plan assets:	$	42.0	$	-	$	(7.4)	$	5.5	$	40.1

The net change in Level 3 assets attributable to unrealized gains at May 29, 2011, were $96.8 million for our pension plan assets, and $1.9 million for our postretirement plan assets.

Weighted-average asset allocations for the past two fiscal years for our defined benefit pension and other postretirement benefit plans are as follows:

	Defined Benefit Pension Plans				Other Postretirement Benefit Plans
	Fiscal Year				Fiscal Year
	2011		2010		2011		2010
Asset category:
United States equities	30.1	%	32.6	%	37.6	%	37.3	%
International equities	18.9		17.1		18.7		18.3
Private equities	13.5		14.7		7.3		9.9
Fixed income	23.9		22.4		30.1		28.1
Real assets	13.6		13.2		6.3		6.4
Total	100.0	%	100.0	%	100.0	%	100.0	%

We do not expect to make contributions to our defined benefit, other postretirement, and postemployment benefits plans in fiscal 2012. Actual fiscal 2012 contributions could exceed our current projections, as influenced by our decision to undertake discretionary funding of our benefit trusts and future changes in regulatory requirements. Estimated benefit payments, which reflect expected future service, as appropriate, are expected to be paid from fiscal 2012 to 2021 as follows:

In Millions		Defined Benefit Pension Plans		Other Postretirement Benefit Plans Gross Payments		Medicare Subsidy Receipts		Postemployment Benefit Plans
2012	$	204.8	$	58.6	$	5.0	$	18.4
2013		213.8		62.6		5.5		17.3
2014		223.3		64.6		6.0		16.3
2015		233.2		66.6		6.5		15.1
2016		243.8		39.6		7.1		14.4
2017-2021		1,402.3		387.7		38.9		66.6

The General Mills Savings Plan is a defined contribution plan that covers domestic salaried, hourly, nonunion, and certain union employees. This plan is a 401(k) savings plan that includes a number of investment funds, including a Company stock fund and an Employee Stock Ownership Plan (ESOP). We sponsor another money purchase plan for certain domestic hourly employees with net assets of $18.1 million as of May 29, 2011, and $16.8 million as of May 30, 2010. We also sponsor defined contribution plans in many of our foreign locations. Our total recognized expense related to defined contribution plans was $41.8 million in fiscal 2011, $64.5 million in fiscal 2010, and $59.5 million in fiscal 2009.

We matched a percentage of employee contributions to the General Mills Savings Plan with a base match plus a variable year-end match that depended on annual results. Effective April 1, 2010, the company match is directed to investment options of the participant's choosing. Prior to April 1, 2010, the company match was invested in Company stock in the ESOP. The number of shares of our common stock allocated to participants in the ESOP was 11.2 million as of May 29, 2011, and 11.9 million as of May 30, 2010.

The ESOP's only assets are our common stock and temporary cash balances. The ESOP's share of the total defined contribution expense was $53.7 million in fiscal 2010 and $50.6 million in fiscal 2009. The ESOP's expense was calculated by the “shares allocated” method.

The Company stock fund and the ESOP held $648.1 million and $610.3 million of Company common stock as of May 29, 2011, and May 30, 2010.