Pension and Other Benefit Programs

Defined Benefit Pension Plans

In connection with our acquisition of NYSE on November 13, 2013, we assumed NYSE’s pension plans covering its U.S. and certain European operations, as well as other benefit plans. The benefit accrual for the U.S. operations pension plan is frozen. Following the Euronext IPO (Note 16) in June 2014, there are no longer any European operations covered by a pension plan.

Retirement benefits are derived from a formula, which is based on length of service and compensation. Based on this calculation, we may contribute to our pension plans to the extent such contributions may be deducted for income tax purposes. During the year ended December 31, 2014, we contributed $51 million to our pension plans. We did not contribute to our pension plans during the period from November 13, 2013 to December 31, 2013. Our practice is to fund our frozen defined benefit pension plan each year at the level above the minimum required contribution but within tax deductible limits. Based on actuarial projections, we estimate that a contribution of $10 million during the year ended December 31, 2015 will allow us to meet our funding goal. However, the actual contribution is contingent on the actual plan performance relative to assumptions.

During year ended December 31, 2014, as part of certain plan amendments, lump sum payments were offered to certain terminated vested participants as part of a de-risking strategy in the pension plans. The offer was made to 2,725 participants, of whom 935, or 34%, elected to receive a lump sum. The total amount paid to this group was $55 million and when combined with other lump sum payments made during the year, it exceeded the total interest cost and service cost for the year. We recognized a loss of $4 million for the year ended December 31, 2014 in connection with these plan settlements, which is included in acquisition-related transaction and integration cost in our consolidated statement of income.

Consistent with prior practice by NYSE, we base our investment policy and objectives on a review of the actuarial and funding characteristics of the retirement plan, the demographic profile of plan participants, and our business and financial characteristics. Capital market risk/return opportunities and tradeoffs also are considered as part of the determination. The primary investment objective of our plan is to achieve a long-term rate of return that meets the actuarial funding requirements of the plan and maintain an asset level sufficient to meet all benefit obligations of the plan. The target allocations for the U.S. plan assets are 65 percent equity securities and 35 percent U.S. fixed income securities. Equity securities primarily include investments in large-cap and small-cap companies primarily located in the United States. U.S. fixed income securities include corporate bonds of companies from diversified industries and U.S. treasuries. Based on the valuation techniques described in Note 15, the fair values of our pension plans assets as of December 31, 2014, by asset category, are as follows (in millions):



	Fair Value Measurements
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash	$	31	$	—	$	3	$	34
Equity securities:
U.S. large-cap	150		76		—		226
U.S. small-cap	69		38		—		107
International	85		51		—		136
Fixed income securities	121		94		—		215
Total	$	456	$	259	$	3	$	718

The fair values of our pension plans assets as of December 31, 2013, by asset category, are as follows (in millions):



	Fair Value Measurements
Asset Category	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash	$	5	$	—	$	—	$	5
Equity securities:
U.S. large-cap	154		76		—		230
U.S. small-cap	74		42		—		116
International	91		57		—		148
Fixed income securities	133		124		—		257
Total	$	457	$	299	$	—	$	756

The measurement dates for the pension plans are December 31, 2014 and 2013. The following table provides a summary of the changes in the pension plans' benefit obligations and the fair value of assets as of December 31, 2014 and 2013 and a statement of funded status of the pension plans as of December 31, 2014 and 2013 (in millions):



	As of December 31,
	2014			2013
Asset Category	U.S. Operations			U.S. Operations			European Operations
Change in benefit obligation:
Benefit obligation at January 1, 2014 and November 13, 2013 (acquisition date)	$	837		$	827		$	227
Service cost	—			—			1
Interest cost	37			5			1
Actuarial loss	146			10			3
Plan settlements	(55		)	—			(197		)
Benefits paid	(49		)	(5		)	(1		)
Currency translation and other	—			—			3
Benefit obligation at year end	$	916		$	837		$	37
Change in plan assets:
Fair value of plan assets at January 1, 2014 and November 13, 2013 (acquisition date)	$	735		$	718		$	214
Actual return on plan assets	36			22			1
Contributions	51			—			1
Plan settlements	(55		)	—			(197		)
Benefits paid	(49		)	(5		)	(1		)
Currency translation and other	—			—			3
Fair value of plan assets at end of year	$	718		$	735		$	21
Funded status	$	(198	)	$	(102	)	$	(16	)
Accumulated benefit obligation	$	916		$	837		$	37
Amounts recognized in the accompanying consolidated balance sheets:
Accrued employee benefits	$	(198	)	$	(102	)	$	(16	)

The components of the pension plans expense/(benefit) in the accompanying consolidated statements of income are set forth below for the year ended December 31, 2014 and for the period from November 13, 2013 to December 31, 2013 (in millions):



	Year Ended December 31, 2014			Period from November 13, 2013 to December 31, 2013
	U.S. Operations			U.S. Operations			European Operations
Service cost	$	—		$	—		$	1
Interest cost	37			5			1
Estimated return on plan assets	(47		)	(6		)	(1		)
Settlement loss	4			—			2
Aggregate pension expense (benefit)	$	(6	)	$	(1	)	$	3

We use a market-related value of plan assets when determining the estimated return on plan assets. Gains/losses on plan assets are amortized over a four year period and accumulate in other comprehensive income. We recognize deferred gains and losses in future net income based on a “corridor” approach, where the corridor is equal to 10% of the greater of the benefit obligation or the market-related value of plan assets at the beginning of the year.

The following table shows the projected payments for the pension plans based on actuarial assumptions (in millions):



2015	$	49
2016	49
2017	50
2018	50
2019	50
Next 5 years	257

Supplemental Executive Retirement Plan

We assumed NYSE’s U.S. nonqualified supplemental executive retirement plan (“SERP”), which provides supplemental retirement benefits for certain employees. The future benefit accrual of the SERP plan is frozen. To provide for the future payments of these benefits, we have purchased insurance on the lives of certain of the participants through company-owned policies. As of December 31, 2014 and 2013, the cash surrender value of such policies was $54 million and $51 million, respectively, and is included in other non-current assets in the accompanying consolidated balance sheets. The following table provides a summary of the changes in the SERP benefit obligations (in millions):



	As of December 31,
	2014			2013
Change in benefit obligation:
Benefit obligation at January 1, 2014 and November 13, 2013 (acquisition date)	$	73		$	73
Service cost	—			1
Interest cost	3			(1		)
Actuarial loss	8			—
Benefits paid	(11		)	—
Benefit obligation at year end	$	73		$	73
Funded status	$	(73	)	$	(73	)
Amounts recognized in the accompanying consolidated balance sheets:
Other current liabilities	$	(11	)	$	(11	)
Accrued employee benefits	(62		)	(62		)

SERP plan expense in the accompanying consolidated statement of income was $3 million for the year ended December 31, 2014, primarily consisting of interest cost. The following table shows the projected payments for the SERP plan based on the actuarial assumptions (in millions):



Projected SERP Plan Payments
2015	$	11
2016	9
2017	8
2018	7
2019	5
Next 5 years	21

Pension and SERP Plan Assumptions

The weighted average assumptions used to develop the actuarial present value of the projected benefit obligation and net periodic pension/SERP costs for year ended December 31, 2014 and for the period from November 13, 2013 to December 31, 2013 are set forth below:



	Year Ended December 31, 2014	Period from November 13, 2013 to December 31, 2013
	U.S.	U.S.	Europe
Discount rate (pension/SERP plans)	3.8%/3.2%	4.6%/3.8%	3.6%/N/A
Expected long-term rate of return on plan assets (pension/SERP plans)	6.5%/N/A	6.5%/N/A	3.5%/N/A
Rate of compensation increase	N/A	N/A	3.5%

The assumed discount rate reflects the market rates for high-quality corporate bonds currently available. The discount rate was determined by considering the average of pension yield curves constructed on a large population of high quality corporate bonds. The resulting discount rates reflect the matching of plan liability cash flows to yield curves. To develop the expected long-term rate of return on assets assumption, we considered the historical returns and the future expectations for returns for each asset class as well as the target asset allocation of the pension portfolio.

Post-retirement Benefit Plans

NYSE’s defined benefit plans provide certain health care and life insurance benefits for eligible retired U.S. employees. These post-retirement benefit plans, which may be modified in accordance with their terms, were fully frozen in 2009. The net periodic post-retirement benefit costs were $9 million and $1 million for the year ended December 31, 2014 and for the period from November 13, 2013 to December 31, 2013, respectively. The defined benefit plans are unfunded and we currently do not expect to fund the post-retirement benefit plans. The discount rate as of December 31, 2014 and 2013 is 3.8% and 4.6%, respectively. The following table shows the actuarial determined benefit obligation, interest costs, employee contributions, actuarial loss, benefits paid during the period and the accrued employee benefits (in millions):



	As of December 31,
	2014			2013
Benefit obligation at the end of year	$	239		$	208
Interest cost	8			—
Actuarial loss	35			—
Employee contributions	3			—
Benefits paid	(16		)	3
Amounts recognized in the accompanying consolidated balance sheets:
Other current liabilities	$	(12	)	$	(12	)
Accrued employee benefits	$	(227	)	$	(196	)

The following table shows the payments projected for our post-retirement benefit plans (net of expected Medicare subsidy receipts of $12 million in aggregate over the next ten fiscal years) based on actuarial assumptions (in millions):



2015	$	12
2016	13
2017	13
2018	13
2019	13
Next 5 years	67

For measurement purposes, we assumed an 8.0% annual rate of increase in the per capita cost of covered health care benefits in 2014 which will decrease on a graduated basis to 4.5% in the year 2029 and thereafter. The following table shows the effect of a one-percentage-point increase and decrease in assumed health care cost trend rates (in millions):



Assumed Health Care Cost Trend Rate	1% Increase		1% Decrease
Effect of post-retirement benefit obligation	$	33	$	(27	)
Effect on total of service and interest cost components	1		(1		)

Accumulated Other Comprehensive Income

The accumulated other comprehensive loss as of December 31, 2014 was primarily a result of a decline in the discount rate and changes to mortality tables used to measure the benefit obligations of the pension, SERP and post-retirement benefit plans. Accumulated other comprehensive loss, after tax, as of December 31, 2014 consisted of the following amounts that have not yet been recognized in net periodic benefit cost (in millions):



	Pension Plans			SERP Plans			Post-retirement Benefit Plans			Total
Unrecognized net actuarial losses, after tax	$	(89	)	$	(4	)	$	(21	)	$	(114	)

The amount of prior actuarial loss included in accumulated other comprehensive income related to the pension, SERP and postretirement plans as of December 31, 2014, which are expected to be recognized in net periodic benefit cost in the coming year, is estimated to be (in millions):



	Pension Plans			SERP Plans		Post-retirement Benefit Plans			Total
Loss recognition	$	(2	)	$	—	$	(1	)	$	(3	)

As of the acquisition date of November 13, 2013, the pension, SERP and postretirement plans were recorded at fair value and the accumulated unrecognized net actuarial loss prior to the acquisition was written off in accordance with purchase accounting rules under U.S. GAAP.

Other Benefit Plans and Defined Contribution Plans

We assumed NYSE's defined contribution plans for which most NYSE's employees contribute a portion of their salary within legal limits. Our U.S. operations match an amount equal to 100% of the first 6% of eligible contributions. The U.K. operations contribute an equivalent of 7% of the employee's salary for all employees who are active in the savings plan. Total contributions made by us for the years ended December 31, 2014 and 2013 were $20 million and $2 million, respectively, related to the NYSE's defined contribution plans. The U.S. operations also provide benefits under a Supplemental Executive Savings Plan (“SESP”) to which eligible employees may contribute. SESP employee contributions were $2 million for both the year ended December 31, 2014 and for the period from November 13, 2013 to December 31, 2013, respectively. Included in accrued employee benefits payable was $13 million and $23 million as of December 31, 2014, and 2013, respectively, relating to the SESP plan.

Our historical ICE U.K.-based subsidiaries have a defined contribution pension plan for eligible employees. We contribute a percentage of the employee’s base salary to the plan each month and employees are also able to make additional voluntary contributions, subject to plan and statutory limits. Our contribution ranges from 10% to 20% of the employee’s base salary. Total contributions made by us for the years ended December 31, 2014, 2013 and 2012 were $4 million, $3 million and $2 million respectively, related to the historical ICE U.S. defined contribution pension plan.

The employees of our historical ICE U.S.-based subsidiaries are eligible to participate in our 401(k) and Profit Sharing Plan (the “401(k) Plan”). We have historically offered a match of 100% of the first 5% of the eligible employee’s compensation contributed to the 401(k) Plan, subject to plan and statutory limits. The 401(k) Plan match was increased to 6% beginning January 1, 2015. Total matching contributions under our 401(k) Plan and for other 401(k) plans that are no longer active were $5 million, $4 million and $4 million for the years ended December 31, 2014, 2013 and 2012. No discretionary or profit sharing contributions were made during the years ended December 31, 2014, 2013 or 2012.