
					Other postretirement
	Pension benefits				benefits
	December 31,				December 31,
	2019		2018		2019		2018
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	(3,239.2)	$	(3,383.6)	$	(98.9)	$	(109.1)
Service cost		(66.0)		(73.0)		—		(0.1)
Interest cost		(126.5)		(119.5)		(3.7)		(3.5)
Actuarial gain (loss)		(506.4)		220.9		(4.8)		7.9
Participant contributions		—		—		(4.4)		(3.7)
Benefits paid		123.6		109.6		12.2		9.7
Plan amendments		122.4		6.4		(1.8)		—
Other		—		—		—		(0.1)
Benefit obligation at end of year	$	(3,692.1)	$	(3,239.2)	$	(101.4)	$	(98.9)

Change in plan assets
Fair value of plan assets at beginning of year	$	2,498.2	$	2,542.2	$	643.9	$	696.8
Actual return on plan assets		520.9		(122.2)		95.5		(47.7)
Employer contribution		30.5		187.8		1.2		0.8
Participant contributions		—		—		4.4		3.7
Benefits paid		(123.6)		(109.6)		(12.2)		(9.7)
Fair value of plan assets at end of year	$	2,926.0	$	2,498.2	$	732.8	$	643.9

Amount recognized in statement of financial position
Other assets	$	—	$	—	$	635.1	$	546.9
Other liabilities		(766.1)		(741.0)		(3.7)		(1.9)
Total	$	(766.1)	$	(741.0)	$	631.4	$	545.0

Amount recognized in accumulated other comprehensive (income) loss
Total net actuarial (gain) loss	$	737.5	$	673.3	$	(17.4)	$	40.2
Prior service benefit		(137.8)		(26.7)		(7.3)		(10.2)
Pre-tax accumulated other comprehensive (income) loss	$	599.7	$	646.6	$	(24.7)	$	30.0

Amounts Recognized in Net Periodic Benefit Cost and Accumulated Other Comprehensive (Income) Loss (Table)


	Pension				Other postretirement
	benefits				benefits
	For the year ended December 31,
	2019		2018		2019		2018
	(in millions)
Other changes recognized in accumulated other comprehensive (income) loss
Net actuarial (gain) loss	$	134.3	$	58.3	$	(57.5)	$	73.4
Prior service (benefit) cost		(122.4)		(6.4)		1.7		—
Amortization of gain (loss)		(70.1)		(67.8)		(0.1)		1.5
Amortization of prior service benefit		11.3		3.4		1.2		13.9
Total recognized in pre-tax accumulated other comprehensive (income) loss	$	(46.9)	$	(12.5)	$	(54.7)	$	88.8
Total recognized in net periodic benefit cost and pre-tax accumulated other comprehensive (income) loss	$	55.6	$	87.4	$	(85.3)	$	43.4

Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost (Table)


	Pension benefits
	For the year ended December 31,
	2019		2018		2017
Discount rate (1)	3.70	%	3.60	%	4.15	%
Expected long-term return on plan assets	5.95	%	6.30	%	6.70	%
Rate of compensation increase:
Cash balance benefit	4.94	%	4.96	%	5.02	%
Traditional benefit	2.73	%	2.77	%	2.82	%

	Other postretirement benefits
	For the year ended December 31,
	2019		2018		2017
Discount rate	3.95	%	3.35	%	3.75	%
Expected long-term return on plan assets	5.19	%	4.85	%	4.40	%
Rate of compensation increase	N/A		2.39	%	2.44	%

(1)

During the second quarter of 2019, we amended The Principal Pension Plan and The Principal Financial Group Nonqualified Defined Benefit Plan for Employees to end traditional benefit accruals as of December 31, 2022, and begin cash balance accruals January 1, 2023. We remeasured the associated plan assets and pension benefit obligations as of May 31, 2019. A discount rate of 4.15% was used until the remeasurement date at which time a discount rate of 3.70% was used. See "Pension Plan Changes and Plan Gains/Losses" for further details.

Effects of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates (Table)


	1-percentage		1-percentage
	point increase		point decrease
	(in millions)
Effect on total of service cost and interest cost components	$	—	$	—
Effect on accumulated postretirement benefit obligation		(1.2)		1.1

Defined Benefit Pension Plans Supplemental Information (Table)


	For the year ended December 31,
	2019						2018
	Qualified		Nonqualified				Qualified		Nonqualified
	Plan		Plan		Total		Plan		Plan		Total
	(in millions)
Amount recognized in statement of financial position
Other assets	$	—	$	—	$	—	$	—	$	—	$	—
Other liabilities		(258.7)		(507.4)		(766.1)		(266.3)		(474.7)		(741.0)
Total	$	(258.7)	$	(507.4)	$	(766.1)	$	(266.3)	$	(474.7)	$	(741.0)

Amount recognized in accumulated other comprehensive loss
Total net actuarial loss	$	567.6	$	169.9	$	737.5	$	544.4	$	128.9	$	673.3
Prior service benefit		(110.3)		(27.5)		(137.8)		(11.0)		(15.7)		(26.7)
Pre-tax accumulated other comprehensive loss	$	457.3	$	142.4	$	599.7	$	533.4	$	113.2	$	646.6

Components of net periodic benefit cost
Service cost	$	59.7	$	6.3	$	66.0	$	65.7	$	7.3	$	73.0
Interest cost		108.0		18.5		126.5		102.0		17.5		119.5
Expected return on plan assets		(148.8)		—		(148.8)		(157.0)		—		(157.0)
Amortization of prior service benefit		(7.8)		(3.5)		(11.3)		(1.5)		(1.9)		(3.4)
Recognized net actuarial loss		57.6		12.5		70.1		53.6		14.2		67.8
Net periodic benefit cost	$	68.7	$	33.8	$	102.5	$	62.8	$	37.1	$	99.9

Other changes recognized in accumulated other comprehensive (income) loss
Net actuarial (gain) loss	$	80.8	$	53.5	$	134.3	$	81.7	$	(23.4)	$	58.3
Prior service benefit		(107.2)		(15.2)		(122.4)		—		(6.4)		(6.4)
Amortization of net loss		(57.6)		(12.5)		(70.1)		(53.6)		(14.2)		(67.8)
Amortization of prior service benefit		7.8		3.5		11.3		1.5		1.9		3.4
Total recognized in pre-tax accumulated other comprehensive (income) loss	$	(76.2)	$	29.3	$	(46.9)	$	29.6	$	(42.1)	$	(12.5)
Total recognized in net periodic benefit cost and pre-tax accumulated other comprehensive (income) loss	$	(7.5)	$	63.1	$	55.6	$	92.4	$	(5.0)	$	87.4

Defined Benefit Plans and Other Postretirement Benefit Plans

Fair Value of Plan Assets (Table)

December 31, 2019

Assets

Amount

Fair value hierarchy level

measured at

fair value

net asset value

Level 1

Level 2

Level 3

(in millions)

Asset category

Pooled separate account investments:

U.S. large cap equity portfolios (1)

$

509.7

$

—

$

—

$

509.7

$

—

U.S. small/mid cap equity portfolios (2)

90.9

—

90.9

—

Balanced asset portfolios (3)

78.5

—

78.5

—

International equity portfolios (4)

328.6

—

328.6

—

Real estate investment portfolios (5)

193.5

—

193.5

—

Single client separate account investments:

Fixed income securities:

U.S. government and agencies

485.9

—

485.9

—

States and political subdivisions

26.1

—

26.1

—

Corporate

1,009.1

—

1,009.1

—

Commercial mortgage-backed securities

32.7

—

32.7

—

Other debt obligations

7.1

—

7.1

—

Hedge funds (6)

129.0

—

Pooled separate account investment (7)

31.5

—

31.5

—

Other (8)

3.4

—

3.4

—

Total

$

2,926.0

$

129.0

$

485.9

$

2,311.1

$

—


	December 31, 2018
	Assets		Amount		Fair value hierarchy level
	measured at		measured at
	fair value		net asset value		Level 1		Level 2		Level 3
	(in millions)
Asset category
Pooled separate account investments:
U.S. large cap equity portfolios (1)	$	387.7	$	—	$	—	$	387.7	$	—
U.S. small/mid cap equity portfolios (2)		64.4		—		—		64.4		—
Balanced asset portfolios (3)		116.3		—		—		116.3		—
International equity portfolios (4)		220.9		—		—		220.9		—
Real estate investment portfolios (5)		133.6		—		—		133.6		—
Single client separate account investments:
Fixed income securities:
U.S. government and agencies		418.8		—		418.8		—		—
States and political subdivisions		24.0		—		—		24.0		—
Corporate		934.5		—		—		934.5		—
Commercial mortgage-backed securities		30.7		—		—		30.7		—
Other debt obligations		8.0		—		—		8.0		—
Hedge funds (6)		124.7		124.7		—		—		—
Pooled separate account investment (7)		23.9		—		—		23.9		—
Other (8)		10.7		—		0.3		10.4		—
Total	$	2,498.2	$	124.7	$	419.1	$	1,954.4	$	—

(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.

11. Employee and Agent Benefits – (continued)

(3)

The portfolios are a combination of underlying fixed income and equity investment options. These investment options may include balanced, asset allocation, target-date and target-risk investment options. Although typically lower risk than investment options that invest solely in equities, all investment options in this category have the potential to lose value.

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

(5)	The portfolio invests primarily in U.S. commercial real estate properties through a separate account.

(6)	The hedge funds have varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these hedge funds.

(7)	The single client separate accounts invest in a money market pooled separate account.

(8)	Includes cash and net (payables)/receivables for the single client separate accounts.

Accumulated Benefit Obligation in Excess of Plan Assets (Table)


	December 31,
	2019		2018
	(in millions)
Accumulated postretirement benefit obligation	$	3.8	$	2.1
Fair value of plan assets		—		0.2

Target Asset Allocation (Table)


Asset category	Target allocation
U.S. equity portfolios	35	%
International equity portfolios	15	%
Fixed income security portfolios	50	%