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Employee Benefit Arrangements

12 Months Ended

Dec. 31, 2018

Pension, Other Postretirement Benefit Plans and Other Benefit Plans

Voya Financial, Inc.'s subsidiaries maintain both qualified and non-qualified defined benefit pension plans (the "Plans"). These plans generally cover all employees and certain sales representatives who meet specified eligibility requirements. Pension benefits are based on a formula using compensation and length of service. Annual contributions are paid to the Plans at a rate necessary to adequately fund the accrued liabilities of the Plans calculated in accordance with legal requirements. The Plans comply with applicable regulations concerning investments and funding levels.

The Voya Retirement Plan (the "Retirement Plan") is a tax qualified defined benefit plan, the benefits of which are guaranteed (within certain specified legal limits) by the Pension Benefit Guaranty Corporation ("PBGC"). Beginning January 1, 2012, the Retirement Plan adopted a cash balance pension formula instead of a final average pay ("FAP") formula, allowing all eligible employees to participate in the Retirement Plan. Participants earn an annual credit equal to 4% of eligible compensation. Interest is credited monthly based on a 30-year U.S. Treasury securities bond rate published by the Internal Revenue Service in the preceding August of each year. The accrued vested cash pension balance benefit is portable; participants can take it if they leave the Company.

In addition to providing qualified retirement benefit plans, the Company provides certain supplemental retirement benefits to eligible employees, non-qualified pension plans for insurance sales representatives who have entered into a career agent agreement

and certain other individuals. These plans are non-qualified defined benefit plans, which means all benefits are payable from the general assets of the sponsoring company.

The Company also offers deferred compensation plans for eligible employees, including eligible career agents and certain other individuals who meet the eligibility criteria. The Company’s deferred compensation commitment for employees is recorded on the Consolidated Balance Sheets in Other liabilities and totaled $278 and $305 as of December 31, 2018 and 2017, respectively.

Voya Financial, Inc.'s subsidiaries also provide other postretirement and post-employment benefits to certain employees. These are primarily postretirement healthcare and life insurance benefits to retired employees and other eligible dependents and post-employment/pre-retirement plans provided to employees and former employees. The Company's other postretirement benefit obligation and unfunded status totaled $16 and $20 as of December 31, 2018 and 2017, respectively. Additionally, net periodic benefit for other postretirement benefits totaled $6, $2 and $4 for the years ended December 31, 2018, 2017 and 2016, respectively.

Obligations, Funded Status and Net Periodic Benefit Costs

The Company's Retirement Plan was fully funded in compliance with Employee Retirement Income Security Act ("ERISA") guidelines as of December 31, 2017, which is tested annually subsequent to this filing. The following tables summarize a reconciliation of beginning and ending balances of the benefit obligation and fair value of plan assets, as well as the funded status of the Company's Plans for the years ended December 31, 2018 and 2017:



	2018			2017
Change in benefit obligation:
Benefit obligations, January 1	$	2,294		$	2,116
Service cost	25			24
Interest cost	86			93
Net actuarial (gains) losses	(157		)	156
Benefits paid	(108		)	(98		)
(Gain) loss recognized due to curtailment	—			3
Benefit obligations, December 31	2,140			2,294

Change in plan assets:
Fair value of plan net assets, January 1	1,764			1,463
Actual return on plan assets	(78		)	257
Employer contributions	27			142
Benefits paid	(108		)	(98		)
Fair value of plan net assets, December 31	1,605			1,764
Unfunded status at end of year ⁽¹⁾	$	(535	)	$	(530	)

⁽¹⁾ Funded status is not indicative of the Company's ability to pay ongoing pension benefits or of its obligation to fund retirement trusts. Required pension funding for qualified plans is determined in accordance with ERISA regulations.

The following table summarizes amounts related to the Plans recognized on the Consolidated Balance Sheets and in AOCI as of December 31, 2018 and 2017:



	2018			2017
Amounts recognized in the Consolidated Balance Sheets consist of:
Accrued benefit cost	$	(535	)	$	(530	)
Net amount recognized	$	(535	)	$	(530	)

Accumulated other comprehensive (income) loss:
Prior service cost (credit)	$	(1	)	$	(10	)
Tax effect	—			4
Accumulated other comprehensive (income) loss, net of tax	$	(1	)	$	(6	)

The following table summarizes information for the Plans with a projected benefit obligation and an accumulated benefit obligation in excess of plan assets as of December 31, 2018 and 2017:



	2018		2017
Projected benefit obligation	$	2,140	$	2,294
Accumulated benefit obligation	2,134		2,290
Fair value of plan assets	1,605		1,764

Components of Periodic Net Benefit Cost

Net periodic pension cost and net periodic other postretirement benefit plan cost consist of the following:


▪	Service Cost: Service cost represents the increase in the projected benefit obligation as a result of benefits payable to employees on service rendered during the current year.


▪	Interest Cost (on the Liability): Interest cost represents the increase in the amount of projected benefit obligation at the end of each year due to the time value adjustment.


▪	Expected Return on Plan Assets: Expected return on plan assets represents the anticipated return earned by the pension fund assets in a given year.


▪	Net Loss (Gain) Recognition: Actuarial gains and losses occur as a result of differences between actual and expected experience on pension plan assets or projected benefit obligation during a given period. The Company immediately recognizes actuarial losses (gains) on the qualified and nonqualified retirement plans as well as the other postretirement benefit plans.

▪

Amortization of Prior Service Cost: This cost represents the recognition of increases or decreases in Pension and other postretirement provisions on the Consolidated Balance Sheets as a result of changes in plans or initiation of new plans. The increases or decreases in obligation are recognized in AOCI at the time of the particular amendment. The costs are then amortized to Operating expenses in the Consolidated Statements of Operations over the expected service years of the covered employees.


▪	(Gain) Loss Recognized due to Curtailment: Curtailment gains and losses occur as a result of events that significantly reduce the expected years of future service of present employees or eliminates for a significant number of employees the accrual of defined benefits for some or all of their future services.

The components of net periodic benefit costs recognized in Operating expenses in the Consolidated Statements of Operations and other changes in plan assets and benefit obligations recognized in Other comprehensive income (loss) related to the Plans were as follows for the years ended December 31, 2018, 2017 and 2016:



	2018			2017			2016
Net Periodic (Benefit) Costs Recognized in Consolidated Statements of Operations:
Service cost	$	25		$	24		$	25
Interest cost	86			93			96
Expected return on plan assets	(129		)	(115		)	(104		)
Amortization of prior service cost (credit)	(9		)	(10		)	(10		)
(Gain) loss recognized due to curtailment	—			1			—
Net (gain) loss recognition	50			14			57
Net periodic (benefit) costs	23			7			64

Other Changes in Plan Assets and Benefit Obligations Recognized in AOCI:
Amortization of prior service (credit) cost	9			10			10
(Credit) cost recognized due to curtailment	—			2			—
Total recognized in AOCI	9			12			10
Total recognized in net periodic (benefit) costs and AOCI	$	32		$	19		$	74

The table below summarizes the components of the net actuarial (gains) losses related to the Plans reported within Operating expenses in the Consolidated Statements of Operations for the periods presented:



(Gain)/Loss Recognized	2018			2017			2016
Discount Rate	$	(160	)	$	196		$	69
Asset Returns	207			(142		)	24
Mortality Table Assumptions	(6		)	(14		)	(22		)
Demographic Data and other	9			(25		)	(13		)
Total Net Actuarial (Gain)/Loss Recognized	$	50		$	14		$	57

The estimated prior service cost related to the Plans expected to be amortized from AOCI into net periodic (benefit) cost in 2019 is $(1).

Assumptions

The discount rates used in determining pension benefit obligations as of December 31, 2018 and 2017 were as follows:



	2018		2017
Discount rate	4.46	%	3.85	%

In determining the discount rate assumption, the Company utilizes current market information provided by its plan actuaries including discounted cash flow analyses of the Company’s pension and general movements in the current market environment. The discount rate modeling process involves selecting a portfolio of high quality, noncallable bonds that will match the cash flows of the pension plans.

The weighted-average assumptions used in determining net benefit cost of the Plans for the years ended December 31, 2018, 2017 and 2016 were as follows:



	2018		2017		2016
Discount rate	3.85	%	4.55	%	4.81	%
Expected rate of return on plan assets	7.50	%	7.50	%	7.50	%

The expected return on plan assets is updated at least annually using the calculated value approach, taking into consideration the Retirement Plan’s asset allocation, historical returns on the types of assets held in the Retirement Plan's portfolio of assets ("the Fund") and the current economic environment. Based on these factors, it is expected that the Fund’s assets will earn an average percentage per year over the long term. This estimation is based on an active return on a compound basis, with a reduction for administrative expenses and non-Voya investment manager fees paid from the Fund. For estimation purposes, it is assumed the long-term asset mix will be consistent with the current mix. Changes in the asset mix could impact the amount of recorded pension income or expense, the funded status of the Plan, and the need for future cash contributions.

Plan Assets

The Retirement Plan is the only defined benefit plan with plan assets in a trust. The primary financial objective of the Retirement Plan is to secure participant retirement benefits. As such, the key objective in the Retirement Plan’s financial management is to promote stability and, to the extent appropriate, growth in funded status (i.e. the ratio of market value of assets to liabilities). The investment strategy for the Fund balances the requirement to generate returns with the need to control risk. The asset mix is recognized as the primary mechanism to influence the reward and risk structure of the Fund in an effort to accomplish the Retirement Plan’s funding objectives. Desirable target allocations amongst identified asset classes are set and, within each asset class, careful consideration is given to balancing the portfolio among industry sectors, geographies, interest rate sensitivity, economic growth, currency and other factors affecting investment returns. The assets are managed by professional investment firms. They are bound by mandates and are measured against benchmarks. Consideration is given to balancing security concentration, investment style and reliance on particular active investment strategies, among other factors. The Company reviews its asset mix of the Fund on a regular basis. Generally, the pension committee of the Company will rebalance the Fund's asset mix to the target mix as individual portfolios approach their minimum or maximum levels. However, the Company has the discretion to deviate from these ranges or to manage investment performance using different criteria.

Derivative contracts may be used for hedging purposes to reduce the Retirement Plan’s exposure to interest rate risk. Treasury futures are used to manage the interest rate risk in the Retirement Plan’s fixed maturity portfolio. The derivatives do not qualify for hedge accounting.

The following table summarizes the Company's pension plan’s target allocation range and actual asset allocation by asset category as of December 31, 2018 and 2017:



	Actual Asset Allocation
	2018		2017
Equity securities:
Target allocation range	37%-65%		37%-65%
Large-cap domestic	23.0	%	25.3	%
Small/Mid-cap domestic	6.1	%	6.9	%
International commingled funds	11.7	%	12.5	%
Limited Partnerships	1.8	%	2.5	%
Total equity securities	42.6	%	47.2	%
Fixed maturities:
Target allocation range	30%-50%		30%-50%
U.S. Treasuries, short term investments, cash and futures	3.0	%	8.0	%
U.S. Government agencies and authorities	8.2	%	4.1	%
U.S. corporate, state and municipalities	31.6	%	27.4	%
Foreign securities	4.1	%	4.1	%
Other fixed maturities	—	%	0.1	%
Total fixed maturities	46.9	%	43.7	%
Other investments:
Target allocation range	6%-14%		6%-14%
Hedge funds	4.8	%	4.2	%
Real estate	5.7	%	4.9	%
Total other investments	10.5	%	9.1	%
Total	100.0	%	100.0	%

The following table summarizes the fair values of the pension plan assets by asset class as of December 31, 2018:



	Level 1		Level 2		Level 3		NAV		Total
Assets
Fixed maturities, short-term investments and cash:
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—
Short-term investment fund⁽¹⁾	—		—		—		48		48
U.S. Government securities	131		—		—		—		131
U.S. corporate, state and municipalities	1		498		7		—		506
Foreign securities	—		66		—		—		66
Other fixed maturities	—		1		—		—		1
Total fixed maturities	132		565		7		48		752

Equity securities:
Large-cap domestic	369		—		—		—		369
Small/Mid-cap domestic	98		—		—		—		98
International commingled funds⁽²⁾	—		—		—		188		188
Limited partnerships⁽³⁾	—		—		—		29		29
Total equity securities	467		—		—		217		684

Other investments:
Real estate⁽⁴⁾	—		—		—		92		92
Limited partnerships⁽⁵⁾	—		—		—		75		75
Other	2		—		—		—		2
Total other investments	2		—		—		167		169
Net, total pension assets	$	601	$	565	$	7	$	432	$	1,605

⁽¹⁾ This category includes common collective trust funds invested in the EB Temporary Investment Fund of The Bank of New York Mellon ("Short-term Investment Fund"). The Short-term Investment Fund is designed to provide a rate of return by investing in a full range of high-quality, short-term money market securities. Participant's redemptions in the Short-term Investment Fund may be requested by 2 p.m. eastern standard time and are processed by the following day.

⁽²⁾

International Commingled funds are comprised of two assets that use NAV to calculate fair value. Baillie Gifford Funds has a balance of $94 and uses a bottom up approach to stock picking. In determining the potential of a company, the fund manager analyzes industry background, competitive advantage, management attitudes and financial strength and valuation. There are no redemption restrictions in the Baillie Gifford Funds. Silchester has a fund balance of $94 that has an investment objective to achieve long-term growth primarily by investing in a diversified portfolio of equity securities of companies located in any country other than the United States. Silchester clients may contribute to and redeem monies from the funds on a monthly basis as of the last business day of each month. Clients must notify Silchester at least six business days before the month-end to make a redemption request. Baillie Gifford and Silchester, as a normal course of business, enter into contracts (commitments) that contain indemnifications or warranties. The funds' maximum exposure under these arrangements is unknown, as this would involve future claims that have not yet occurred. Baillie Gifford and Silchester have no unfunded commitments.

⁽³⁾ Limited partnerships are comprised of two assets that use NAV to calculate fair value. Pantheon Europe has a balance of $4 and Pantheon USA has a balance of $25. Their strategy is to create a portfolio of high quality private equity funds, operating across Europe and diversified by stage, sector, geography, manager and vintage year. For the year ended December 31, 2018, Pantheon Europe and Pantheon USA have unfunded commitments of $1 and $5, respectively, and there were no significant redemption restrictions.

⁽⁴⁾UBS Trumbull Property Fund ("UBS") uses NAV to calculate fair value. UBS has a balance of $92 and is an actively managed core portfolio of equity real estate. The Fund has both relative and real return objectives. Its relative performance objective is to outperform the National Council of Real Estate investment Fiduciaries Open-End Diversified Core ("NFI_ODCE") index over any given three-to-five-year period. The Fund's real return performance objective is to achieve at least a 5.0% real rate of return (i.e., inflation-adjusted return), before advisory fees, over any given three-to-five-year period. Investors may request redemptions of all or a portion of their units as of the end of a calendar quarter by delivering written notice to the Fund at least sixty days prior to the end of the quarter.

⁽⁵⁾Magnitude Institutional, Ltd. ("MIL") has a balance of $75 and is designed to realize appreciation in value primarily through the allocation of capital directly and indirectly among investment funds and accounts. There are significant redemption restrictions in the MIL fund.

The following table summarizes the fair values of the pension plan assets by asset class as of December 31, 2017:



	Level 1		Level 2		Level 3		NAV		Total
Assets
Fixed maturities, short term investments and cash:
Cash and cash equivalents	$	7	$	—	$	—	$	—	$	7
Short-term investment fund⁽¹⁾	—		—		—		136		136
U.S. Government securities	73		—		—		—		73
U.S. corporate, state and municipalities	—		476		7		—		483
Foreign securities	—		72		—		—		72
Other fixed maturities	—		1		—		—		1
Total fixed maturities	80		549		7		136		772

Equity securities:
Large-cap domestic	446		—		—		—		446
Small/Mid-cap domestic	121		—		—		—		121
International commingled funds⁽²⁾	—		—		—		220		220
Limited partnerships⁽³⁾	—		—		—		43		43
Total equity securities	567		—		—		263		830

Other investments:
Real estate⁽⁴⁾	—		—		—		86		86
Limited partnerships⁽⁵⁾	—		—		—		75		75
Other	1		—		—		—		1
Total other investments	1		—		—		161		162
Net, total pension assets	$	648	$	549	$	7	$	560	$	1,764

⁽¹⁾ This category includes common collective trust funds invested in the Short-term Investment Fund. The Short-term Investment Fund is designed to provide a rate of return by investing in a full range of high-quality, short-term money market securities. Participant's redemptions in the Short-term Investment Fund may be requested by 2 p.m. eastern standard time and are processed by the following day.

⁽²⁾ International Commingled funds are comprised of two assets that use NAV to calculate fair value. Baillie Gifford Funds has a balance of $111 and uses a bottom up approach to stock picking. In determining the potential of a company, the fund manager analyzes industry background, competitive advantage, management attitudes and financial strength and valuation. There are no redemption restrictions in the Baillie Gifford Funds. Silchester has a fund balance of $109 that has an investment objective to achieve long-term growth primarily by investing in a diversified portfolio of equity securities of companies located in any country other than the United States. Silchester clients may contribute to and redeem moneys from the funds on a monthly basis as of the last business day of each month. Clients must notify Silchester at least six business days before the month-end to make a redemption request. Baillie Gifford and Silchester, as a normal course of business, enter into contracts (commitments) that contain indemnifications or warranties. The funds' maximum exposure under these arrangements is unknown, as this would involve future claims that have not yet occurred. Baillie Gifford and Silchester have no unfunded commitments.

⁽³⁾ Limited partnerships are comprised of two assets that use NAV to calculate fair value. Pantheon Europe has a balance of $6 and Pantheon USA has a balance of $37. Their strategy is to create a portfolio of high quality private equity funds, operating across Europe and diversified by stage, sector, geography, manager and vintage year. For the year ended December 31, 2017, Pantheon Europe and Pantheon USA have unfunded commitments of $1 and $5, respectively, and there were no significant redemption restrictions.

⁽⁴⁾UBS uses NAV to calculate fair value. UBS has a balance of $86 and is an actively managed core portfolio of equity real estate. The Fund has both relative and real return objectives. Its relative performance objective is to outperform the NFI_ODCE index over any given three-to-five-year period. The Fund's real return performance objective is to achieve at least a 5.0% real rate of return (i.e., inflation-adjusted return), before advisory fees, over any given three-to-five-year period. Investors may request redemptions of all or a portion of their units as of the end of a calendar quarter by delivering written notice to the Fund at least sixty days prior to the end of the quarter.

⁽⁵⁾MIL has a balance of $75 and is designed to realize appreciation in value primarily through the allocation of capital directly and indirectly among investment funds and accounts. There are significant redemption restrictions in the MIL fund.

As described in the Fair Value Measurements (excluding Consolidated Investment Entities) Note to these Consolidated Financial Statements, pension plan assets are categorized into a three-level fair value hierarchy based upon the inputs available in evaluating each of the assets. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). Certain investments are measured at fair value using the NAV per share as a practical expedient and have not been classified in the fair value hierarchy. The leveling hierarchy is applied to the pension plans assets as follows:

Cash and cash equivalents: The carrying amounts for cash and cash equivalents reflect the assets' fair value. The fair values for cash and cash equivalents are determined based on quoted market prices. These assets are classified as Level 1.

Short-term Investment Funds: Short term investment funds are estimated at NAV. See subscript (1) in Fair Value Hierarchy table footnotes for a description of the fund's redemption policies.

U.S. Government securities, corporate bonds and notes and foreign securities: Fair values for actively traded marketable bonds are determined based upon quoted market prices and are classified as Level 1 assets. Corporate bonds, ABS, U.S. agency bonds, and foreign securities use observable pricing method such as matrix pricing, market corroborated pricing or inputs such as yield curves and indices. These investments are classified as Level 2.

International Commingled Funds: Commingled funds are estimated at NAV per share. See subscript (2) in Fair Value Hierarchy table footnotes for description of the fund's redemption policies.

Equity securities: Fair values are based upon a quoted market price determined in an active market and are included in Level 1.

Real estate: Real estate is estimated at NAV. See subscript (4) in Fair Value Hierarchy table footnotes for more information on real estate.

Limited partnerships: Limited partnerships are estimated at NAV. See subscripts (3) and (5) in Fair Value Hierarchy table footnotes for more information on limited partnerships.

Expected Future Contributions and Benefit Payments

The following table summarizes the expected benefit payments for the Company's pension plans to be paid for the years indicated:



2019	$	121
2020	126
2021	130
2022	135
2023	137
2024-2028	710

The Company expects that it will make a cash contribution of approximately $84 to the Plans in 2019.

Defined Contribution Plans

Certain of the Company’s subsidiaries sponsor defined contribution plans. The largest defined contribution plan is the Voya 401(k) Savings Plan (the "Savings Plan"). The assets of the Savings Plan are held in independently administered funds. Substantially all employees of the Company are eligible to participate, other than the Company’s agents. The Savings Plan is a tax qualified defined contribution plan. Savings Plan benefits are not guaranteed by the PBGC. The Savings Plan allows eligible participants to defer into the Savings Plan a specified percentage of eligible compensation on a pretax basis. The Company matches such pretax contributions, up to a maximum of 6% of eligible compensation, subject to IRS limits. Matching contributions are subject to a 4-year graded vesting schedule. Contributions made to the Savings Plan are subject to certain limits imposed by applicable law. These plans do not give rise to balance sheet provisions, other than relating to short-term timing differences included in Other

liabilities. The amount of cost recognized for the defined contribution pension plans for the years ended December 31, 2018, 2017 and 2016 was $35, $39 and $38, respectively, and is recorded in Operating expenses in the Consolidated Statements of Operations.