PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

This note provides details about defined benefit and defined contribution plans we sponsor for our employees. The "Pension and Other Postretirement Benefit Plans" section of Note 1: Summary of Significant Accounting Policies provides information about employee eligibility for pension plans and postretirement health care and life insurance benefits, as well as how we account for the plans and benefits.

DEFINED BENEFIT PLANS WE SPONSOR

OVERVIEW OF PLANS

The defined benefit pension plans we sponsor in the U.S. and Canada differ according to each country’s requirements. In the U.S., we have plans that qualify under the Internal Revenue Code (qualified plans), as well as plans for select employees that provide additional benefits not qualified under the Internal Revenue Code (nonqualified plans). In Canada, we have plans that are registered under the Income Tax Act and applicable provincial pension acts (registered plans), as well as nonregistered plans for select employees that provide additional benefits that may not be registered under the Income Tax Act or provincial pension acts (nonregistered plans). We also offer other postretirement benefit plans in the U.S. and Canada, including retiree medical and life insurance plans.

Actions to Reduce Pension Plan Obligations

During 2018, we offered select U.S. terminated vested plan participants the opportunity to elect an immediate lump sum distribution. Lump sum distributions were paid from plan assets totaling $664 million during fourth quarter 2018. In connection with this transaction, we have recorded a settlement charge of $200 million during fourth quarter 2018, accelerating the recognition of previously unrecognized losses in “Accumulated other comprehensive loss”, that would have been recognized in subsequent periods. The settlement triggered a plan remeasurement, however due to the short period between the settlement and our normal year-end remeasurement, the effects were insignificant to the net periodic benefit costs and therefore not recorded.

In January 2019, we transferred approximately $1.5 billion of U.S. qualified pension plan assets and liabilities to an insurance company through the purchase of a group annuity contract. We expect to record an additional settlement charge of approximately $450 million in connection with this transaction during first quarter 2019.

To maintain the U.S. qualified pension plan's current funded status in connection with these transactions, we contributed $300 million to the plan during third quarter 2018. Refer to Note 21: Income Taxes for details on the tax effects of this transaction.

FUNDED STATUS OF PLANS

The funded status of the plans we sponsor is determined by comparing the projected benefit obligation with the fair value of plan assets at the end of the year. The following table demonstrates how our plans' funded status is reflected on the Consolidated Balance Sheet.



DOLLAR AMOUNTS IN MILLIONS
	PENSION						OTHER POSTRETIREMENT BENEFITS
	2018			2017			2018			2017
Funded status:
Fair value of plan assets	$	4,930		$	5,514		$	18		$	—
Projected benefit obligations	(5,263		)	(6,795		)	(166		)	(200		)
Funded status	$	(333	)	$	(1,281	)	$	(148	)	$	(200	)
Presentation on our Consolidated Balance Sheet:
Noncurrent assets	$	74		$	45		$	—		$	—
Current liabilities	(18		)	(21		)	(10		)	(19		)
Noncurrent liabilities	(389		)	(1,305		)	(138		)	(181		)
Funded status	$	(333	)	$	(1,281	)	$	(148	)	$	(200	)

Assets and liabilities on the Consolidated Balance Sheet are different from the cumulative income or expense that we have recorded associated with the plans. The differences are actuarial gains and losses and prior service costs and credits that are deferred and amortized into periodic benefit costs in future periods. Unamortized amounts are recorded in "Accumulated Other Comprehensive Loss", which is a component of total equity on our Consolidated Balance Sheet. The "Accumulated Other Comprehensive Income (Loss)" section of Note 16: Shareholder's Interest details changes in these amounts by component.

Changes in Fair Value of Plan Assets



DOLLAR AMOUNTS IN MILLIONS
	PENSION						OTHER POSTRETIREMENT BENEFITS
	2018			2017			2018			2017
Fair value of plan assets at beginning of year (estimated)	$	5,514		$	5,351		$	—		$	—
Adjustment for final fair value of plan assets	44			18			—			—
Actual return on plan assets	123			553			—			—
Foreign currency translation	(73		)	59			—			—
Employer contributions and benefit payments	345			57			36			20
Plan participants’ contributions	—			—			4			6
Plan transfers	1			3			—			—
Benefits paid (includes lump sum settlements)	(1,024		)	(527		)	(22		)	(26		)
Fair value of plan assets at end of year (estimated)	$	4,930		$	5,514		$	18		$	—

We estimate the fair value of pension plan assets based upon the information available during the year-end reporting process. In some cases, primarily with regard to private equity funds, the available information consists of net asset values as of an interim date, plus cash flows and market events between the interim date and the end of the year. We update the year-end estimated fair value of pension plan assets during the first half of the next year to incorporate year-end net asset values received after we have filed our Annual Report on Form 10-K. During second quarter 2018, we recorded an increase in the beginning of year fair value of the pension assets of $44 million, or less than 1 percent.

During second quarter 2018, we also updated our mortality assumption and census data used to estimate our projected benefit obligation for our U.S. qualified pension plan. We recorded an adjustment to our projected benefit obligation, incorporating updated census data and applying new company-specific mortality data. As a result of these updates, the beginning of year pension projected benefit obligation decreased by $155 million, or approximately 2 percent. The net effect of these updates, including the update to the pension assets, was a $199 million improvement in funded status

See additional details about the changes in the fair value of plan assets in the "Pension Assets" section below.

Changes in Projected Benefit Obligations of Our Pension and Other Postretirement Benefit Plans



DOLLAR AMOUNTS IN MILLIONS
	PENSION						OTHER POSTRETIREMENT BENEFITS
	2018			2017			2018			2017
Reconciliation of projected benefit obligation:
Projected benefit obligation beginning of year	$	6,795		$	6,469		$	200		$	225
Service cost	37			35			—			—
Interest cost	236			264			7			8
Plan participants’ contributions	—			—			4			6
Actuarial (gains) losses	(718		)	489			(18		)	(18		)
Foreign currency translation	(69		)	59			(5		)	5
Benefits paid (includes lump sum settlements)	(1,024		)	(527		)	(22		)	(26		)
Plan amendments and other	5			3			—			—
Plan transfers	1			3			—			—
Projected benefit obligation at end of year	$	5,263		$	6,795		$	166		$	200

See additional details about the actuarial assumptions and changes in the projected benefit obligation in the "Actuarial Assumptions" section below.

Accumulated Benefit Obligations Greater Than Plan Assets

As of December 31, 2018, pension plans with accumulated benefit obligations greater than plan assets had:


•	$4.5 billion in projected benefit obligations,


•	$4.4 billion in accumulated benefit obligations and


•	assets with a fair value of $4.1 billion.

As of December 31, 2017, pension plans with accumulated benefit obligations greater than plan assets had:


•	$5.9 billion in projected benefit obligations,


•	$5.9 billion in accumulated benefit obligations and


•	assets with a fair value of $4.6 billion.

The accumulated benefit obligation for all of our defined benefit pension plans was:


•	$5.2 billion at December 31, 2018, and


•	$6.7 billion at December 31, 2017.

PENSION ASSETS

Our Investment Policies and Strategies

Our investment policies and strategies guide and direct how the funds are managed for the benefit plans we sponsor. These funds include our:


•	U.S. Pension Trust — funds our U.S. qualified pension plans;


•	Canadian Pension Trust — funds our Canadian registered pension plans; and


•	Retirement Compensation Arrangements — fund a portion of our Canadian nonregistered pension plans.

U.S. and Canadian Pension Trusts

As of the end of 2018, we have begun to shift pension plan assets to an allocation that will more closely match the pension plan liability profile going forward. The former investment strategy included investments in hedge funds, private equity funds, derivative instruments and other investments. These asset classes are now generally in redemption and run-off mode however, given the long-term nature of these investments, they will continue to comprise a significant portion of the plan assets for several years. We expect all investments in redemption to be redeemed at amounts materially consistent with their net asset values. As these investments are redeemed or liquidated, cash proceeds available for investment will be invested in accordance with our revised investment strategy.

The revised investment strategy targets an initial 60 percent allocation to growth assets and a 40 percent allocation to liability hedging assets. We expect to increase the allocation to liability hedging assets over time as the funded status of the pension plan improves. Growth assets include new investments in global equities, hedge funds, which are generally in redemption, and private equity assets, which are generally in run-off mode. Liability hedging assets include corporate credit and government issued fixed income securities, treasury futures and interest rate swaps selected to align with the plan liabilities.

Cash and short-term investments include highly liquid money market and government securities and are primarily held to fund benefit payments, capital calls, margin requirements or to meet regulatory requirements. Cash at December 31, 2018, includes amounts that will be invested in liability hedging assets such as fixed income investments.

Fixed income investments include publicly traded corporate and government issued debt. These bonds have varying maturities, credit quality and sector exposure, and are selected to align with the duration of our plan liabilities. The fixed income investments are invested largely in line with long corporate bond indices.

Hedge fund and related investments are privately-offered managed pools primarily structured as limited liability entities. General members or partners of these limited liability entities serve as portfolio managers and are thus responsible for the fund’s underlying investment decisions. Underlying investments within these funds may include long and short public and private equities, corporate, mortgage and sovereign debt, options, swaps, forwards and other derivative positions. These funds have varying degrees of leverage, liquidity, and redemption provisions.

Private equity and related investments are investments in private equity, mezzanine, distressed, co-investments and other structures. Private equity funds generally participate in buyouts and venture capital of limited liability entities through unlisted equity and debt instruments. These funds may also borrow at the underlying entity level. Mezzanine and distressed funds generally invest in the debt of public or private companies with additional participation through warrants or other equity options.

Derivative instruments are comprised of swaps, futures, forwards or options. Equity and fixed income index derivatives are used to achieve target equity and bond exposure or to reduce exposure to certain market risks. Foreign currency derivatives reduce exposure to certain currency risks. Total return swaps enable exposure to return characteristics of specific financial strategies with limited exchange of principal.

Assets within our qualified and registered pension plans in our U.S. and Canadian pension trusts were invested as follows:



	DECEMBER 31, 2018		DECEMBER 31, 2017
Cash and short-term investments	5.8	%	10.6	%
Fixed income investments:
Corporate	21.5		—
Government	8.6		—
Hedge funds and related investments	36.9		58.8
Private equity and related investments	21.9		22.2
Derivative instruments, net	5.6		8.7
Accrued liabilities	(0.3	)	(0.3	)
Total	100.0	%	100.0	%

Retirement Compensation Arrangements

Retirement compensation arrangements fund a portion of our Canadian nonregistered pension plans. As required by Canadian tax rules, approximately 50 percent of these assets are invested into a noninterest-bearing refundable tax account held by the Canada Revenue Agency. This portion of the portfolio does not earn returns. The remaining portion is invested in a portfolio of equities.

Managing Risk

Investments and contracts are subject to risks including market price, liquidity, currency, interest rate and credit risks. The following provides an overview of these risks and describes governance processes and actions we take to mitigate these risks on our pension plan asset portfolios.

Market price risk is the risk that market fluctuations will adversely affect the value of plan assets. The trusts mitigate market price risk by investing in a diversified portfolio. In addition, we and our investment advisers perform regular monitoring with ongoing qualitative assessments, quantitative assessments, and comprehensive investment and operational due diligence.

Liquidity risk is the risk that the trust will not be able to settle liabilities such as payments to participants, counterparties, and service providers. Plan investments in limited liability pools with no active secondary market may be illiquid. Private equity funds are subject to distribution and funding schedules set by fund managers and market activity. Hedge funds may also be subject to restrictions that delay redemptions. To mitigate liquidity risk, private equity portfolios have been diversified across different vintage years and strategies, and hedge fund portfolios have been diversified across investment fund managers, strategies and liquidity provisions. In addition, the investment committee regularly reviews cash flows of the pension trusts and sets appropriate guidelines to address liquidity needs. With the change in investment strategy and a larger percentage of the plan assets invested in more liquid instruments such as publicly traded fixed income investments, liquidity risk is greatly reduced.

Currency risk arises from holding plan assets denominated in a currency other than the currency in which its liabilities are settled. Currency risk is generally managed through notional contracts designed to hedge net exposure to non-functional currencies. With the change in investment strategy, currency risk will be mitigated going forward by investing more of the Canadian plan assets in Canadian dollar investments.

Interest rate risk exists on both the asset and liability side, and is the risk that a change in interest rates will adversely affect the fair value of interest rate securities or liabilities, thereby affecting the overall funded status. With the change in investment strategy to more closely match the plan liabilities, interest rate risk will be greatly reduced.

Credit risk is the risk that counterparties’ failure to discharge their obligations could affect cash flows. The trusts have exposure through investments in fixed income securities. This risk is mitigated by investing in a diversified portfolio. The trusts also have exposure through settlement receivables from derivative contracts. Only the amount of unsettled net receivables is at risk for these types of investments, and no principal is at risk. We decrease credit risk exposure by only dealing with highly-rated financial counterparties; as of year-end, our counterparties each had a credit rating of at least A from S&P. We further manage this risk through diversification of counterparties, predefined settlement and margining provisions and documented agreements.

We are also exposed to credit risk indirectly through counterparty relationships initiated by underlying managers of investments in limited liability pools. This risk is mitigated through initial due diligence and ongoing monitoring processes.

Valuation of Our Plan Assets

Pension assets are stated at fair value as of the reporting date. Fair value is based on the amount that would be received to sell an asset or paid to settle a liability in an orderly transaction between market participants at the reporting date. We do not consider forced or distressed sale scenarios. Instead, we consider both observable and unobservable inputs that reflect assumptions applied by market participants when setting the exit price of an asset or liability in an orderly transaction within the principal market for that asset or liability.

We value the pension plan assets based upon the observability of exit pricing inputs and classify pension plan assets based upon the lowest level input that is significant to the fair value measurement of the pension plan assets in their entirety. The fair value hierarchy is:


•	Level 1: Inputs are unadjusted quoted prices for identical assets or liabilities traded in an active market.


•	Level 2: Inputs are quoted prices in non-active markets for which pricing inputs are observable either directly or indirectly at the reporting date.


•	Level 3: Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

Investments for which fair value is measured using the net asset value per share as a practical expedient are not categorized within the fair value hierarchy.

Cash and short-term investments are valued at cost, which approximates market.

Fixed income investments are valued at exit prices quoted in active or non-active markets or based on observable inputs.

Hedge funds, private equities, and related fund units are valued based on the net asset values of the funds. These values represent the per-unit price at which new investors are permitted to invest and existing investors are permitted to exit. When net asset values as of the end of the year have not been received, we estimate fair value by adjusting the most recently reported net asset values for market events and cash flows between the interim date and the end of the year.

Derivative instruments are valued based upon valuation statements received from each derivative’s counterparty. Some of these contracts are not publicly traded.

The net pension plan assets, when categorized in accordance with this fair value hierarchy, are as follows. Investments valued using net asset value (NAV) as a practical expedient are presented to reconcile with total plan assets.



DOLLAR AMOUNTS IN MILLIONS
2018	LEVEL 1		LEVEL 2		LEVEL 3		NAV		TOTAL
Pension trust investments:
Cash and short-term investments	$	275	$	12	$	—	$	—	$	287
Common and preferred stock	—		—		—		—		—
Fixed income investments:
Corporate	—		1,054		—		—		1,054
Government	—		426		—		—		426
Hedge fund and related investments	—		—		3		1,811		1,814
Private equity and related investments	—		—		65		1,014		1,079
Derivative instruments	—		15		262		—		277
Total pension trust investments	275		1,507		330		2,825		4,937
Accrued liabilities, net									(17		)
Pension trust net assets									4,920
Canadian nonregistered plan assets:
Cash and short-term investments	5		—		—		—		5
Common and preferred stock	5		—		—		—		5
Total Canadian nonregistered plan assets	10		—		—		—		10
Total plan assets									$	4,930



DOLLAR AMOUNTS IN MILLIONS
2017	LEVEL 1		LEVEL 2		LEVEL 3		NAV		TOTAL
Pension trust investments:
Cash and short-term investments	$	580	$	2	$	—	$	—	$	582
Common and preferred stock	1		—		—		—		1
Hedge fund and related investments	59		—		10		3,168		3,237
Private equity and related investments	—		—		102		1,120		1,222
Derivative instruments	—		31		445		—		476
Total pension trust investments	640		33		557		4,288		5,518
Accrued liabilities, net									(16		)
Pension trust net investments									5,502
Canadian nonregistered plan assets:
Cash and short-term investments	6		—		—		—		6
Common and preferred stock	6		—		—		—		6
Total Canadian nonregistered plan assets	12		—		—		—		12
Total plan assets									$	5,514

Assets that do not have readily available quoted prices in an active market require more judgment to value and have increased risk. Approximately $330 million, or 6.7 percent, of our pension plan assets were classified as Level 3 assets as of December 31, 2018.

A reconciliation of the beginning and ending balances of the pension plan assets measured at fair value using significant unobservable inputs (Level 3) is presented below:



DOLLAR AMOUNTS IN MILLIONS
	INVESTMENTS
	Hedge funds and related investments			Private equity and related investments			Derivative instruments, net			Total
Balance as of December 31, 2016	$	4		$	75		$	376		$	455
Net realized gains (losses)	(1		)	(30		)	15			(16		)
Net change in unrealized gains (losses)	2			41			67			110
Purchases	—			14			—			14
Sales	(1		)	—			—			(1		)
Settlements	—			—			(13		)	(13		)
Transfers into Level 3	6			19			—			25
Transfers out of Level 3	—			(17		)	—			(17		)
Balance as of December 31, 2017	10			102			445			557
Net realized gains (losses)	—			—			238			238
Net change in unrealized gains (losses)	1			(5		)	(184		)	(188		)
Purchases	—			5			—			5
Sales	—			(2		)	—			(2		)
Settlements	—			—			(237		)	(237		)
Transfers into Level 3	—			18			—			18
Transfers out of Level 3	(8		)	(53		)	—			(61		)
Balance as of December 31, 2018	$	3		$	65		$	262		$	330

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. We evaluate the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits.

The table below shows the fair value and aggregate notional amount of the derivative instruments held by our pension trusts at the end of the last two years.



DOLLAR AMOUNTS IN MILLIONS
	FAIR VALUE				NOTIONAL
	DECEMBER 31, 2018		DECEMBER 31, 2017		DECEMBER 31, 2018		DECEMBER 31, 2017
Equity and fixed income index derivatives, net	$	—	$	19	$	—	$	501
Foreign currency derivatives, net	—		12		13		1,413
Futures contracts, net	15		—		1,073		—
Total return swaps, net	262		445		558		1,443
Total	$	277	$	476	$	1,644	$	3,357

ACTUARIAL ASSUMPTIONS

We use actuarial assumptions to estimate our benefit obligations and our net periodic benefit costs. The following tables show the rates used to estimate our benefit obligations and periodic net benefit costs.

Rates We Use in Estimating Our Benefit Obligations



	PENSION
	DECEMBER 31, 2018		DECEMBER 31, 2017
Discount rates:
United States	4.40	%	3.70	%
Canada	3.70	%	3.50	%
Lump sum distributions⁽¹⁾⁽²⁾	PPA Table		PPA Table
Rate of compensation increase:
Salaried:
United States	13.00% to 2.00% decreasing with participant age		13.00% to 2.00% decreasing with participant age
Canada	3.25	%	3.25	%
Hourly:
United States	13.00% to 2.30% decreasing with participant age		13.00% to 2.30% decreasing with participant age
Canada	3.00	%	3.00	%
Lump sum or installment distributions election⁽²⁾	60.00	%	60.00	%
(1) PPA Phased Table: Interest and mortality assumptions as mandated by Pension Protection Act of 2006 including the phase out of the prior interest rate basis in 2013. (2) U.S. qualified salaried and nonqualified plans only.

The discount rates used for our U.S. other postretirement benefit plans were 4.20 percent and 3.50 percent for the years ended December 31, 2018, and December 31, 2017, respectively. Additionally, the discount rates used for our Canadian other postretirement benefit plans were 3.70 percent and 3.40 percent for the years ended December 31, 2018, and December 31, 2017, respectively.

Estimating Our Net Periodic Benefit Costs



	PENSION
	2018		2017		2016
Discount rates:
United States	3.70	%	4.30	%	4.50	%
Canada	3.50	%	3.70	%	4.00	%
Lump sum distributions⁽¹⁾⁽²⁾	PPA Table		PPA Table		PPA Table
Expected return on plan assets:
Qualified/registered plans⁽³⁾	8.00	%	8.00	%	9.00% for all plans except 7.00% for plans assumed from Plum Creek
Nonregistered plans	3.50	%	3.50	%	3.50	%
Rate of compensation increase:
Salaried:
United States	13.00% to 2.00% decreasing with participant age		13.00% to 2.00% decreasing with participant age		13.00% to 2.00% decreasing with participant age
Canada	3.25	%	3.50	%	3.50	%
Hourly:
United States	13.00% to 2.30% decreasing with participant age		13.00% to 2.30% decreasing with participant age		13.00% to 2.30% decreasing with participant age
Canada	3.00	%	3.25	%	3.25	%
Lump sum distributions election⁽²⁾	60.00	%	60.00	%	60.00	%
(1) PPA Phased Table: Interest and mortality assumptions as mandated by Pension Protection Act of 2006 including the phase out of the prior interest rate basis in 2013. (2) U.S. qualified salaried and nonqualified plans only. (3) Beginning in 2017 we used an assumed expected return on plan assets of 8.00 percent for qualified and registered pension plans.

The discount rates used for our U.S. other postretirement benefit plans were 3.50 percent, 3.70 percent and 4.00 percent for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, respectively. Additionally, the discount rates used for our Canadian other postretirement benefit plans were 3.40 percent, 3.60 percent and 3.90 percent for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, respectively.

Expected Return on Plan Assets

We estimate the expected long-term return on assets for our qualified, registered and nonregistered pension plans.

Qualified and Registered Pension Plans

We assumed a long-term rate of return on plan assets of 8.0 percent for the year ended December 31, 2018.

As of the end of 2018, we have begun implementing a change in our asset strategy to an allocation that will more closely match the plan’s liability profile moving forward, resulting in a larger allocation of our assets into fixed income securities. With this change, we have determined that we will reduce our assumption of long-term rate of return on plan assets to 7.0 percent for the year ended December 31, 2019.

Determining our expected return requires a high degree of judgment. We consider actual pension fund performance over multiple years, and current and expected valuation levels in the global equity and credit markets. Historical fund returns are used as a base, and we place added weight on more recent pension plan asset performance.

Nonregistered Plans

Canadian tax rules require that 50 percent of the assets for nonregistered plans go to a noninterest-bearing refundable tax account. As a result, the return we earn investing the other 50 percent is spread over 100 percent of the assets. Our expected long-term annual rate of return on the portion we are allowed to manage is 7.0 percent. This assumption is based on historical experience and future return expectations. The expected overall annual return on assets that fund our nonregistered plans is 3.5 percent.

Health Care Costs

Rising costs of health care affect the costs of our other postretirement plans. We use assumptions about health care cost trend rates to estimate the cost of benefits we provide. Our trend rate assumptions are based on historical market experience, current environment and future expectations. In 2018, the assumed weighted health care cost trend rate was:


•	8.4 percent for U.S. Pre-Medicare


•	4.5 percent for U.S. Health Reimbursement Account (HRA)


•	5.1 percent for Canada

This table shows the assumptions we use in estimating the annual cost increase for health care benefits we provide.

Assumptions We Use in Estimating Health Care Benefit Cost Trends



	2018				2017
	U.S.		CANADA		U.S.		CANADA
Weighted health care cost trend rate assumed for next year	7.80% for Pre-Medicare and 4.50% for HRA		4.90	%	8.40% for Pre-Medicare and 4.50% for HRA		5.10	%
Rate that the cost trend rate gradually declines to	4.50	%	4.00	%	4.50	%	4.30	%
Year the cost trend rate is reached	2037		2039		2037		2028

The assumed health care cost trend rate can influence projected postretirement benefit plan payments. The following table demonstrates the effect a one percent change in assumed health care cost trend rates would have with all other assumptions remaining constant.

Effect of a One Percent Change in Health Care Costs

ACTIVITY OF PLANS

Net Periodic Benefit Cost (Credit)



DOLLAR AMOUNTS IN MILLIONS
	PENSION									OTHER POSTRETIREMENT BENEFITS
	2018			2017			2016			2018			2017			2016
Net periodic benefit cost (credit):
Service cost⁽¹⁾	$	37		$	35		$	48		$	—		$	—		$	—
Interest cost	236			264			277			7			8			8
Expected return on plan assets	(399		)	(409		)	(495		)	—			—			—
Amortization of actuarial loss	225			195			156			8			8			9
Amortization of prior service cost (credit)	3			4			4			(8		)	(8		)	(7		)
Accelerated pension costs for Plum Creek merger-related change-in-control provisions	—			—			5			—			—			—
Settlement charge	200			—			—			—			—			—
Net periodic benefit cost (credit)	$	302		$	89		$	(5	)	$	7		$	8		$	10
(1) Service cost includes $13 million in 2016 for employees that were part of our Cellulose Fibers divestitures. These charges are included in our results of discontinued operations. Curtailment and special termination benefits are related to involuntary terminations due to restructuring activities.

Estimated Amortization from Accumulated Other Comprehensive Loss in 2019



DOLLAR AMOUNTS IN MILLIONS
	PENSION		OTHER POSTRETIREMENT BENEFITS			TOTAL
Net actuarial loss	$	108	$	7		$	115
Prior service cost (credit)	4		(1		)	3
Net effect cost	$	112	$	6		$	118

Expected Pension Plan and Benefit Funding

Established funding standards govern the funding requirements for our qualified and registered pension plans. We fund the benefit payments of our nonqualified and nonregistered plans as benefit payments come due. We voluntarily contributed $300 million to our U.S. qualified pension plans during 2018, although there was no minimum required contribution for the year.

During 2018, we contributed $22 million for our Canadian registered plans, we made contributions and benefit payments of $2 million for our Canadian nonregistered pension plans and made benefit payments of $19 million for our nonqualified pension plans.

During 2019, based on estimated year-end asset values and projections of plan liabilities, we expect to:


•	be required to contribute approximately $17 million for our Canadian registered plan;


•	be required to contribute or make benefit payments for our Canadian nonregistered plans of $3 million; and


•	make benefit payments of approximately $16 million for our U.S. nonqualified pension plans.

We do not anticipate a contribution being required for our U.S. qualified pension plan for 2019.

Expected Postretirement Benefit Funding

Benefits for these plans are paid from our general assets as they come due. We expect to make benefit payments of $23 million for our U.S. and Canadian other postretirement benefit plans in 2019, including $6 million expected to be required to cover benefit payments under collectively bargained contractual obligations.

Estimated Projected Benefit Payments for the Next 10 Years



DOLLAR AMOUNTS IN MILLIONS
	PENSION ⁽¹⁾		OTHER POSTRETIREMENT BENEFITS
2019	$	272	$	17
2020	233		16
2021	231		15
2022	232		14
2023	234		14
2024-2028	1,161		57
(1) Estimated payments exclude future payments transferred in conjunction with our January 2019 group annuity contract purchase.

UNION-ADMINISTERED MULTIEMPLOYER BENEFIT PLANS

We contribute to multiemployer defined benefit plans under the terms of collective-bargaining agreements. These plans cover a small number of our employees and on an annual basis our contributions are immaterial.

These plans have different risks than single-employer plans. Our contributions may be used to fund benefits for employees of other participating employers. If we choose to stop participating, we may be required to pay a withdrawal liability based on the underfunded status of the plan. If another participating employer stops contributing to the plan, we may become responsible for remaining plan unfunded obligations.

DEFINED CONTRIBUTION PLANS

We sponsor various defined contribution plans for our U.S. and Canadian salaried and hourly employees. Our contributions to these plans were:


•	$22 million in 2018,


•	$21 million in 2017 and


•	$27 million in 2016.

AS OF DECEMBER 31, 2018 (DOLLAR AMOUNTS IN MILLIONS)

1% INCREASE

1% DECREASE

Effect on total service and interest cost components

Less than $1

Less than $(1)

Effect on accumulated postretirement benefit obligation